Al Cleinman's Blog

Advancing Opticianry as a Strategic Competetive Action

It’s clear that advancing the medical model has been critical to the success of private practice optometry over the past decade. Yet this is not the only opportunity before the profession.  There’s another trend, which, in my opinion, is of equal importance and presents equal opportunity.  That trend might best be described as “The Commoditization of Eyewear”  

 

Eyewear is commoditized when the focus is on price vs. features and benefits combined with the overall optical “experience.”   The fact that every patient is exposed to deep discounting in the form of second-pair discounting, BOGO, etc. only exacerbates the problem.  Consumers simply aren’t valuing eyewear as they rightfully should, given the wonderful technologies that exist to enhance our life experience.  That's largely because our industry has failed to effectively communicate all of the wonderful technologies available to patients.  In the absence of anything else, price prevails. 

 

So what's the solution?

 

Over the past twenty years, I have witnessed a dramatic decline in optometry’s employment and development of skilled opticians.  Perhaps this has been caused by a move to fashion.  Perhaps this has been caused by a desire to reduce costs.  Whatever the reason, organizations like Wal-Mart and Costco are gaining an upper hand in the fight for the eyewear market.   The mass merchant’s market share continues to grow at the expense of the independent professional in spite of all the wonderful technologies promulgated through the private practice channel.

 

Why is this market share eroding?  Perhaps it’s because we’ve allowed the art and science of opticianry to give way to a focus on eyewear as a commodity.   For many private practice optometrists:

 

Ø  Whether an optician is licensed and ABO certified is of little importance.

Ø  Whether your optician really knows how to properly fit an advanced design progressive lens; or communicate the importance of an occupational lens; has been left largely to chance.

Ø  The focus has been on what takes place in your exam room and not on the total patient experience.

 

Now, don’t get me wrong, there are many, many highly skilled and career-minded opticians.  But it is my belief that, just as optometry is winning the battle with consumers for eyecare by increasing the scope of practice, so too can private practice optometry retain and recapture the eyewear market by investing in the skills and professionalism of the opticians who call optometry their home.  And with 45% of revenue currently coming from eyewear (down from 52% in 2000); with lens capture rates declining in the current economy; with retail chains moving into the medical model; that’s turf that private practice optometry shouldn’t simply surrender.  

 

We know from experience that increasing the skills of opticians and positioning them as professionals in their own right will help to communicate increased value to your patients.  It’s my opinion that if we help to bring professionalism to a new level for opticians, under optometry’s umbrella, we will help to ensure that the patient experience is far superior to that delivered by the mass merchants.  And it is only through this value differentiation; the result of advanced technical skills; superior communications and education; improved merchandising; increased time invested with patients; and better facilities; that we can ensure that our patients understand the importance of properly selected and appropriately fitlenses…combined with the very best in eyewear fashion.  If not already done, you and your opticians have to do for the optical experience what you’ve done so very well for the medical experience. 

 

In a nutshell…it’s your people that make the difference.  And it’s up to you, as the practice leader, to raise the bar and keep it high.  To do otherwise is to simply give up…and there’s lots of proof that to do so isn’t necessary or appropriate.

 

So, invest in your opticians.  Look at your optical experience with a critical eye.  If not already done, bring the art and science of opticianry to the same levels as that of your optometry services.  The result will be a patient experience that clearly demonstrates the difference between eyewear as a commodity and eyewear as a technology. 

 

The market opportunity is yours…. for the action.

 

Thanks for Believing in Me!

I remember it like it was yesterday.  I can see it in my mind’s eye.  I replay the event periodically; the memory always brings with it the warmest of feelings.  For most of you, your similar experience is likely lost in the fog of time.  But for this author, that single action which occurred over 40 years ago, dramatically impacted my entire life. 

 

Today I made a pilgrimage to pay my respects to the gentleman responsible.   I was so pleased to see him, a spry 92 years young, looking almost exactly as he did the last time I laid eyes on him some 25 years ago.   My visit to his home in North Carolina was something that I’d contemplated for some time and had attempted on a prior occasion without success.  But the stars finally aligned during my “walk-about” from Dallas to my home in upstate NY. 

 

By now, you’re probably wondering of what I’m referring.  What act could have been so special?  But before I share the rest of the story, I’m going to ask you to think about the crossroads that you’ve had in your life and the people who have profoundly impacted you.  If you’re like me, there are many.   John Donne, the Renaissance era poet, said it best with “no man is an island, entire of himself.”  We all have people for whom we owe a debt of gratitude; for whom we owe a special “thanks.”  Perhaps it’s time?  Today, it was for me.

 

Jack holds a special place in my heart.  His action changed my life forever.  You see, Jack gave me my very first paycheck.  Now, being the hustling kid that I was, I’d certainly earned money before.  But his payment was a check!  I can still see it today.  It was for $8.00; a veritable fortune to an eleven year old in 1967!  I can see the grey color of the paper.  I can see his very distinctive signature.  I can see the ink from the fountain pen that he always used.  I remember the circumstances under which I was hired to assist Jack’s regular “lawn boy” in the monumental task of raking leaves that fall.  I remember how important I felt when I cashed that paper in for greenbacks at my parent’s grocery store (which acted as the local “bank” in the tiny village in which I grew up). 

 

I subsequently secured the coveted job of "yard boy" and worked for this wonderful man and his lovely wife for four years, until his neighbor (an optometrists) lured me away for my first "professional" job at the ripe age of sixteen.  While the stories are many, what is most important to understand is that I long ago recognized that Jack believed in me.  And it was through his unique support that I learned that I could tackle most anything; that problems are only opportunities in disguise.

 

So, thank you Jack!  Thank you for your guidance; your patience; your friendship. Thank you for the opportunities that you bestowed on a very young, precocious kid.  Thank you for believing in me.  Thank you for opening my eyes to what it means to be benevolent.  Thank you for showing me the door to my future. For that, I am profoundly grateful. 

The Road Less Traveled

Greetings from New Orleans, where I just finished the first leg of a +/-2000 mile "walk-about" from Dallas to New York.  Several times a year, I make it a point to get out of the airplane and take a closer look at the world in which I live.  In this case, together with my 26 year young daughter, Ashley, I'm transportingg a car that I bought in Dallas back to my New York home. 

For those of us directionally challenged, GPS is a marvelous invention.  I bought my first GPS unit a few years back.  We named her Alice, since it was clear from the get-go that I was bound to be talking to it from time to time ("Alice, you ignorant fool").  I'm sure this is what everyone does.  My GPS is named "Alice," as in "go ask Alice, when she's ten feet tall," the lyric from Grace Slick/Jefferson Airplane's 1967 hit "White Rabbit."  Those of you old enough can likely hear the song in your mind right now.  Well, I don't know why this drug culture song hit me when I was coming up with a name.  After all, I was but 11 and about as non-druggie as one could be when it was on the charts.  But it struck me as appropriatete for a guy who's always seeking "the way" and who uses a giraffe for his logo.  So, Alice it is.

Now Alice has her idiosynchrocies.  Last evening, about 7pm, Ashley and I are cruising down U.S. 49 in Louisianna when we decide that we're in need of some BBQ.  So what do we do?  We "go ask Alice," of course.  Low and behold, Alice comes up with Papa's BBQ just 8 miles away.  Now, one thing you learn when you ask Alice about a particular destination such as a specific restaurant (as opposed to an address) on her list is that she measures distance "as the crow flies."  So, twenty miles and thirty minutes later, we pull up on Papa's BBQ, a rramshackle hut in the middle of nowhere which hasn't seen brisket in 10 years.  Oh well!  We did have a pleasant ride through Louisiana back-country, though. 

So we turn the car around (I'm working on a name for this vehicle) and head back towards the interstate.  Just as we cross over the point at which we started, we stumble across the small town of Natchidoches, Louisianna (nack-ah-tush).  WOW!

Natchitoches is Louisiana's oldest town, established in 1714.

This quaint and perky community is where they filmed the movie Steel Magnolias.  Nestled on a beautiful river, the Landmark Historic District is jam-packed with shopping, dining, and attractions plus historic fort sites, museums, and year around cultural events and festivals.

Famous for their special meat pies, Natchitoches is also recognized as the Bed & Breakfast Capital of Louisiana and home to the Cane River Creole National Historical Park at Oakland & Magnolia Plantations. The National Trust named Natchitoches one of the 2005 "Dozen Distinctive Destinations" for Historic Preservation and it was recognized as one of the top 100 places to retire by Where to Retire magazine. 

What a beautiful community and one worth visiting!  But I'm not writing this as a public service announcement for the Natchitoches Chamber of Commerce. 

My message is simple.  We discovered this gem of a village because I wasn't afraid to get off the beaten path.  I knew that Alice would get me back to my desired destination sooner or later...and, so what if the diversion caused me to pull into New Orleans at midnight.  Pulling off the highway came with little risk.  But, as you can see, what great reward!

The next time you're focused on your destination, whether a physical locale or a goal, don't be afraid to "take the road less traveled."  Along the way, you just might discover something magical.  And likewise, the next time you have a task or project to assign, give it to someone who's not the obvious choice for the job.  They'll appreciate the opportunity and you might be pleasantly surprised where they take you.

Happy trails!

VSP Study Supports Significant Increase in Provider Reimbursements

In a recent press release, VSP announced the results of a study that indicates that annual eye exams save companies nearly $3 billion each year.  That's great and very logical.  And I trust that VSP will be making the study available to all it's Providers for use in their individual marketing efforts.

These results certainly appear to be very compelling and I applaud the study.  Great job VSP (I really mean it)!

Reading the Study from a different direction, the results are also reason why VSP should be able to convince employers to increase their investment in vision care for their employees and, as a result, bring Provider reimbursements to a realistic level. 

But one doesn't really have to look to VSP's customers (employers) for rationale for improvement in reimbursements.  While VSP's 2008 Audited Financials (reflecting the impact of the Marchon acquisition) don't yet appear to be available through my source, here's a copy of their 2007 Auditor's Report for your viewing pleasure (Download VSP 2007 Financials).  As this report shows, for 2006 and 2007,VSP had net income (after reserves for taxes) of over $100 million each year!  That's after paying  their employees what can only be viewed as ludicrous benefits and outlandish salaries. 

So let's assume for a moment that 50% of that income is reasonably available for distribution to the Providers whom VSP purportedly serves.  After all, reserving $50million in capital each year (VSP has a net worth in excess of $1billion and cash/securities as of 12/31/07 of almost $800 million) should be adequate to fund capital investments and their required statutory reserves of about $15million. 

The result would be a distribution of about $2,000 per Provider each year.  Not great, but it helps.

But now, since VSP has proven that employers save about $3billion a year through annual eye exams, it seems safe to say that employers would be thrilled to save, say, only $2.5 billion.  After all, that's a huge return on their premium investment and a compelling bottom line improvement.  That would give VSP the ability to improve reimbursements by, let's say, about $20,000 per Provider per year.  Now that's real money and would finally bring Provider reimbursements in line with increasing costs.

I know that VSP would say "that's ridiculous, it's a cold, cruel world out there and we have to compete."  That's logical, after all, VSP is the "high cost producer" in the "managed vision" world.  VSP premiums are higher than most other plans.  Unfortunately, what none of the plans seem to get is that Providers require margins to continue to invest in people, facilities and technology to deliver the very health benefits that the VSP Study proves are of such value.  And that, without quality Providers, all these managed care businesses are worthless..can't operate...nada...vaporized...or...as my grandfather would say..."kaput." 

Hmmm, I wonder when Providers will finally say "we're sick and tired of being treated like dog dirt and we're not going to take this anymore?"  What would the result be of a unilateral "strike" during which all optometrists simply refused to accept any vision care plans?  What would happen if optometrists simply told plan participants, "I'm sorry, Mrs. Jones, your insurance is not reimbursing us at a level at which we can continue to provide the quality care that you expect from us.  So, we've decided to participate in a national boycott for the next week to send a message to these plans and to your employer that we can't deliver what you expect us to deliver without adequate reimbursements.  I'm sure that you can understand this...our plight is the same as if your employer reduced your hourly wage by 50%."   

Perhaps, only then, will the likes of VSP, EyeMed, Spectera and Davis and the employer groups whom they represent (they sure as heck don't represent Providers) stand up and take notice? 

 

 

 

And You Think You've Got It Bad!

Just as VSP puts more of a squeeze on your margins, I receive this link from a client.  Kinda puts things into perspective.

http://www.maniacworld.com/are-you-going-to-finish-strong.html

Enjoy...and don't ever feel sorry for yourself.

VSP - The Rabbi and the Beggar

In a recent letter to VSP providers, VSP says:

a) It's a competitive market (duh!)

b) They've lost some business to "retail friendly plans" (read EyeMed)

c) To compete, they're dictating some changesin reimbursements (ie: you're going to suffer)

VSP's solution is to increase the discount on 2nd pair sales for eyewear purchases on the same day as an exam from 20% to 30%; Move more contacts to tiered pricing; and eliminate the $2 case fee and the patient supplied frame fee.

Oh...the good news is that they did promise to allow you to provide in-office finishing for select programs beginning in early 2010 (no details).  Perhaps VSP is reading my blog:)

What VSP is really saying here is that, because they want their premium income to rise and they're challenged to sell against a price competitor, Providers are, once again, going to take it in the shorts. 

What's interesting is that these changes appear to have little impact on VSP premium pricing.  They're modifications that will be perceived by employers and consumers as enhancements but which seemingly carry little cost toVSP...they come from the Provider. 

VSP, if you're really worried about competition, why not simply reduce your employer 401k contribution from an outrageous 15% of payroll to the more standard 3%.  Based on just that action, my simple math indicates that you could roll back premiums to employers by about 2%.  Then, add in the $75,000 company cars for management and all the other outrageous benefits that you give your employees and I'll bet you could roll back premiums by as much as 5% WITHOUT TAKING A DIME FROM YOUR UNDERPAID AND UNAPPRECIATED PROVIDERS. 

This reminds me of the scene from Fiddler on the Roof in which the beggar is shouting "alms for the poor" and the rabbi hands him one Kopeck.  The beggar says, in response, "but Rabbi, last week you gave me two Kopecks"  The rabbi retorts "I had a bad week"...to which the beggar responds, "so you had a bad week, why should I suffer!"

VSP, it's time for you to suffer along with your Providers.  Tighten your belt, just as you have continually forced belt-tightening on your Providers.  It's time to share in the pain instead of operating like Fat Cats and living off the largesse of your Providers.

Turn Off Your TV and Read a Good Book!

We are more and more becoming a society that blows in the wind of the media.  How sad.

While I certainly don't want to discount that sickness and death are a serious thing, this Swine Flu (oops...sorry Pork Institute...I mean H1N1 flu) mayhem appears to be a PR event underwritten by the folks who sell hand-sanitizer and face-masks (Johnson and Johnson).  2 people have died in the U.S. from this virus!  Frankly, and with all due respect for those affected, BIG DEAL!  Each flu season is unique, but it is estimated that, on average, approximately 5% to 20% of U.S. residents get the flu EVERY YEAR, and more than 200,000 people are hospitalized for flu-related complications each year. About 36,000 Americans die on average per year from the complications of flu.

I find it interesting that this Swine Flu thing started to hit the media in early March.  Coincidentally, J&J stock hit its low in early March.  Since then, those who own the stock have realized about a $10 a share increase.  While the stock isn't quite back to where it was last year...more of this Swine Flu mayhem will get it there. 

Think about it!  This crap is promoted to sell newspapers and fill air time.  This one was likely released by some PR firm hired by a firm who was hired by a firm who was hired by Johnson and Johnson.  The forth estate loves to whip society into a frenzy and with everyone so wired, it works.   

Let's stop worrying and get back to life.