Finances

The State of the Optometric Profession: Increase Demand Among Existing Patients

By Thomas F. Steiner

Director of Market Research,
Review of Optometric Business
Sponsored By Essilor and VisionWeb

AOA Excel recently commissioned Jobson Medical Information to assess the current status of the optometric profession and the future impact of major trends in the business, regulatory and technology environments. The AOA wanted an objective, third-party evaluation that weighed all available information on the eyecare industry from associations, publishers, manufacturers and government agencies.
>>The major findings of the report were presented at the AOA Optometry’s Meeting in June, 2013. The full report can be downloaded by clicking HERE<<
This article, the third of three, reports on optometry’s opportunity to increase demand among existing patients.

Primary eyecare is a huge market in which a majority of Americans participate. Currently it is estimated that more than 200 million Americans wear some type of vision correction device–nearly 65 percent of the total US population. This vast audience drives demand for primary eyecare services, which includes refractive eye exams and device sales, but excludes refractive surgery and medical eyecare. In 2012 the primary eyecare market was estimated to total $31.4 billion. This represented per capita spending of $100 for primary eyecare. By comparison, per capita spending for dental care is estimated by be $269 annually.

The primary eyecare market is large, but the market’s growth rate is not robust. Over the past decade, as the US population expanded 0.9 percent annually, the vision correction population grew at the same rate. Most people who could benefit from vision correction devices currently wear them. Over the past decade, primary eyecare spending per capita increased 0.7 percent percent annually. This reflects a slow rise average eyecare spending among consumers. But the growth rate in eyecare spending was much lower than total consumer expenditures for health care, which grew 4.4 percent annually over the same time period. The combination of slow population growth and relatively stable per capita spending caused the primary eyecare market to advance just 1.6 percent annually since 2001.

There is no basis to project stronger growth in primary eyecare demand over the next decade than has occurred in the recent past. The vision correction population is projected to grow 0.9 percent annually as will the number of refractive eye exams. Through 2020 it is projected that sales of vision correction devices will increase 1.6 percent annually, including 0.7 percent annual growth in eyewear sales and 5 percent growth in contact lens sales.

Although demand for corrective devices is likely to be sluggish over the next decade, demand for therapeutic eyecare services will increase more rapidly as the large Baby Boom generation ages. The Census Bureau projects that the population over 55 years of age will increase by 28 percent between 2010 and 2020, as the total population grows by 10 percent. This generational bulge in the older population will result in two percent annual increases in the number of patients with diabetes, cataracts, glaucoma, macular degeneration and other age-related ocular conditions.

The size of the eyecare market is ultimately rooted in the incidence of ocular conditions among different age groups, in household income levels and in consumer spending priorities. From one perspective, eyecare providers compete with every other product and service category for a share of consumer spending. In the affluent American society, most households have discretionary income and are free to decide how to allocate available funds among spending priorities. As consumers make spending decisions, they make personal judgments about the relative value of different options. Through education, eyecare professionals can influence patients’ value perceptions of eyecare goods and services and can expand demand for primary eyecare among patients at a much faster rate than the overall market has grown in the recent past.

Optometric practices which are effective educators are able to realize significantly higher revenue per patient visit. For example, data collected by the Management & Business Academy show that the median private OD practice collects $306 for each comprehensive eye exam performed, including both professional fees and product sales. Among the 20 percent of practices achieving the highest revenue per exam, the average is greater than $400. The median OD practice receives an average of $227 per eyewear sale. The average eyewear sale among the top performing 20 percent of practices is over $300.

The Affordable Care Act of 2010, which will begin to be implemented in 2014, will increase demand for vision care services by increasing the number of people with medical insurance coverage, which may include vision benefits. By 2020, the number of Medicare beneficiaries will increase by 10 million. Over the next few years, the number of people eligible for Medicaid benefits will increase by 17 million people, including nearly four million youth whose primary vision care will be covered.

This overview of demand for eyecare identifies several priorities for ODs to increase patient demand for vision care products and services:

• Improve patient education to increase consumption of eyecare goods and services. Demographic and consumer spending trends will produce only modest growth in primary eyecare demand in the years ahead. Apart from expanding medical eyecare services, the greatest growth potential for ODs is to educate patients about the benefits of regular eye exams and of new eyewear and contact lens technologies.
• Market medical eyecare services. Medical eyecare is the largest undeveloped revenue opportunity in many OD practices. Many OD offices are capable of doubling current medical eyecare revenue.
• Capture new demand from the expanded population with eyecare benefits. Expansion in the number of patients enrolled in government and private health insurance programs will not automatically translate to growth of an OD’s patient base or in increased patient visits. ODs must become accredited to gain access to newly covered patients, and must adopt technology to comply with insurer reporting requirements.

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