Soft contact lenses are a commodity—they are sold on the open market to anyone with a valid prescription. They are easily found on the Internet and at mass merchandisers, making the local marketplace a global competition. Many consumers say that the shift in the economy calls for increased frugality; however, finding the best price is not just a necessity for some consumers, it’s considered “standard practice.” Many patients were previously embarrassed to ask for a prescription and compare prices, but today, this practice is expected.
In 2007, nearly 25% of contact lens prescriptions from independent eye care practitioners were purchased from alternate sources vs. 14% from optical chains and 3% from mass merchandisers.1 Most doctors would agree: This is a trend that’s increasing. How likely is it that contact lenses will continue to be sold in private practices in the future? And, will they be profitable?
How to Maintain Overhead
According to Jack Schaeffer, O.D., contact lenses will continue to be profitable as long as the practitioner adopts a medical approach. Dr. Schaeffer believes that three fees must be instituted when developing a financial plan for the contact lens business model:
• Eye examination fee. Separate the fee for the eye exam from any contact lens fitting or evaluation fees. Office brochures and trained staff can help explain the difference between an eye examination and the contact lens evaluation. In Dr. Schaeffer’s experience, an educated patient is more likely to value your expertise and pay a separate fee for a contact lens evaluation.
• Contact lens evaluation and follow-up fees. Due to sinking contact lens product profits, Dr. Schaeffer believes the real contact lens profit is in contact lens evaluation fees—so, developing an adequate fee structure for your time and expertise is important. A contact lens evaluation is not just about looking at the lens on the eye; rather, it relies on your knowledge of contact lens problem solving. During this evaluation, it is quite common to find problems that may hinder contact lens wear success, such as dry eye, compliance issues, giant papillary conjunctivitis and prescription changes.
It is not necessary to bundle fitting fees; doctors should decide whether their fee structure covers just one visit or many during the fitting process. A contact lens evaluation fee should be charged at all subsequent comprehensive exams.
Another key element: ancillary personnel. Your clinical technician should be well versed in all aspects of the contact lens evaluation and delivery process.
Keep in mind that if you are going to deliver a product with this high level of service, there has to be a fee involved with each of these steps.
• Materials fee. It is critical for the contact lens practitioner to maintain maximum profitability within the professional services segment of the overall contact lens fee, but the most successful contact lens practices still generate significant income from the sale of contact lens materials. These practices have had to explore what motivates contact lens patients when they decide where to purchase their contact lens materials. One of the primary motivators? Convenience of contact lens delivery.
Appropriate organization of practice systems can create an environment that will encourage patients to purchase their contact lens materials from the prescribing practice. According to Barry Eiden, O.D., “Anything you can do to make the sales/transaction process easier and more convenient increases the likelihood of completing the transaction.”
Options for office-based contact lens delivery include dispensing from onsite inventory, lens ordering with patient dispensing at the office, lens ordering with direct-to-patient shipping, practice website-based ordering with direct-to-patient delivery and in-office dispensing and vendor-based website ordering.
• Dispensing from onsite inventory. Practices can select a limited number of frequently fit contact lens designs and inventory key parameters. The advantage of this modality of lens dispensing is the ultimate convenience: providing product to patients at the time of their examination. In addition, many manufacturers provide their best prices on cost of goods when they can sell a large-volume single shipment to the practice, which can both add to practice profit margins and allow for lower price offerings to patients. Potential limitations of in-office inventory include the required space for storage of lens inventories, the cost of maintaining inventory, the ability of patients to request small-volume purchases (one or two boxes of lenses) and the possibility of being out of a specific lens parameter.
• Lens ordering with dispensing at the office. Staff members order lenses and have them shipped to the practice. Once the lenses arrive, the patient is notified (by phone, e-mail, text message or fax) and must come to the office for dispensing. The dispensing may be as simple as handing the lenses to the patient or as involved as having the patient insert lenses at the office along with a fit and vision evaluation either by the practitioner or a contact lens technician. This modality of lens dispensing is most appropriate when fitting custom lenses or more advanced designs, such as multifocal or toric lenses. The disadvantage of this dispensing modality is obviously the inconvenience for patients. Additionally, greater chair time reduces practice profitability.
•Direct-to-patient delivery. This modality of lens dispensing is becoming more popular and involves the ordering of contact lenses by the office staff, after which the lenses are shipped directly to the patient.
When the evaluation of the lens fit and vision performance is not necessary, this can be an efficient method of contact lens dispensing. Many manufacturers of disposable contact lenses will provide direct-to-patient shipping at no charge when a certain number of lens boxes are ordered. When patients leave the office with diagnostic disposable lenses on their eyes, they enjoy immediate visual function and the peace of mind that comes with knowing that their supply is coming directly to them soon.
Limitations of this method include the chance of not obtaining the best pricing from manufacturers, shipping charges for orders that do not meet minimum requirements, and delivery time and location concerns.
• Practice website-based ordering. With broadband technology, access to the Internet has become faster and more affordable. Correspondingly, the number of households with high-speed Internet access has increased, and so has the number of your patients who have become regular Internet buyers.
To take advantage of this trend, more and more practices are developing practice website-based contact lens ordering systems. The sophistication of these systems can vary from simple e-mail order requests to online stores with parameter selection options, delivery modality options and online payment options. When patients place an order for contact lenses on the practice website, the dispensing options we discussed previously can be provided. Confirmation e-mails can be sent back to the patient when his or her order has been processed.
Using the practice website for contact lens ordering allows our patients to interact with our practice when and where they choose to do so. It has the added advantage of reducing phone calls to the practice, both from the patient and third-party verifications, indirectly increasing profits. The potential disadvantages of a web store include the cost of building and maintaining the e-commerce site, which could run $10,000 or more for a secure site if credit card information is to be captured. And of course, staff is still needed to process the order.
• Vendor-based website ordering. Hospital overhead and staff costs weren’t just cutting into our profit margin; they were destroying it. We were losing money on every box of contact lenses sold. We needed to outsource our contact lens ordering but wanted to maintain the advantages of in-office sales. I was faced with stopping lens sales altogether, but at the same time, I was worried about the impact on the practice. Vendor-based ordering allows us to think globally and act locally.
Vendor-based web ordering is a quick and easy “out of the box” approach to developing your own personal web ordering while reducing staff costs. You maintain control of the web content, design and prices, while the vendor processes the transaction, ships the lenses directly to the patient and manages all returns.
Here’s how it works: During the exam, register the patient’s contact lens prescription on the website, including lens parameters, expiration date and the total number of boxes to be purchased. An automatic e-mail is sent to patients; it includes an invitation, password and instructions. They can then log into the site 24/7 to reorder lenses. If the prescription has expired or they have exceeded the number of allotted boxes, patients are directed to call your office. Because you enter the information about your practice on the site and the vendor gives permission to complete the sale, there are no Fairness to Contact Lens Consumers Act validation calls to your practice—but, you can elect to be notified when a patient places an order.
You set the contact lens prices, but the vendor will monitor the national average and make recommendations. This way, your site can automatically adjust with the changing market. At any time, you can monitor sales details directly from the site. Once a month, the vendor sends you a check, which is all profit.
A Successful Contact Lens Practice
Ensuring contact lens profitability in 2010 and beyond will require new ways of accommodating patients. This includes offering superior care while focusing on exam fees and the various ways in which the practice delivers lens materials. I hope you’re up for the challenge and are able to overcome it by utilizing novel contact lens delivery systems, which have helped so many practitioners establish successful contact lens practices.
Dr. Sindt is the Co-Chief Clinical Editor of Review of Optometry. She is also the Director, Contact Lens Service, and an associate professor of clinical ophthalmology at the University of Iowa, as well as the president of Women of Vision.
1. Johnson & Johnson Vision Care Channel Buyer Study. September 2007.