TRENDS MANAGED VISION CARE AND INSIGHTS. Marge Axelrad

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1 MANAGED VISION CARE TRENDS AND INSIGHTS Marge Axelrad SVP and Editorial Director Vision Monday/Jobson Optical Group

2 MVC TRENDS AND INSIGHTS Outline A Quick Look Back Current Trends in Vision Correction Consumer Attitudes Showing MVC Value New Perspectives Employee Needs, ECP Solutions Enrollment/Utilization Demographics Product interest/needs/demand What You Had to Say

3 A QUICK LOOK BACK

4 HISTORICAL INSIGHTS: GROWTH IN $$ +4.6% 2007/2013 Total U.S. Vision Care Industry Sales in 2007: $34.3 billion Total U.S. Vision Care Industry Sales in 2013: $35.6 billion

5 HISTORICAL INSIGHTS: SPEND PER VISION CORRECTION USER FLAT-DOWN -2.6% 2007/2013 In 2007: $ In 2013: $195.99

6 HISTORICAL INSIGHTS: MVC HELPED DRIVE GROWTH The total number of eye exams trended upward through the recession +12.4% (8.0M) increase in number of exams at independents (2007 to 2013) +.9% (0.3M) increase in number of exams at chains (2007 to 2013) ~73% of exams have MVC coverage attached

7 CURRENT TRENDS IN VISION CORRECTION Past 12 Months The Vision Council s VisionWatch Survey

8 OPTICAL RETAIL SALES HAVE BEEN PRETTY GOOD VisionWatch September 2015 Total U.S. Optical Market in Dollars 2014/ % $32,060 $34,137 12ME Sept14 12ME Sept15 Dollar amounts In millions Represents total U.S. Optical Market Vision Care Products and Services

9 LENS $ SALES STRONG +9%, EXAMS UP, TOO VisionWatch September 2015 Dollars by Product and Service Type +5.9% +8.9% $12,510 $11,487 $9,032 $9, % 12ME Sept14 12ME Sept % $3,565 $3, % +0.5% $5,637 $5, % $1,880 $1,980 $375 $387 $83 $83 Frames Lenses Contact Lenses Sunglasses OTC Readers Exams Refractive Surgery Dollar amounts In millions Inflation not taken into consideration

10 INDEPENDENTS CONTINUE TO GROW IN SALES U.S. Independent Market in Dollars 2014/ % $16,459 $17,808 12ME Sept14 12ME Sept15 VisionWatch September 2015 Independent ECPs Perform 2/3 of the Eye Exams in the U.S. Dollar amounts In millions Inflation not taken into consideration

11 LENSES, CLs EVEN STRONGER AMONG INDEPENDENT ECPs THAN MARKET OVERALL VisionWatch September 2015 Dollars by Product and Service Type in Independent Market +11.4% +8.4% $5,029.3 $4,641.5 $5,994.9 $6, % +4.6% $3,909.6 $4,088.0 Gains also Seen in Exams $1,729.7 $1, % +5.3% 12ME Sept14 12ME Sept15 $150.1 $156.2 $33.6 $31.8 Frames Lenses Contact Lenses Sunglasses OTC Readers Exams Dollar amounts In millions Inflation not taken into consideration

12 CLOSE TO 70% OF AMERICANS REQUIRE SOME FORM OF VISION CORRECTION Vision Correction Usage Product Profile Percentage of American Adults Currently Using By Gender and Age VisionWatch September ME Sep15 Eyeglasses Contact Lenses OTC Readers Male 60.8% 11.5% 12.0% Female 18 to to % 54.2% 67.2% 20.6% 25.7% 20.4% 0.8% 4.0% 12.9% Important to Be Mindful of Demographic Differences 45 to % 14.7% 24.6% 55 to % 6.3% 21.0% Eyeglasses 64.1% U.S. population 18+ Contact Lenses 16.2% U.S. population 18+ OTC Readers 12.6% U.S. population 18+

13 PALS STRONGER AMONG OLDER PATIENTS VisionWatch September 2015 Total Lens Sales Lens Design Profile Pair Shares by Ages Total Market Single Vision Bifocal/Trifocal 18 to 34 yrs 26.6% 49.8% 2.3% 35 to 44 yrs 16.7% 26.4% 7.7% No-line Bifocal/ Progressive 0.7% 5.1% 12ME Sep15 Single Vision Still Important Among Millennials 45 to 54 yrs 20.2% 14.5% 22.8% 28.5% 55 yrs+ 36.5% 9.3% 67.3% 65.8%

14 EYEGLASS FREQUENCY NEEDS TO IMPROVE VisionWatch September 2015 Eyeglass Sales and Wearers Units and People by Age 74.8 Units Sold 12ME Sep15 Number of People Wearing 12ME Sept15 Population 12ME Sep15 as Benchmark Repurchase Cycle Varies by Age Group Dollar amounts In millions Inflation not taken into consideration 18 to 34 yrs 35 to 44 yrs 45 to 54 yrs 55 yrs+ Repurchase Cycle 2.0 years 1.8 years 2.0 years 2.5 years

15 A FEW OTHER THINGS TO CONSIDER

16 Vision Correction and THE PROCESS OF eye examinations are being redefined and introduced New methods, including mobile, change the eye exam dynamic New business models coming on strong this year Not only by online sellers but conventional practices and optical retailers, too What are patients expectations? What s the OD s role?

17 THE MILLENNIAL INFLUENCE IS CHALLENGING ASSUMPTIONS OF CONSUMER BEHAVIOR millennial-project/

18 Online + Offline BECOMES THE NORM AS CONSUMERS AND PATIENTS INTERACT IN EVERY CHANNEL ECPS ARE TAKING NOTE MOBILE TAKES OFF

19 DIGITAL IMPACTS DELIVERY OPTIONS even for ECPs and Optical Retailers

20 ALL EYEWEAR PRODUCTS NOW PART OF THE DIGITAL SCENARIO VisionWatch September 2014 VisionWatch Estimates: Total Eyewear Units Purchased by Consumers Online Contact Lenses Plano SG Rx Eyeglasses OTC Readers In millions of transactions, not unit sales

21 WHAT S in the CLOUD INCREASING IN IMPORTANCE From EHR to POS to Ordering

22 NEW U.S. HEALTHCARE DELIVERY SCENARIO Healthcare reform mandates cost controls Consolidations among insurers Adoption of technology Growing dependence on analyzing data outcomes Rethinking the doctor s role New views towards reimbursement A new reality for all insurance companies including MVC firms

23 CONSUMER ATTITUDES SHOW MVC IMPACT The Vision Council 2015 Managed Care Usage & Behavior Study

24 PEOPLE ASSOCIATE MVC WITH LIKELIHOOD TO GET EYE EXAM 2015 Would you be more likely to get an eye exam if you had MVC/vision insurance? 65.8% 57.8% 30.8% AHI: Up to $60K AHI: $60K+ Vision Coverage Influences Getting Eye Exams 21.2% 13.0% 11.3% Includes adults without MVC coverage Yes No Not Sure

25 IMPACT ON LOCATION CHOICE 2015 Will MVC/vision insurance coverage influence the location of your eyeglass purchase? 53.3% 64.4% Respondents w/mvc & bought eyeglasses in past 6 months Respondents w/mvc & planning to buy eyeglasses in next 6 months 40.6% 28.3% 6.1% 7.4% Vision Coverage Influences Where Patients Shop, Reinforcing Influence of Provider Network Yes No Don't Know

26 NEW PERSPECTIVES EMPLOYEE NEEDS AND ECP SOLUTIONS Transitions Employee Perceptions of Vision Benefits Survey

27 VISION A POPULAR BENEFIT Vision benefits are now tied with dental as the second most popular election.

28 MILLENNIALS, TOO, VALUE MVC BENEFITS

29 HIGH UTILIZATION 8 out of 10 employees who are enrolled in a vision benefit used it to pay for their eye exam in the past year. Outdoor Workers Used It More Than Indoor Workers (93% vs. 78%)

30 MAJORITY DESIRE MORE LIGHT PROTECTION 28% have Sunglass coverage 31% have Photochromic coverage 37% have AR coverage

31 AN UNMET NEED WAITING TO BE DISCUSSED

32 OPPORTUNITY FOR BLUE LIGHT EDUCATION

33 GLASS HALF EMPTY OR FULL? What you had to say Pre-Academy Attendee Survey

34 YOU VE NOTICED PHOTOCHROMICS COVERED MORE What are you seeing in the market with regard to coverage of photochromic lenses versus five years ago? 37.5% Covered more Covered the same 47.9% Covered less 14.6% All TRANSITIONS ACADEMY MVC TRENDS & INSIGHT SURVEY

35 WHAT YOU SAID PATIENTS CAN BENEFIT How much do you agree with the following statement: I believe it would enhance patients overall vision care to have photochromics covered by their managed vision care plan. 88% Agree 56.3% 56% Strongly Agree Strongly Agree Agree 31.3% Neutral 12.5% All TRANSITIONS ACADEMY MVC TRENDS & INSIGHT SURVEY

36 RECOGNITION OF MVC AS BUSINESS-DRIVER How much do you agree with the following statement: It can be a successful business tactic to sell lens upgrades above and beyond what is covered by a managed vision care plan. 77% Agree 58.3% 18.8% 22.9% Strongly Agree Agree Neutral All TRANSITIONS ACADEMY MVC TRENDS & INSIGHT SURVEY

37 WHAT CONCERNS YOU MOST ABOUT MVC 2.3% 2.4% 9.3% 17.1% 7.0% 23.3% 17.1% 21.6% 27.0% Other Ability to process claims easily Volume of paperwork 58.1% 41.5% 22.0% 24.3% 16.2% 10.8% Ability to have desired products covered by vision plan Profitability (reimbursement rates, lab costs) MOST CONCERNING 2nd MOST CONCERNING 3rd MOST CONCERNING TRANSITIONS ACADEMY MVC TRENDS & INSIGHT SURVEY

38 WHAT YOU VALUE MOST ABOUT MVC 7.3% 26.8% 14.6% 9.8% 41.5% 32.5% 28.9% 7.5% 28.9% 32.5% 15.8% 10.0% 5.3% 17.5% 21.1% Ability to introduce patients to additional services Easier to recommend upgrades (part of purchase is covered) Drives patients in sooner for exams Delivers steady patient flow Drives new patients into my practice MOST VALUABLE 2nd MOST VALUABLE 3rd MOST VALUABLE TRANSITIONS ACADEMY MVC TRENDS & INSIGHT SURVEY

39 WHAT YOU WANT TO KNOW MORE ABOUT ACA Impacting Market Top and Bottom Line Growth With MVC Photochromic Sales and Profit Opportunity

40 REMEMBER

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