IT IS IMPORTANT to remind readers that the Federal Trade Commission (FTC) considers all optometrists, ophthalmologists, and other contact lens prescribers to be competitors and at risk for committing antitrust violations under the Sherman Antitrust Act when discussing finances in our common area of enterprise (FTC, 2024). However, the fact that I have written this article is not a violation on its own.
The other half of such a violation is agreeing, or seeming to agree, to do something in concert in our shared enterprise with regard to pricing or organizing a boycott. The safe harbor here is discussing billing strategies as an educational exercise. Never ask other eyecare practitioners what they charge for an eyecare service or material or agree to use only certain suppliers. Always set your own fees and choose your own suppliers independently of other prescribers.
With that disclaimer, let’s revisit sensible and ethical ways to establish a rational and profitable fee schedule for your contact lens practice.
As with all business enterprises, one must know what it costs to deliver a service or material before one knows what to charge for that service or material.
It’s important to know the “chair cost” to set a fee that covers that cost and provides a profit. In a previous article, I detailed the correct method for calculating one’s chair cost (Newman, 2008). Basically, you need to figure out what fee you would have to charge for each unit of time that a patient is in your exam chair to break even with your practice costs.
Once you know that number, invest some time in tracking the number of those units it really takes to deliver a specific service. Do that for each type of specialty or routine cosmetic lens, and multiply the number of units by the chair cost. Then, add the desired profit and you will know what to charge for a service.
Using spreadsheets is a great way to track these time units and fees accurately and easily. One rule that I have always followed is to count staff time as one-half of my time. That is, if chair cost is based on 15-minute units and you spend two units and your staff spends two, that amounts to three units. Get it?
If, after doing this exercise, you find that your fees are out of whack with the competition, you made an error in calculations, your expenses are significantly higher than those of your competitors, or you are not skilled enough to reduce the number of visits it takes to get it right compared to those around you. Becoming an expert at prescribing these specialty lenses will make you more profitable by reducing the number of visits it takes to achieve success.
REFERENCES
1. Federal Trade Commission. The Antitrust Laws. Available at ftc.gov/advice-guidance/competition-guidance/guide-antitrust-laws/antitrust-laws. Accessed 2024 Aug 20.
2. Newman CD. A Rational Method for Setting Fees, Part 1. Contact Lens Spectrum. 2008 Nov;23. Available at clspectrum.com/issues/2008/november/coding-strategies. Accessed 2024 Aug 20.
