Finances

3 Steps to Choosing the Right OD Network

By Rod Snow, OD

July 6, 2016

SYNOPSIS

There are many threats to independent optometry. Optometric networks, or alliances, can help. Here are three key steps to ensure you choose the right one.

ACTION POINTS

EVALUATE COMPONENTS OF A NETWORK. Determine who the owner of the network, or alliance, is. Make sure it’s not a private equity firm for which you’re not a priority.

ASK: WHAT SERVICES DO THEY OFFER? Find out the rebates, or discounts, offered to members, or what kind of continuing education is offered.

DETERMINE COST. A key consideration is the cost to join and maintain your membership. Is your fee based on a percentage of your income? Are there dues?

Independent optometry is getting more challenging with the growth of corporate chains, online eyewear retailers and telemedicine, which promises refraction and eyewear fitting, and sometimes even medical advice, from a patient’s computer or device. Add in the changes brought by health care reform, and an independent OD needs a wealth of resources to maintain profitability. My two-OD practice’s participation in an OD network, or alliance, has helped us remain valuable to our patients while sustaining our business.

Drs. Snow & Durkin, Inc.

History of practice: Dr. Snow originally entered into a solo practice in 1980 that was owned by Dr. Jack Keith. In 1983, he purchased the practice from Dr. Keith, and his partner, Dr. Durkin, entered as an employee in 1988. Dr. Durkin and Dr. Snnow formed a corporation in 1992.

Number of doctors: 2

Number of locations: 1

Number of support staff: 9 full-time employees

Comprehensive Exams: 4,100 annually

Annual Revenues: $1,250,000

More Employed ODs

Primary care physicians have been transitioning from independent practice to employed practice for several years. In a July 29, 2015, press release, the company Accenture (a global management and consulting firm) predicted that only one out of every three physicians will be independent by the end of 2016.

Similarly, The Physicians Foundation (a non profit 501(c)(3) organization that “seeks to empower physicians to lead in the delivery of high quality, cost effective healthcare”) surveyed 20,000 physicians. In its white paper, “2014 Survey of America’s Physicians: Practice Patterns and Perspective,” it is reported that 35 percent of physicians describe themselves as “independent.” This is down from 62 percent in 2008.

There are many reasons for this transformation including increased overhead expense, lower reimbursements and increased complexity of business (electronic medical records, accountable care organizations and patient-centered medical homes, among other challenges). In short, running a medical practice is expensive, time-consuming and frustrating! Therefore, these physicians sell their practices to hospitals or other conglomerates.

How does optometry fit into this new paradigm? We have the same increased overhead. We have the same lower reimbursements. We have the same complexity. Furthermore, we have the additional stress of competing against retail optical chains with immense budgets. What most of us don’t have is a white knight (hospital) that wants to buy our practices for a fair price.

Does this mean we are doomed? No!

Gain Business Resources: Join an OD Network or Alliance

Optometrists need to become better business people and increase their organizational skills. It is virtually impossible for an independent optometrist to keep up with the changes in governmental regulations and health care reform without sacrificing either precious chair or family time. We all need to maximize our efficiency and spend as much time as possible doing what we do best – examining eyes and improving vision.

There are many resources available to help optometrists. Certainly our state and national optometric organizations can provide a wealth of information. But optometrists who wish to remain independent need additional assistance to control overhead and maintain market share. One way to do this is to align with a network focused on primary eyecare.

The development of networks has changed over the past two decades. There have been independent practitioner association (IPA) networks which were frequently created by entrepreneurial doctors. Many of these networks served their doctors well in the 1990s and early 2000s. However, very few of them remain today. The most common reasons these networks fail are time, money and member complacency. The original doctors either lose interest or move on to other things, such as retirement. Furthermore, the constant need for money to operate forces these networks to “beg” for money from vendors and doctors. And, most importantly, many doctors are so complacent that they don’t worry about the network until some other force (low reimbursement insurer) invades their hometown and erodes their patient base.

Another form of network developed from buying groups. These groups offered enhanced discounts and rebates for the doctors. While these groups have helped maintain the practice profitability, are they the best vehicle to promote optometry with health care reform? If not, how does a doctor select a network?

Action Plan: Join an OD Network or Alliance

EVALUATE COMPONENTS OF A NETWORK. Factors that differentiate these various networks can be critical. One of the most important is the owner of the network. Recently, some networks have been purchased by private equity firms, also known as venture capitalists, or large optical companies. In these cases, are you their primary customer? What role does your practice play among their aims and goals? You may not be a private equity-owned network’s top propriety.

ASK: WHAT SERVICES DO THEY OFFER? Most networks advertise their discounts and rebates with other optical companies. Others offer free continuing education. A few offer value-added programs such as credit card discounts or basic legal advice. However, with the advent of The Affordable Care Act, perhaps the most important service a doctor’s alliance can provide is marketing the doctor to health care entities like Accountable Care Organizations and Patient Centered Medical Homes. Many networks claim to be marketing their doctors to different health care entities, but it is important to see the assets they have committed to the process. How much staff time and money is actually spent promoting and negotiating with ACOs and other health care entities?

DETERMINE COST. A key consideration is the cost to join and maintain your membership. Is your fee based on a percentage of your income? Are there dues? If there are dues, are there mechanisms to offset the dues by using preferred vendors? Do the discounts and rebates truly create positive cash flow? Are there any “value-added” benefits that truly help your bottom line?

Below is a grade card you can use to objectively evaluate the various networks. I have entered some values and percentages that reflect my opinions (but you can adjust these for your practice). Rank each category for each network being considered. The sum total for each network will give you an objective value for comparison.

Independent optometry has survived many challenges and changes in the past 50 years including DPA legislation, TPA legislation and retail conglomerates. Now we must accept the challenge of becoming an integral part of the health care system. This may be the largest challenge yet! But, you can survive and thrive if you partner with the right network!

Rod Snow, OD, is a partner with Drs. Snow & Durkin, Inc., in Akron, Ohio, and the medical director for ECP Network in Cincinnati, Ohio. To contact: rodsnowod@gmail.com

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