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Positioning Contact Lenses Within Your Practice
This often overlooked revenue generator may have a place in your practice.
ARTHUR DE GENNARO

This article explores some of the reasons for this phenomenon and offers some strategies ophthalmologists can use to improve contact lens sales and profits, while hopefully deriving ancillary benefits associated with it.

Why Sell Contact Lenses?

With the growing acceptance of refractive surgery among patients and the prospect of more and better technologies becoming available in the future, the question arises, as an ophthalmologist, should I continue to focus on maintaining a contact lens practice? In my opinion, the answer is yes.

It is common knowledge that the majority of refractive surgery patients are previous contact lens wearers. For this reason alone, building a base of contact lens patients, especially among the young, can create future in-house refractive surgery referrals. Organizing a practice that does not welcome these patients tends to push them to competitors.

There are limits however. Building a successful contact lens practice that limits appointments for routine patients who wear eyeglasses would be counterproductive, because the margins and profits for eyeglasses are far more generous than those for contact lenses. As a result, one strategy is to orchestrate the number of contact lens patients seen on a particular day or week. My suggestion is, that as the percentage of contact lens patients begins to exceed 21%, you add more doctor coverage, limit the number of these appointment slots and/or raise fees.

Who Sees Contact Lens Patients?

Because routine eye exams are generally conducted in a similar manner, it is common for general ophthalmologists to see these patients. However, new contact lens patients and those established patients who would benefit from changing the brand or modality of the lenses they wear will need to have a contact lens fitting. In many practices this is where the problems begin.

This is so for a number of reasons. The first reason is that trying on a number of contact lenses to determine which is the most efficacious or comfortable can be a time-consuming process, and time, as we all know, is the nemesis of ophthalmologists. Viewed strictly through the economics then, having the ophthalmologist perform this work is generally not a viable strategy.

It is common for optometrists to perform this work in those ophthalmology practices that employ them. Salaries for optometrists, however, have risen over the years while retail prices, gross profit margins and net profits derived from contact lens sales have continued to fall. As a result, although generally lower, the cost of delivering this service still remains higher than necessary. Beyond that, as more and more ophthalmologists begin using optometrists to see patients who need medical care and postoperative care, using optometrists to deliver contact lens services may not continue to prove to be either cost effective or productive.

Some ophthalmology practices hire opticians certified by the National Contact Lens Examiners (NCLE). These are opticians who have passed a rigorous examination in contact lens theory and practice. They can take over after the ophthalmologist has performed the eye examination and take the patient through to discharge. Again, viewed strictly from a financial standpoint, the cost of delivering contact lens services with the help of these opticians is an attractive option.

Implementation Strategies

Now that you have an understanding of those who can provide contact lens services, here are some implementation strategies.

►Concentrate on specialty fits. One of the market forces that has deeply impacted contact lens pricing is branding. Unlike eyeglass frames, manufacturing and distributing contact lenses is a very expensive process. As a result, a few companies make the vast majority of contact lenses sold in the United States. These companies are well known to your patients and they have confidence in these products.

Because the patient has confidence in the product, and because they do not see the product as needing to be modified or altered by the practitioner, their goal will be to obtain the product at the lowest possible cost. That means shopping around.

This strategy only works for those lenses that are mass produced and widely available. Some lenses, however, are not. These fall into the category of specialty fits. For purposes of this discussion let us define specialty fits as those 20% to 30% of patients who have unusual contact lens needs. Specifically, these patients have keratoconus, highly astigmatic corneas, large amounts of residual astigmatism or wear gas-permeable lenses simply for comfort. These patients tend to be vastly more loyal to their doctors, and the lenses they wear are not readily available on the Internet or at discount warehouses. This is because gas-permeable and some specialty soft lenses are custom made.

►Concentrate on professional fees. Fees for contact lens services are often quoted as packages — a global fee for the eye examination, the contact lens fitting, the contact lenses and some number of follow-up visits. There are quite a few variations on this theme; all of which seek to find a balance between the professional and product fees.

With regard to product pricing, the difficulty is that ophthalmologists often fail to use the most basic cost-plus model (cost + overhead + profit = retail price) in order to set reasonable pricing. This is often due to a lack of understanding of what the fully allocated costs of delivering these services are.

Instead, pricing is often set simply by looking at aggressive competitors and assuming that, "If they can make money at that price, then I can make money at that price." The reason this logic fails is because Internet sellers and discount warehouses have dramatically lower overheads. Discount warehouses can use contact lenses as a loss leader to generate foot traffic in their stores, betting that while on premises customers will purchase other products with higher margins.

The same logic is true for professional fees; many ophthalmologists fail to take into consideration the fully allocated cost of providing contact lens services beyond the eye exam. An ophthalmologist does not need to fit contact lenses very long to recognize that this cost can be substantial, especially for those patients who require repeated refitting. Therefore, it is critical that you get your arms around the chair cost, that is, the fully burdened overhead cost for delivering contact lens services.

With that said, non-managed care patients have a strong tendency to choose who will perform their eye examinations based on the reputation of the doctor, not on the fee charged. In fact, higher fees are often interpreted as access to better care. Viewed from a certain perspective, the patient is attempting to purchase a portion of the doctor's time, sometimes bidding that fee up in the process. This is because the doctor's time is in limited supply; competition for it tends to increase prices while competition for the products — which are essentially unlimited in supply — tends to force prices down. All of this boils down to the creation of a professional fee schedule formula that has a bias for professional fees over product fees.

►Focus on recall. Early in my career, I worked as an optician, a contact lens fitter and later taught ophthalmic dispensing. During this time, I learned that the single greatest impediment to successful contact lens wear was patient compliance.

Contact lens patients can be treacherously noncompliant. This exposes them to a wide array of complications and midnight visits to urgent care facilities. Among these noncompliant behaviors is wearing planned replacement or disposable lenses for more days, weeks or months than have been approved by the FDA and recommended by the manufacturer.

Another tendency of these patients is they delay obtaining the routine health maintenance represented by an annual eye examination. This happens because many contact lens patients do not regard themselves as being under physician management in the same way that a glaucoma patient would. This is an important distinction, because as long as contact lens patients view themselves as the gatekeeper of their own eyecare, they will have a tendency to put off being seen until they actually have a medical event or run out of lenses.

One way to ensure that contact lens patients access the routine eye health maintenance that they require is to pre-appoint annual routine examinations. This must be reinforced with an appropriate recall and patient education program. Helping patients to understand their contact lenses are medical devices, and requiring them to be under the management of a licensed and trained professional, goes a long way towards gaining compliance.

In light of all these factors, it appears that ophthalmologists still have significant opportunities to build their contact lens practices. If skillfully done, practices can generate attractive professional fees, reasonable product fees and create a groundswell of interest in LASIK and other refractive procedures.

Arthur De Gennaro is president of Arthur De Gennaro & Associates, LLC, an ophthalmic practice-management consulting firm that specializes in dispensary issues. He can be reached at (803) 359-7887 or by e-mail at IsForU@aol.com.