Finances

Three Kinds of Practices: Which is Yours & How Can You Prosper?

By Jerome Legerton, OD, MS, MBA, FAAO


August 5, 2015

I had the opportunity to work with an exceptional marketing professional, Shareef Mahdavi, when I consulted for VISX from 1995 through 2004. One of the things Shareef liked to talk about is the “experience economy,” in which consumers judge which businesses to continue using based on their customer, or, in the case of health care, patient experience.

You may find yourself in one of three kinds of practices:

• High-volume, low-cost, reimbursement sector

• Overlap of reimbursement medical benefit care and lifestyle sector health care

• Self-pay lifestyle sector health care.

Here is what I believe the “experience economy” means to these different kinds of practices, including what the ODs who own these practices need to guard against and optimize in order to flourish.

The Medical Benefits Reimbursement Practice

If you are clearly a medical benefits practice, or your trend line is pointing to a complete cost leadership practice, start making a list of the finite elements that make for a positive experience with the patients who seek your care. A positive experience may be the result of the following factors:
• Immediate access to examination including refraction
• Brief total time in office (or store)
• Minimum or no overages on eyewear
• Full contact lens inventory to assure same-day delivery
• Online ordering at price parity to major fulfillment businesses
• Fast lab services and willingness to mail eyewear to home or business
• Strong evidence documentation, Meaningful Use, EHR and billing functions
• Delegation to highly trained and efficient ancillary personnel
Since the reimbursement-medical-benefits consumer segment is comprised of humans, they still want to be touched, but not at a price. They still want you and your staff to be warm and friendly and to care about them as individuals. Success in this model is still based on positive attending skills, pricing that matches the segments expectations, and efficient service. The line of tension for high-volume care requires purchasing control and operational efficiency on one hand, while maintaining a strong human resource function on the other. Generally, more service is delegated and more touch is by ancillary personnel. Failure to recruit, hire, train and manage personnel is a formula for failure in the experience economy, even if the prescription and the price is right. Proven systems must be implemented and controlled.

The Lifestyle Benefit Practice

There are very few self-pay lifestyle benefit optometric practices today. I forecast that this will be a growing segment because the risk-to-reward equation will continually improve, as will the products and services that will not be reimbursable under the medical benefit segment. Already Corneal Refractive Therapy, refractive error regulation (myopia control), vision therapy, and if you are self-pay only; irregular cornea specialty contact lenses, comprehensive ocular surface disease and dry eye management, and low-vision care constitute product and service areas that could be practiced in a self-pay lifestyle benefit practice today. Given the great success of self-pay fashion and high-end eyewear stores, lifestyle eyewear falls in this category.
A positive experience in self-pay will be the result of these factors:
• Practitioner and staff perceived as warm and friendly
• Practitioner and staff perceived as having special knowledge and expertise
• Practice and environment are tasteful, warm and hygienic,
• Practice is technologically advanced
• Minimal waiting time for scheduled appointment
• Minimal waiting time in office
• Strong attending skills; active listening, unconditional positive regard, accurate empathy
• Full selection of products in the category
• Optimized delivery time for products
• Planned follow-up for satisfaction management of respective value proposition
The elephant in the room is the reality that you can’t practice lifestyle low-vision care, specialty contact lens care, refractive therapy, vision therapy, or comprehensive ocular surface disease and dry eye and be properly compensated today under the medical benefit model. The result is often a shift to compromised treatment plans and the respective loss of income.
The future holds additional opportunities for self-pay lifestyle benefit practices as consumer electronics meets ophthalmic health care. Wearable display technology will not be on the medical benefit road map for years to come, if ever. Significant investment is directed today to other products and services that target lifestyle benefits with no expectation that they will ever be reimbursed by the medical benefit segment.

The Overlap Practice

The most challenging is the third and most common practice model; the overlap of medical benefit reimbursement care and self-pay lifestyle benefit care. Most practices during my lifetime evolved from 100 percent self-pay to numbers like 60-70 percent reimbursement. They have been managing overlap for decades while experiencing an erosion of their self-pay segment. They generally decreased their time with each patient and provide the same level of care to medical benefit patients as they do lifestyle benefit self-pay patients. In fact, there may be incomplete identification of when a self-pay patient is actually a medical benefit patient without coverage or a lifestyle benefit patient.
An overlap also causes what I call the scheduling “conundrum.” The modern medical benefit patient wants faster everything and doesn’t expect high levels of touch. In fact, too much guidance in frame styling may leave them feeling that they want you to “get out of their face.” They lean more and more to self-service and their antenna are up for your attempts to “up-sell” them or load them with value-added enhancements that they enjoy, but don’t want to be made to pay.
Conversely, the lifestyle benefit patient appreciates a more thorough case history and consultation. You succeed when you accurately discover their wants and preferences. Your personal analog case history will discover the road to enhancing their lifestyle and quality of life while a delegated or digital case history may be doomed to failure. A thorough consultation and treatment plan presentation is a must for the lifestyle benefit self-pay patient. This paradigm is also called “transformational” service. You serve as doctor-teacher and enable their feelings as a unique individual, and you transform their life with benefits that they would have difficulty accessing any other way.
Can you really manage the overlap? Does your scheduling allow you to offer both care strategies? Further, if you have agreed to take reimbursement from a host of third parties, are you free to do anything but take the third-party payment for lifestyle benefit delivery? Most optometrists must continue to manage this dilemma the best they can. Even so, there is genius in identifying the lifestyle benefit patient and managing every aspect of your practice consistent with the economy of experience that will result in your time with them becoming positive dinner conversation.
One strategy is the control of scheduling where reimbursement patients are scheduled on specific days and lifestyle patients are scheduled on the remainder. This raises the question of the flexibility and role of ancillary personnel. Are the same personalities, skill sets and behaviors desirable for the two delivery models? My take with my psychologist/practice management hat on is NO. Even so, you must try, and a good start is to train staff to discern the patient segment type and alter attending skills accordingly. Scheduling separately can help.
Multiple doctor overlap practices have it much easier. They can internally refer to their “specialist” associates. This can result in higher levels of care for low vision, vision therapy, specialty contact lens and ocular surface disease management. It may not solve the imposed ceiling on reimbursement, which ultimately may compromise the reimbursement if not the experience and the transforming benefits.
Which of the three practice descriptions most accurately defines your practice? What are you doing to make your particular mode of practice as profitable as possible?

Jerome Legerton, OD, MS, MBA, FAAO, is an author, lecturer, inventor, consultant, strategic planner and futurist in the ophthalmic industry. To contact him: jlegerton@aol.com.

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