The Golden Opportunity in Contact Lenses

BY SHARRON MARIONNEAUX & NANCY T. GWIN, FCLSA, COT

Here's how you can increase your contact lens revenue while optimizing patient care.

In its basic form, profit is revenue minus cost. In the old days of what accountants like to call "cigar box accounting," you would put money into a cigar box, take money out of it to pay a bill, and what was left was your profit. To make the ancillary departments in your practice profitable, you've got to run them like a business. Develop a multi-year working plan, just like you would in any business. Sit down with your accountant and say "Today, our contact lens department is generating $5,000 a month in revenue. Five years from now, we want it to be generating $20,000, so how are we going to get there?" There are only two ways you are going to increase profitability -- by decreasing your costs and by increasing your revenue.

Decreasing Your Costs

Decreasing your costs requires paying attention to the small things that take place in your office. Let's talk first about decreasing your cost of goods. A good benchmark is to keep your cost of goods right at 30 percent or lower. As soon as your cost of goods goes up, you should know that you have to take action to make sure it comes back down.

Price shopping and volume buying -- One of the ways to decrease your cost is by price shopping and volume buying. Many offices buy from multiple manufacturers and have multiple bills at the end of each month. These bills may add up to a sizable amount for you, but to each manufacturer, the order is small potatoes. The manufacturers have accounts who spend thousands of dollars with them every month, so they're probably not too eager to offer you discounts. However, if you take all of those purchases to one supplier, you'll have an account that's worth much more each month. With that philosophy, you can approach the supplier and say, "I am guaranteeing you $5,000 in business every month, so what can you give me to help me lower my overall cost on these lenses? Will you give me a percentage across the board? Will you decrease the cost of my soft lenses? Will you give me better RGP pricing?" When you consolidate your accounts, you have a lot more clout with every company with which you deal. You'll also be eligible to utilize corporate co-op funding.

Co-opportunities -- For a long time, it was customary to not pay a lot of attention to what company reps were offering. Now that we are in a position to do some advertising for the retail side, you can go to the companies and ask what they can do for you as a practice. If you do a mail-out to your patient base, are companies willing to put up $1,000 or $2,000 to offset the cost? If you want to run an ad in your local newspaper, will they fund that for you? Will they print the postcards? Will they do recalls for you?

You'll probably find that many of the contact lens manufacturers are willing to do much more for you than you are accustomed to allowing them to do. Some companies will give you products instead of actual money, and that's just as good. For example, if you do a certain number of fits, they'll comp you six or eight lenses, and that's a big block of money if you're talking about bifocal lenses. So, now you've got six or eight free lenses, you can fit three patients, and your contact lens cost is zero because you've utilized that co-op that was available to you from the manufacturer. But the only way to do that is to pay attention to your sales reps and to the mail you get from the companies. Make it a point to pay attention to the products and services that the companies are offering to you.

Lens exchanges -- Another way to control costs is to keep track of returns and credits. Let's say you buy an RGP lens for a patient but either the lens doesn't fit or you need to change the power. You're within a fitting period for that patient and don't want him to pay an extra fee, so you change the lens. The laboratory bills you when you reorder, but you don't get a credit on that lens until you return it to the company. How can you be sure that you receive all the credit you deserve?

It's very simple at Sharron's office. In a little book is the name of every company, plus a listing for the date, the lens type, the invoice number, the number of lenses sent back and whether or not the office received credit. Every time the technician returns a lens, she writes it in that book. The technician responsible for checking credits writes in red next to the lens that was returned the amount and date the credit was received. Checking the book at the end of the month or at the end of a quarter reveals how long it took to get credit on each lens. If the book indicates that credits are due, the technician who is in charge of contact lens credits calls the company and finds out why.

You can argue that you have enough profit built in to most of these lens fittings to absorb some of that, but consider bifocals, some of which will cost you upwards of $100 and allow one return. If you charge $600 for a bifocal fitting and you've just spent $400, where is your profit?

Try designating a drawer in your contact lens department for returns. Every time a patient brings in a lens that has to be exchanged, attach it to the invoice and put it in the drawer. Once a week, have the technician in charge of returns send all the lenses in the drawer back for credit. So, when you open that drawer and it's full and brimming over with lenses that haven't been returned, remember that there's money sitting in that drawer.

It's an issue that seems small on the surface, but making sure that you get credit for those returns and making sure that you know why you didn't get credit for a returned lens will cut your cost of goods tremendously.

Increasing Your Revenue

As far as your creative mind can take you, you can build a practice and you can make a profit. Here are just a few possible techniques.

In-house referrals -- In-house practitioner referrals to the contact lens department is first and foremost. Many practitioners don't feel all that comfortable talking to patients and trying to sell contact lenses -- that's not what they do. The ancillary personnel should do the selling. The technician has the very first chance to plant the seed in the patient's mind for a contact lens fit. At the eye exam workup, all the technician has to say to the patient while looking at the prescription is, "Gosh, you're a good candidate for contact lenses; we have some really new products available now." Then, when the patient goes in for the complete eye exam, he says to the doctor, "Doc, what do you think about contact lenses for me?" The doctor then feels at ease about saying, "You're a great candidate for them. Go over to our contact lens department and they'll give you all the information you need."

Since the eye exam workup is a timely process, you might try instituting a bonus plan to encourage technicians to plant the seed. Develop some forms with the date, the patient's name, the technician's name and whether the patient is a new wearer, a previous wearer or a new patient to your clinic. Counting up all the record slips at the end of the month will tell you exactly how to comp the technicians on the referrals they sent you. It doesn't matter whether the patients were wearing contact lenses before or not -- they weren't buying them from you. So, the technician who encourages patients to start buying contact lenses through your department, even those patients who are currently wearing lenses, receives added recognition.

A well-trained staff -- Remember, the key to any successful business is a well-trained staff. The more trained and experienced contact lens technicians are, and the more that they can do, the more chair time they free up for the doctors. Educating your staff is money well spent. Send them to meetings and seminars, because developing those motivated and enthusiastic people is worthwhile. It's also a good idea to have staff members who are trained with NCLE certification. The more education your staff members receive, the better equipped they are to recognize problems and relieve doctors of chair time.

Database marketing -- Putting all of your patients in a workable, PC database categorized according to refractive condition -- myopes, hyperopes, presbyopes and high myopes, for example -- opens up some ideal opportunities for marketing. You can market for bifocal candidates or for new toric lens candidates, and you can send mail-outs to high myopes, even if they're current contact lens wearers.

You can send a letter to your spectacle database that says, "I know you like your spectacles, but have you ever gotten dressed to go out to a party and just didn't want to put on that same pair of eyeglasses that you wear every day? Now we have contact lenses that you can wear once and throw away." By the same token, you can market your optical business to your contact lens database by sending a letter to every new contact lens wearer that says, "Because you've just purchased a new pair of contact lenses from us, we'll give you a 25 to 30 percent discount on a pair of really hot, new sunglasses."

Boosting patient retention -- Your patient retention plan is also an important vehicle for increasing your revenue. The object is to keep all of your patients without giving away the farm.

A good practice is to have the technician who worked with a new contact lens patient make a follow-up call at least within two days of fitting the lenses to see how the patient is doing. Make it personable, and tell patients that they can come in any time and that your office will be glad to work with them. It encourages them to buy contact lenses at your office because they feel like a real person within your group.

Also, instead of waiting for patients to contact your office when their lenses need to be replaced, try sending them a little handwritten note or a postcard that says, "Your traditional lenses are almost a year old," or "Your disposables should be almost gone; it's time to come back in and get more lenses." Another benefit: the little card puts the name of your practice right in front of them. You can also perform this recall by phone during down time, such as early in the day when your staff isn't busy yet or right after lunch before things pick up. An in-house service agreement, which insures that patients buy their lenses from you, is another way to boost patient retention. The service fee is assessed each year, and patients buy their lenses at half price with a small handling fee. This plan encourages even patients who are already wearing lenses to stay loyal.

Keep in mind that the best way to determine a patient retention method is to focus on the opportunities. Just sit down with your staff and brainstorm on how to build your contact lens practice.

Patient seminars -- A great way to attract new contact lens wearers is to educate them through patient-directed seminars. The presbyopic population is a great place to start, but sometimes it's difficult explaining the concept of presbyopia to patients. However, there are wonderful speakers at eyecare meetings who you can recruit to explain presbyopia in easy-to-understand language.

Sharron's office conducted a nighttime presbyopia seminar -- just some light refreshments and good speakers who explained presbyopia and the options that are available. It was sponsored by some of the manufacturers and distributors, who also covered the cost of sending a speaker. It was hugely successful and another one is scheduled for this year, only bigger. So, don't be afraid to sit down with some of the lens manufacturers and distributors and say, "I want to do a seminar for presbyopes ... are you interested in helping?"

Waiting room reading material -- At Sharron's office, there are little brochures that say Contact Lens Division all over the office. They consist simply of a folder that tells patients what's available in soft contact lenses, disposables, RGPs, soft torics, bifocals and more. A patient who's waiting for his eyes to be dilated or something else might get tired of reading Field and Stream. With these brochures scattered across the office, he'll likely pick up one of them and say, "I didn't know they had cosmetic tinted lenses today," or (we hear this all day long), "You really have lenses that are soft that can correct my astigmatism? I went down the street and they said they couldn't fit me."

Perceived Value

Those of us who care about our integrity and who are not willing to compromise our standards of fitting in contact lenses and corneal health for an easy dollar are not going to charge the lowest fee. We don't want to be known as the practice that has the lowest price. There are plenty of people who don't go to K-Mart to buy their clothes; they go to Macy's. We're dealing with an affluent, well-educated patient base today, and they understand the value of what they're buying. They're not afraid to spend money if they know what they're getting for it.

There's an interesting story about the Cadillac Cimaron. Cadillac decided it wanted to tap into the Chevrolet/Ford market, so it introduced a model that cost what a Ford cost, but it didn't sell. Surveys revealed that people place a high value on the perception of what they are getting. Car buyers didn't want a low cost Cadillac because they felt they weren't getting the "Cadillac of cars" -- they were getting a Ford-priced car. This applies to us in our contact lens practices. We give a patient everything we can give them for what they pay, and we charge up front for it. We're not shy about saying, "Yes, we are more expensive, but look what you get. You can come in whenever you feel like it. We'll spend time with you and we'll answer your questions. We'll do unlimited numbers of insertion and removal for you.

Topography is a great asset too. You give patients a map of their eye, and they know that they have something that is really medically significant. They didn't just go to a place and have somebody hand them a pack across the counter and say, "That will be $29 ... there's your fitting and follow-up."

It's also helpful to use printed forms. Put your logo on everything that comes from your office.

We often hear people say, "Why does Lens-4-U sell these lenses for $18?" So I tell them that we're selling service -- I say, "We care about the health of your cornea. We're not just selling you a lens to put on your eye. We're going to call you and we're going to make sure that you're successful in your contact lens wear. A year from now, we're going to write to you again to find out whether you're still wearing those lenses or whether you paid $100 to put them in a drawer and never wear them again."

Here's another thing you can do. Let's say that two years ago, a patient paid $600 for a pair of bifocals which he never wore but didn't want to bring back. This patient comes in today and says, "I really want to try this again; I think I'm at a point in my life where I'm ready to do it." Look back in the record and talk about the fact that he didn't wear those lenses. Then give him a 30 or 40 percent discount because he's already spent a chunk of money for which he got nothing. He didn't utilize your time and he didn't utilize the product that he bought. It seems that lots of practices will dither with patients over a dollar because it's their policy. This creates a patient who's irate because he's not getting what he considers a fair credit when he can't wear the lenses for one reason or another. Be flexible. If you've got a patient that you know is unhappy, give him back everything. If you don't, he'll go out and tell 500 people that your practice is nothing but a bunch of money-hungry people who don't care about the patient at all. But, if you credit him every penny that he paid to you and you say, "We hope you'll come back to us when you're ready to try lenses again, so here's all of your money back," he'll go out and boast about the service and quality of care at your practice. So now you've become a hero; otherwise, you're just this money-grubbing contact lens practice.

Staying on Top

Once you've begun implementing strategies to cut your cost and increase your revenue, it's a good idea to know what your revenue is every day. If you're not making money day-to-day, don't wait until the end of the quarter to do something about it. If you don't see growth, call a meeting with your office managers and your staff, and brainstorm ways to increase revenue and cut costs. It goes back to that basic concept -- profit is revenue minus cost.

So remember, profitability is not a dirty word in your contact lens practice, and contrary to what many people believe, contact lenses are a golden opportunity. By paying attention to the little details and operating your contact lens practice with business savvy, you and your patients will prosper.

This article was adapted from a lecture presented at the 25th annual meeting of the Contact Lens Association of Ophthalmologists, January 1998, Las Vegas, Nevada.