be familiar with the study that published in our March 2006 issue,
Which Patients Are More Profitable? by Mark Ritson, PhD, then of the
London Business School. This study determined that contact lens
patients are demonstrably more profitable than spectacle patients.
If you're saying, Not in my practice, then it may be time to
reassess your contact lens fees and how you present contact lenses
four practitioners who have successful contact lens businesses to
describe how they charge for contact lenses and how they manage
contact lens patients. While similarities exist among their methods,
it's important to recognize that there's no one formula for insuring
revenue with contact lenses.
Evolution of Fee Philosophy
disposable lenses arrived in the market, most practitioners charged
a global fee for contact lenses that combined the service and
material fees. At that time contact lenses were available only
through practitioners, and the lens materials themselves provided a
significant source of profit.
today's disposable lenses are readily available from numerous
alternate distribution channels, enticing many lens wearers to shop
these sources for the lowest price when purchasing their contact
lenses. This in turn has driven down the profit that practitioners
can make from selling contact lens materials. As a result, many
practitioners, including all four interviewed here, now present
their service and material fees separately. What's more, the
interviewed practitioners focus less on making profits from selling
contact lenses and more on emphasizing the value of the services
they provide to lens wearers.
Charging for Your
Services For reasons already mentioned, reassessing
your service fees might be the most important step you take in
achieving a profitable contact lens portion of your practice. But
where do you start? What should you place the most value on? The
time you spend with each patient? The type of lens? The uniqueness
of the service? You must carefully weigh these considerations in
determining what to charge for your services. In many ways they are
interrelated because the type of lens will impact the difficulty of
the fit and how much time you spend with a particular patient.
Giedd, OD, practices with three other optometrists in Winter Park,
Fla., an Orlando suburb with a population of approximately 2 million
in the surrounding area. About 60 percent of his practice is
dedicated to contact lenses. We base fees somewhat on the amount of
time we spend with patients, but the type of lens is probably the
most indicative for how we set our fees, Dr. Giedd says. We have a
fee schedule for GP lenses, toric soft lenses, soft multifocals, GP
multifocals, etc. Dr. Giedd also considers the uniqueness of the
service for specialty fits such as post-surgical cases, keratoconus
Sorrenson, OD, of northwest Austin, Texas (population of about
800,000, with 1.5 million in the surrounding area), shares many
aspects of Dr. Giedd's service fee philosophy. In her practice,
which she shares with two other practitioners, they base service
fees somewhat on time spent with patients and somewhat on lens type.
We of course charge more for toric lenses and for GP lenses, and we
charge a lot more for specialty lenses, she says. We also definitely
consider the uniqueness of the service when appropriate in
determining what to charge, she adds. About 55 percent of Dr.
Sorrenson's practice is dedicated to contact lenses.
Norman, FCLSA, takes a slightly different approach to determining
contact lens service fees. He practices with two ophthalmologists,
one optometrist and numerous technical support staff as part of a
large multidisciplinary medical clinic in South Bend, Ind., which
has a population of about 110,000 with a 275,000 draw area. All of
his practice is dedicated to contact lenses, which are fit primarily
by Kirstin Rhinehart, OD, and himself. We attempt to calculate the
fee based on the projected amount of time spent with each patient,
he says. However, this is also related to the lens type and the
difficulty of the fit. For instance, a spherical soft lens fit may
necessitate only two or three office visits. For a presbyopic,
keratoconic or corneal reshaping fit, we project that it would take
many more visits to complete the fitting process, he says.
practitioners, including Bobby Christensen, OD, of Midwest City,
Okla., try to equally weigh all three considerations of time, lens
type and uniqueness of service. His soft lens examination and
fitting/follow up fee schedule is broken down by lens category as
well as by whether the patient is a new fit or an established
contact lens patient/refit. Dr. Christensen practices in a
four-practitioner office that serves a community of about 70,000
people. Contact lenses represent about 25 percent of his practice.
Fees With so much emphasis for contact lens
profitability placed on service fees, how should you charge for the
materials themselves? Should you take into consideration what your
competitors advertise? Should you charge by lens modality or lens
brand? In talking with our four contact lens practitioners, I found
that although most of them are aware of what competitors charge for
contact lenses, they don't set their material fees based on the
contact lenses, we do consider what on-line sources charge and we
try to be competitive, but we don't necessarily try to match prices,
says Dr. Giedd. His practice sometimes considers what the local
competition advertises, but he says they probably pay more attention
to local pricing for spectacles.
Christensen also says that he sometimes considers what on-line
sources charge, but his practice doesn't match prices. He also
doesn't check local prices for contact lenses. His practice sets
material fees relative to the age of the technology and to the
replacement schedule. We charge more for monthly replacement lenses,
and newer technology lenses are more expensive to purchase compared
to older materials, he says.
Norman and Dr. Sorrenson both aim to make a certain amount of profit
from material fees, although they each have their own formula. We
generally base our material fees on a 60 percent to 80 percent
markup over acquisition costs, depending on the product category,
says Craig Norman. We're aware of alternative distribution channel
pricing along with the pricing of our local competitors, but we base
our fees on our material cost formula.
consider what our on-line and local competitors charge, says Dr.
Sorrenson. But we aim for a profit of $80 to $100 for a year's
supply when determining our material fees.
to our inquiry about whether to set material fees based on lens
modality or lens brand, our participants were evenly divided. Dr.
Sorrenson reported that they charge mostly the same price depending
on the lens type, with some exceptions.
concurs with this philosophy, saying, We tend to charge the same
material fees in categories where replacement patterns are similar,
assuming our cost is somewhat comparable among the products.
Norman's practice applies its markup formula to each lens brand to
set material fees. Similarly, Dr. Christensen says, We have
different fees for most lenses due to varying replacement schedules
Presenting Fees to Patients
determine both your lens service and material fees, you need a clear
and concise way to communicate them to patients and you need to
decide whether to delegate fee presentation to your staff.
Norman's practice, the decision regarding who will present fees to
patients depends on each patient's situation. A patient who is new
to contact lenses usually is inquisitive about potential costs. In
these situations I address fees in the exam room, he says. Staff
members usually handle the fee presentation for previous wearers,
fitting updates and replacement lenses.
Norman doesn't usually present fees to patients in writing. We quote
the patient a fee, then provide them a final bill that breaks down
the different costs, he says.
also doesn't usually present fees in writing. In his practice, the
doctors initiate the fee discussions and the staff follow up if
necessary. We don't often provide patients with a fee schedule in
writing for standard lenses, he says. But for specialty cases such
as orthokeratology, we use a general form with spaces to write
specific fee information for each patient.
Christensen and Dr. Sorrenson both delegate fee presentation to
their staff and use a written form to do so. Our contact lens
technician quotes fees to patients, says Dr. Christensen. We provide
patients with a preprinted form on which we write the exam cost,
fitting cost and contact lens cost, as well as any necessary
follow-up costs. We price each fitting based on whether a patient is
a new or current contact lens wearer, and we price each lens based
on either a six-month or one-year supply (if disposable). A sample
of Dr. Christensen's soft lens fee schedule is available in the
on-line version of this article at
www.clspectrum.com . His practice has a separate form for
Sorrenson's office uses a similar preprinted form to present fees.
Our contact lens technicians use a checklist form in the dispensing
area to review the fees with patients and to show how much they can
save from ordering a year's supply of disposable lenses, she says.
Our technicians also review in writing what the patient's insurance
Charge for All of
Your Services All of the interviewed practitioners
agreed that when a lens patient also comes in for an annual exam,
you should charge both an annual exam fee and a contact lens exam
fee. Many practitioners feel that this is standard and they don't
even mention it to patients. Craig Norman explains that some
patients may complain, but over time they've become accustomed to
Christensen's practice prepares new contact lens patients for the
contact lens exam fee before they come in for their appointment. The
staff member who schedules the appointment will ask the patient if
he is new to contact lenses. If so, the staff member will give him
the cost of the annual exam and the starting cost for a contact lens
exam and fitting, as well as an estimated cost on lenses, he says.
We also explain to the patient that the cost of the lenses and
fitting may increase depending on the his prescription once we
perform the exam.
tells his returning contact lens patients that he must perform a
contact lens update along with the annual exam. We educate patients
that no matter where they go, contact lens annual examinations will
cost more because practitioners need to perform more tests than for
an annual exam of a spectacle wearer. We simply break it down for
them, mostly because we have so many third party plans that require
us to do so, he says.
practitioners also unanimously agreed that, at least for most cases,
you should bill using a 99XXX code if a patient arrives to a
pre-paid follow-up visit with conjunctivitis, giant papillary
conjunctivitis, red eye or some other medical condition.
consider each case, but typically if reasons are appropriate we
would bill insurance, says Dr. Giedd. Within the first few weeks
(trial period), if a new patient experiences a red eye I tend to see
them through without adding additional charges.
Christensen agrees with this thinking, stating, We most often charge
a medical office visit, but it really depends on the timing and
circumstances. You have to be flexible on this.
Norman and Dr. Sorrenson both agreed that you should definitely
charge for such visits. Our contact lens fees are separated between
fitting fees and material costs, says Craig Norman. They don't cover
medically necessary visits, which we would charge as any other
medically related events.
Become More Proactive
generate much of your own success with contact lenses by simply
discussing them with potential candidates or by discussing new
lenses available with current wearers. Current wearers may not know
that there are newer lenses available that may make lens wear more
comfortable for them, and keeping patients comfortable during lens
wear is a great way to prevent future dropout. All of our
practitioners proactively recommend contact lens upgrades to
the annual visits we describe to patients what new lenses and lens
care systems are available since their last visit, says Craig
Norman. We mention how trying a new product might benefit them and
we often provide sample lenses for trial or a new lens care kit. He
does note that if there are no indications that the new technology
will provide definite improvement to a patient's lens wear, they
don't automatic upgrade the patient.
should you charge for a refit of this type? If it's one of our
established patients, we may simply charge them the contact lens
office visit fees as they return for follow up with a new lens
material/design, says Craig Norman. If the patient is new to the
practice, we generally charge a refitting fee.
Christensen also generally charges a refitting fee when upgrading
patients into a newer material. Practitioners in his office actively
inform patients that there are newer lenses available that allow
more oxygen to reach the cornea.
Sorrenson also allows patients to try newer lenses to see if they
have beneficial effects. We offer a free trial lens to see if the
patient experiences less redness or less fatigue at the end of the
day, she says. Her practice charges a service fee for some, but not
all refits of this nature.
has found that most patients appreciate it when you point out to
them that better lenses may be available. Most patients seem
interested in knowing what's new and/or better, and few complain
about the slightly higher fees for these products if they perceive a
quality difference, he says. He also charges a minimal service fee
for such refits, but he says, Patients rarely even notice it.
Keeping Lens Sales in the Office
the practitioners interviewed here have structured their fees so
that they make their most profit through their services, it
obviously still adds to the bottom line to sell as many boxes of
disposable lenses as possible. How do our practitioners encourage
patients to purchase lenses through them?
rebates, rebates, says Dr. Giedd. Year's supplies are key to
reducing patient visits and wasted staff time. They also encourage
patient compliance and reduce their need to shop around.
also educates patients that his office can't help patients with
emergency lens replacements or with returns if they don't purchase
the lenses from the practice. Educating patients that the diagnostic
lenses we receive are based on our sales is truthful and effective,
Sorrenson and Dr. Christensen both offer patients discounts on a
one-year supply. Our contact lens staff presents the savings on
purchasing a year's supply to patients in writing, says Dr.
Sorrenson. Dr. Christensen's practice offers a $16 instant savings
for patient who purchase a one-year supply and also uses
manufacturer rebates as incentive.
Norman emphasizes the overall value of purchasing disposable lenses
directly through the practice. We mention the convenience,
competitive pricing and the ability to make exchanges if necessary,
he says. We also whenever possible suggest annual supplies and the
use of rebates to offset patient costs.
conclusion, we asked our participating practitioners about any other
tips they may have on establishing or implementing contact lens
fees. Following are their thoughts.
periodic review of your fee structure is important, even if the
result is no change in the fee structure, says Craig Norman.
Material costs should be fair, but surely don't need to be extremely
low to remain competitive. Because professional fees are split for
the material costs, make sure patients receive 'fair value' for the
fees you charge. We also let patients know that if they desire to
purchase their lenses elsewhere, it's not a problem - we simply want
to take care of their lens fit and their eyes regardless of where
they purchase their lenses.
Sorrenson advises, Don't mandate follow ups that aren't necessary.
Don't be afraid to charge higher fees for specialty fits. For
instance, $1,000 for a keratoconus fit and materials can be
reasonable if you specialize in this area.
today's competitive market and minimal profitability for soft
contact lenses in particular, I frequently shop my professional fees
to make sure I'm not undercharging for my time, says Dr. Giedd.
Patients are more willing to pay more for service and expertise that
they feel is excellent compared to what they might receive