MANAGED VISION CARE & YOUR PRACTICE

MANAGE MANAGED VISION CARE PLANS

ACHIEVE PROFITABILITY BY ASSESSING THE VITALITY OF A PLAN AND SUCCESSFULLY UTILIZING IT

Jay Binkowitz, president of GPN, Farmingdale, N.Y.

IN TODAY’S world, the question of whether vision care plans are accepted is no longer a question. For the majority of us, not accepting them would be detrimental to our businesses. The argument for a concierge-style business is very exciting but, realistically, it’s not going to be a mainstream business model. So the real world question is how can you manage managed care plans in order to be profitable? Another question: What is wrong with cash? (But that is another conversation.)

For those of you who think you can’t be profitable, think again. In my practice, we accept VSP and have Premier status. This has been a very successful relationship for us and many of my clients through GPN. We also accept Eyemed, and this, too, has been a very successful relationship. I know our emotions take over when discussions take place relative to managed care plans, but, quite frankly, both of these plans have contributed to the success of my business.

Here, I discuss the two ways you can effectively manage managed care plans to achieve profitability.

1 ASSESS THE VITALITY OF HAVING A PLAN

First, track what percentage of your current patient base has each plan. Next, calculate the total value of the interaction you have with those patients. This is done by tracking all the products and services you deliver:

• Net revenue generated from eyewear and contact lenses

• Revenue generated from professional fees, which includes additional testing

• Revenue, billed to third party, for medical treatments and follow-up appointments during the year

• Any additional products and services

You cannot equate the true value of the plan patient to merely the reimbursement of a comprehensive exam. You must weigh all that you do with and for the patient. For example:

• Patients for the year = 600

• Total revenue from frames and lenses = $140,000

• Revenue from additional patient-paid testing = $15,000

• Revenue from third party medical billing = $75,000

• Revenue from contact lenses = $40,000

• Total revenue = $270,000/600 = $450 average revenue per patient.

Not a bad thing!

2 SUCCESSFULLY UTILIZE A PLAN

To accomplish this, you may need to adjust the following:

A. Product mix. Adjust your inventory mix of frames, so you do not carry any frames with less than a $50 listed original wholesale cost.

B. Pricing strategies. MSRP is dead. You need to assess fair market value, and stop undercharging. Folks charge less because they are scared to ask for more. Think about how you are presenting your value proposition to the patient vs. just the products. Do you sell 30 frames per week? If you keep 80% of the overage on your frames from a plan, then a $20 increase in the list price will net the following: 30 x $20 = $600 x 80% = $480 x 52 = $24,960.

You are already being told your prices are too high. That is not going to go away. We all experience patient pushback. So, you might as well make more money too!

C. Price adjustments. Do you offer a few lines of frames that do really well? Raise the price $10 or even $20. You must keep testing fair market value. I did this with many of our clients. Trust me, the patient is not going to come back a year or two later and tell you he or she knows you raised the price of the frame line $10. A great example of this is when one of my clients was selling 25 units of one frame a month. The profit and the turnover rate were very good. We raised the price $20. Do you know what happened? They still sold 25 units the next month but added $500 more to the bottom line. At the end of the year that is $6,000. Not so bad, right? Never use a set system for mark up. You must keep testing and refining like any other business.

D. Take advantage of in-office lens finishing programs offered by managed care. Make sure you and your team understand how to process the work and the billing. Too many clients hurt themselves in this area. Don’t miss the co-pays and deductibles. This can be an automatic 20% loss in revenue. Isn’t it worth spending an hour a week from an administrative standpoint to make thousands of dollars more? Unfortunately, many practice owners and administrators would rather spend that hour complaining or being frustrated, instead of developing a strong plan of how to best utilize managed vision care plans.

There is no law that says people could or should have only what their plan covers. It is a matter of developing the right process and scripts to educate, promote and sell the products and services that your patients actually need and desire — not what their plans tell you they are eligible for. They are eligible for anything they want!

MY MATH

Here is something to think about. Many years ago, we accepted a plan that paid us barely enough to take care of lunch. It was embarrassing, and we were going to drop it. But when I did the math, I found out something about the patients who had that plan. I tracked the total number of patients we saw for the year. Then we added all the reimbursements along with all the patient out-of-pocket payments made. In the end, we realized a net average result of $300 per patient. Is that bad? The plan paid us almost nothing, but the patients who had that plan liked to wear nice eyewear and enjoyed the quality of the lenses we offered and continue to offer.

THE BOTTOM LINE

It is not the responsibility of the vision care plans to run our businesses or teach us how to be profitable. I know emotions run high, as we feel like we are being controlled and or dictated to. Ultimately, you need to be a fan of yourself and not let your emotions rule your decisions. Leveraging strong relationships with industry, and taking advantage of their resources and loyalty programs will support your goal of growing a healthy practice for yourself and your team. Adopting foundational business strategies will bring you the financial success you and your team deserve. OM

MR. BINKOWITZ is president of GPN, a leading businesss management company based in Farmingdale, N.Y. He has had extensive experience in retail operations, merchandising and marketing. Email him at jay@GatewayPN.com, or to comment on this article, visit tinyurl.com/OMcomment.