The following content highlight from The State of the Optometric Profession analyzes the demand for eyecare across varied segments of American society—and provides strategies for growing an optometric practice.
Optometry’s Largest Opportunity Is To Increase Eyecare Demand Among Existing Patients, Expanding Care To Elderly And Other Populations At Risk of Treatable Eye Diseases
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 U.S. 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 billion annually.
The broad penetration of vision correction devices in the US population makes the primary eyecare market large. But the growth rate of the market 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 annually. This reflects a slow rise in the 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.
New refractive surgery technologies have not revolutionized vision correction as some early pundits had predicted. Most of the vision correction population remains reluctant to undergo a refractive surgical procedure. Since 1996, it is estimated that 13 million Americans have had refractive surgery – 4 percent of the total population and 6 percent of the current vision correction population. Currently about 1 million people a year are undergoing initial refractive surgery.
For the first five years after having surgery, 60 percent of patients stop buying vision correction devices but continue to have eye exams with the same frequency as the general population. This means that about 582,000 people a year are dropping out of the vision correction population as a result of having surgery – a minor depressant on primary eyecare demand, with a modest long-term effect.
There is no basis to project a 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 5.0 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 and in household incomes and 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 independent 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 average months elapsed between patient eye exams for all eyecare professionals is 25 months, but some practices reduce this to 18 months.
Actionable Strategy Imperatives
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, particularly among ODs in independent practice who already offer services. To capture the potential, every office needs a process to identify candidates for diagnosis and treatment and to make these patients aware of the range of services available. Many OD offices are capable of more than doubling current medical eyecare revenue.
• Capture new demand from expanded population with eyecare benefits. Expansion in the number of patients enrolled in government and independent 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. ODs must also educate existing patients, who may not be aware of their eligibility for expanded benefits.