Increasing Your Profitability with Vision Plans, Part 1
February 9, 2011
Rather than complaining about vision plans and the discounts they require, let's develop a strategy to maximize gross and net revenue with vision plans. Rather than wishing we could change vision plan policies, let's figure out a way to change your practice to adapt to the mandates in a positive way.
Should you join in the first place?
I'm well aware that there are some practices that do not accept vision plans. There are also some practices that accepted vision plans in the past and dropped them. The decision to become a provider for vision plans is important and complex and every practice owner should perform a careful analysis, but I'm going to save that discussion for a future article. Many ECPs have already analyzed the question of participation and have made the decision that belonging to some vision plans is in their best interest. Many ECPs realize that if they were to drop out of a vision plan, they may not be able to sustain their practices.
Read on and consider how your practice handles each of the following strategic points. The more prevalent vision plans are in your practice, the more action you should take.
I think maximum delegation to technicians is an important step to increased profitability in all practices, but it's even more important if a high percentage of your patients are members of vision plans. The goal is to make the most out of the situation you're in. Let's play the hand you're dealt. You might prefer the practice model where the doctor does most of the testing and appointments are scheduled every half hour, but if exam fees are determined by vision plans, that model just won't work. You might like to examine patients the way you were taught in optometry school, but the real world may dictate that you find a more automated way to evaluate the eye and visual system.
It is true that a delegation model requires an investment in staff and instrumentation, but doing so puts first things first. If you don't have enough patient demand then perhaps you can see your entire patient load in two or three days per week. That is still a victory. You have created three days per week when you can do something else. Those three free days could be spent working in another practice, opening your own branch office in another community, or working on the management and marketing of your current office to increase the demand. But at least you are spending the correct amount of time on each patient based on the fees you're being paid.
If you review the payments and charge-backs for all optical products under each vision plan, you'll see that some items yield greater profit than others. Typically, the more advanced lens designs allow a higher fee and greater profit. This should guide your decisions about what products to offer your patients. You do not have to carry all products and you should always recommend the best products. Typically, the vision plan member gets a great deal on the most advanced lenses and best frames and your practice receives a higher profit.
This really goes hand in hand with product selection above, but you must spend time training your staff to recommend the best and to practice some basic sales techniques. I often hear staff members start a frame selection by asking the patient if they would like to see frames that are covered in full by the vision plan. We certainly know they do not have to start there. I often observe staff assist a patient with an eyeglass order and never mention the option of high index plastic, even though it provides a thinner lens with UV protection and excellent scratch resistance all in one. The assumption is that the patient does not want to spend any extra money, but that is so untrue! Sadly, when an optician fails to review and sell all the lens options, the quality of the eye care is diminished.
Many ECPs who have a high concentration of vision plans feel that there is no point to raising fees. The thinking is that the plan caps all the fees anyway so there would be no increase in collected revenue. I disagree with that philosophy on several levels. If a practice is dominated by vision plans I'd counter by asking why not charge high fees? The patients are not going to be upset in the least because they don't have to pay those fees. In fact the patient's perception of your practice is enhanced because many people judge the quality of the goods and services based on the usual price.
But the most important reason to charge higher fees is because there are many services and products that are not covered by vision plans. In those instances we must be able to generate a strong profit. Also, there are many services and products where a discount is mandated and you obviously will generate more revenue in those cases if your usual fee is higher. Consider the patient who needs an interim eye exam that is not covered. Consider the effect of the retail price mark-up when a frame overage is calculated. Consider the effect of price when a patient buys a second pair of glasses or must replace a lost pair of glasses in between eye exams. These are all examples of items that are not fully covered by vision plans and they happen every day in your office. Pricing makes a difference.
There is much more to consider with your new strategy for vision plans; next week I'll cover the following:
Converting to medical insurance
Maximizing patient demand
Contact lens services
Please let me know your thoughts and strategies about vision plans