Workforce
Too Many O.D.s?
That's a matter of perspective
What happens when we look at eyecare opportunities instead of supply and demand?
BY RICHARD C. EDLOW, O.D., Towson, Md.

Is there an oversupply of optometrists? This question has recently sparked lively debates in professional journals, educational seminars and Internet discussion groups. As is the case with most sensitive topics, however, there are no easy answers. Observers can often use the same set of statistics to support opposing views. In many cases, the arguments are anecdotal or rely purely on emotion. As I will demonstrate, in theory there is an oversupply, but in reality, it doesn't matter.

Let me suggest that we move beyond the typical arguments of supply and demand and attempt to answer two additional questions: Are there opportunities for ambitious, qualified optometrists? If so, where are these opportunities?

The prognosis

As one surveys the overall economy, an incredible picture is painted for excellent practice growth opportunities for optometrists because of:

• the demographic shifts in the United States for the next 20 years
• the cyclical nature of healthcare expenditures and its relationship to the gross domestic product (GDP)
• the income surveys of the profession
• the growth in eyecare expenditures
• the relationship between the Department of Labor's Bureau of Labor Statistics Consumer Price Index (CPI) and Eye Care Inflation Index
• the expanded scope of optometric practices.

Despite an oversupply of O.D.s, AOA figures show income continues to grow.

The argument for oversupply

My conclusion does not mean that the arguments for an oversupply of optometrists aren't valid. A recent workforce study, conducted by the American Optometric Association (AOA) and consulting group Abt, measured demand for optometric services and concluded that the supply of optometrists outstrips demand by about 12%. It also showed that the number of new optometrists entering practice each year (1,125) is greater than the number of optometrists who retire or exit the profession each year.

The AOA research predicts that the supply of optometrists is almost certain to increase at a greater rate than the population through the year 2010, and that an excess supply of optometrists seems likely over the next 10 years.

My own workforce projections, which I present at conferences in a tongue-in-cheek-manner, also show a great disparity between the supply and demand of Eye Care Providers (ECPs, both optometrists and ophthalmologists). Here's why: There are 285 million Americans. If we assume that 30% (that's probably a high estimate) of them schedule a comprehensive eye exam each year, then we arrive at 85.5 million exams demanded each year.

I have found that if each practice operates at top efficiency using the latest technology, superior human resources and enough exam lanes, an optometrist can perform four quality comprehensive exams each hour, or 160 exams over a 40-hour week. Assuming each doc worked 48 weeks each year, then each ECP performs 7,680 exams annually.

If we divide the annual workload possible for each optometrist (7,680 exams) into the total number of exams needed (85.5 million), we might conclude that it takes 11,133 ECPs to provide all the primary eye care. You may want to add a couple thousand ECPs to our final number for low vision, functional vision care and sports vision services.

Approximately 2% of the population requires visits for ocular diseases each year and we could use the same calculations above to arrive at the total need for secondary care optometry, or another 742 ECPs. And, let's add another 742 ECPs because the pathology patients will probably require two visits each patient.

Additionally, surgeons perform an estimated 4 million cases of eye-related-surgeries each year. Assuming that the surgeons involved in this area spend approximately 20 surgical minutes with each patient, we would require 695 additional docs.

From this basic study, America requires a total of somewhere around 15,312 ECPs. Because we have about 49,000 ECPs (31,000 optometrists and 18,000 ophthalmologists) in this country, we can surmise that the supply of ECPs is more than three times as great as the demand. But what does this really mean?

	AOA research predicts that an excess supply of optometrists seems likely over the next 10 years.

A dose of reality

The conclusion that the supply of optometrists outstrips demand by such a great number is theory, not reality. For example, in the aforementioned numbers we assume that each optometrist operates efficiently enough to care for four patients each hour, although any number of factors (from scheduling to a practice's efficiency) can reduce this number. Any reductions mean that a greater supply of optometrists is required to serve an equal number of patients. My manpower survey also assumes an even geographic distribution of patients so that each ECP would practice in an area with enough patients to fill each appointment slot.

Certainly you could make an argument against any of my figures and I invite you to use your own if you prefer. Yet just about any set of numbers reveals an oversupply when dealing strictly with demand.

But, remember, our goal is to uncover the level of opportunity for optometrists.

Demographics

An indicator of future opportunity is changing demographics. Most studies of supply and demand take into account a growing population, but not the growth of the aging population, which generally requires more eyecare services. From 1990 to 2010, according to the Bureau of Labor Statistics (BLS), the newly emerging presbyopic population (those 45 to 54 years old) will grow from 25 million to 44 million. That equates to a 76% increase in the growth of presbyopes.

Also, the number of older Americans ages 65 and older will increase from 31 million to almost 40 million, which constitutes a 28% increase in the cataract population.

The BLS job outlook for optometrists is positive, stating "Employment of optometrists is expected to grow about as fast as the average for all occupations through 2010 . . . As baby boomers age, they will be more likely to visit optometrists and ophthalmologists because of the onset of vision problems in middle age, including those resulting from the extensive use of computers."

The BLS summary continues: "The demand for optometric services also will increase because of growth in the oldest age group, with their increased likelihood of cataracts, glaucoma, diabetes, and hypertension. Employment of optometrists also will grow due to greater recognition of the importance of vision care, rising personal incomes, and growth in employee vision care plans."

This was further supported by the National Eye Institute's recent study, "The Vision Problems in the U.S." Released in partnership with Prevent Blindness America, the report finds that the number of blind and visually impaired Americans, aged 40 and over, is expected to double over the next 30 years as the Baby Boomer generation ages.

The employment of optometrists would grow even more rapidly "were it not for anticipated productivity gains that will allow each optometrist to see more patients," says the BLS. "These gains stem from greater use of optometric assistants and other support personnel, who will reduce the amount of time optometrists need with each patient."

Laser surgery can correct some vision problems, but it remains expensive, says the BLS. "Optometrists will still be needed to perform pre-operative and postoperative care for laser surgery; however, patients who successfully undergo this surgery may not require optometrists to prescribe glasses or contacts for several years."

Plunkett Research's healthcare industry statistics also support the need for more optometrists, forecasting 2,000 annual job openings from 1996 through 2006.

GDP and increased demand

Project HOPE, which examines healthcare policy and research, says that economic development, as measured by the GDP, is the major trend affecting the demand for all healthcare services.

Project HOPE developed a model for workforce planning using a number of macro-economic trends, including economic expansion, population growth, physicians' work effort and the provision of services by non-physician clinicians. Though directed at physicians, I am confident that these trends affect all healthcare providers, including O.D.s. The organization projects a shortage because of:

• aging physicians, who work fewer hours as they near retirement
• female physicians, who work an average of 20% fewer hours
• employed, salaried physicians
• younger docs who demand more personal time
• physicians who retire earlier
• residents who are permitted to work fewer hours.

Other statistics point to increased patient care. For example, the ophthalmic market has grown steadily, from $14.5 billion in 1989 to $23.4 billion in 2000. As GDP continues to increase, it is likely that the market will continue to grow.

It is no surprise then that Project HOPE concludes: "If the pace of medical education remains unchanged, then the shortage will become more severe."

Healthcare and CPI

Most forecasts do not factor in the economic attractiveness of optometric services. Yet from 1986 through 2000, both the CPI and the Eye Care Index (ECI), defined as eye exams, and eyeglasses and contact lenses, increased by 51%, while the price of all medical care -- including physician, hospital, eye care and dental care -- has increased by 115%.

In this regard, optometric care is a bargain. One could argue that the ECI remaining relatively constant with the CPI further supports the oversupply theory (and I believe it does on the macro level); it also represent an income anomaly.

Income levels

With such an apparent oversupply of O.D.s, we could logically assume that income levels have dropped over the past decade, but AOA statistics do not support this assumption. From 1988 to 2000, the individual net median income for O.D.s has grown from $60,000 to $118,000. In 2000, the median income for employed optometrists was $92,000 and the mean income was $113,000.

Self-employed mean net income grew from $112,000 in 1998 to $132,000 in 2000. In the same year, the mean net income of O.D.s in a private practice was $143,000; the median was $120,000. For those in a corporate practice, the mean was $111,000 and the median was $98,000.

To add perspective, we can adjust income to inflation levels. By adjusting the mean total individual net income to the 1998 CPI level, we can see that income grew from $66,000 in 1998 to $96,000 in 2000.

One could argue that this anomaly reflects AOA income levels and not levels for all optometrists. Then we run into a chicken vs. egg argument in attempting to explain AOA member income levels: Do optometrists with higher income levels join the AOA, or does membership in the AOA facilitate higher income levels?

Opportunity knocks

We can look at other healthcare trends to identify opportunities for our own practices. For example, growth of HMO enrollment remained flat in 2000 and 2001, while enrollment growth in PPO plans, which frees enrollees to choose their own healthcare providers (within a panel) and allows docs to more frequently charge their usual and customary fees, has increased. A larger number of PPO patients translates into greater revenue opportunities. Patients are demanding greater freedom of choice in their health care options.

In addition, the number of Medicare+Choice HMO plans has been steadily declining since 1998. With fewer Medicare patients covered by HMOs, more Medicare patients are free to choose their providers in a more open market environment.

We should market our services to attract these two populations of private-pay patients. When marketing, be aware that some of these patients may not necessarily be new to your practice. They could very well be patients whose managed-care coverage has changed.

Optometrists should also note that certain revenue opportunities already exist in their scope of practice that are among the most attractive in the eyecare industry.

For example, fitting a presbyope with a pair of glasses can produce significant revenue. How attractive is this patient service? In the chart above I show revenues for cataract surgery, laser-assisted in situ keratomileusis (LASIK) surgery and a baby boomer prescription for eyeglasses, including high index, anti-reflective coated lenses with a premium frame.

After subtracting costs for resources, including pre-op, surgery and post-op care, exams and direct costs, I calculated net revenues for each. When I divided these revenues by the time required by each ECP (ophthalmologist for the surgical component of cataract and LASIK surgery and either optometrist or ophthalmologist for the exam with glasses), I arrived at revenue per minute numbers. At $30.66, the eyeglass prescription earns the highest revenue per minute of doc time. Again, these are examples -- feel free to use your figures and apply your own reality.

High earnings profile

Using AOA research, we can identify the characteristics of the optometrists who have the greatest earnings potential, which can demonstrate further opportunities. These characteristics are:

• 15 to 25 years in practice
• a private-practice setting
• partnership in a group practice of optometrists
• self-employment.

Oversupply is not the issue

Studies that compare the supply of optometrists with the demand for their services can prove useful in revealing opportunities. I would suggest, however, that there is a danger in using such data to develop public policy.

When we tell the public that there are too many optometrists, we might discourage the best and brightest young people from considering what will be a fruitful career in optometry. That may lower the quality of care over time. And we leave out the most important message of all: In optometry, financial opportunities are excellent and the growth potential is outstanding. From my perspective, oversupply is an irrelevant concept.

Dr. Richard C. Edlow chairs the American Optometric Association (AOA) Information & Data Committee. He is an optometrist and chief operating officer with the Katzen Eye Group in Towson, Md. He is a frequent lecturer on eyecare workforce issues and optometric practice strategy. The views expressed are those of the author and do not necessarily reflect the views of the AOA.