Why is optical important? Why is optical important? Disclosures. Lecture notes. Neil Gailmard, OD, MBA, FAAO 7/26/2015

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1 Disclosures Neil Gailmard, OD, MBA, FAAO has received honoraria or has other consulting arrangements with the following companies: Neil Gailmard, OD, MBA, FAAO President, Prima Eye Group Atlanta, Georgia ================================================================ CEO, Gailmard Eye Center Munster, Indiana International Vision Expo Alcon Essilor Signet-Armorlite PentaVision Jobson Prima Eye Group Neil Gailmard, OD, MBA, FAAO Lecture notes Co-founder/President/Consultant, Prima Eye Group CEO, Gailmard Eye Center, Munster, Indiana Visiting Lecturer, UC Berkeley, School of Optometry, Editor, Optometric Management Tip of the Week, 2002 to 2015 Optometric Business Innovator award for 2014 by Vision Monday Questions are welcome. Why is optical important? Medical eye care is important, but not the savior for optometry. ODs are losing their focus on the most lucrative aspect of our profession. Get over the fear of selling. Teach your staff to sell. Patients do not think optical is trivial (only ODs think that). Why is optical important? Optical is extremely profitable much more so than office visits and medical testing. Optical can easily produce 50% or more of gross revenue in optometric practice. This revenue is produced with very little work by the doctor. 1

2 Is a practice with a high percentage of medical revenue doing well? Is a practice with 70% of its revenue from medical eye care doing great with medical or is it just doing poorly with optical? Optical sales can happen concurrently with eye care services. Some ODs just stop thinking about glasses. They may not even do a refraction on medical cases. Why is optical important? A great optical is a huge practice builder! Patients love it! The patient experience is key to practice growth and optical is the most fun part of the visit! Word of mouth referral. Why is optical important? I understand that as an optometrist, optical dispensing is not your favorite thing but as CEO of your practice, it should be your favorite thing. What about the future of optical? The future looks great to me! We can compete just fine with online vendors and any other retail concept! A. We have the customer first and I don t see that changing for a long time. B. We are the trusted authority on eye care and optical products. c. We will evolve and adapt and do what we have to do to maintain sales. What about the future of optical? The service of eye care and the product are closely tied together. That s good for us. Our opticals are not simple retail. People would rather buy glasses from their optometrist than online. Price is really the only factor and we can adapt to that as needed and still be profitable. If you accept vision plans you have already adapted to that! Key points for optical Devote large floor space (>1,000 SF) Beautiful and visible New high end displays and furniture Large inventory (1,000 frames) Move frame lines up in price. What s the new upper end? Show $600 to sell $400 Exclusive lines? Your market won t go for this? 2

3 The biggest problem facing optometry today Not enough patients. Insufficient patient demand. Solve that issue and all other problems go away. How many patients are enough? How to increase patient demand Word of mouth referral Vision plans Marketing Why do some practices gross millions of dollars while others struggle? What is the secret to success in optometry and optical? It s customer service. I wish it was more dramatic! 3

4 Customer service I m obsessed with patient satisfaction. o Actually, customer LOYALTY is a better term. osatisfaction is the lowest acceptable level of service. I m talking about legendary service! Because I m obsessed my staff is. Customer loyalty is the single most important factor in practice building. Don t kid yourself Your practice is probably not all that great at customer service Mine could be way better (and I m obsessed) Most small businesses aren t Most doctor s offices aren t Many O.D.s don t get it they aren t objective they don t know what they don t know What has been your experience? What about the unreasonable patient? This is where it really gets fun! This is where we find out who really gets it. The patient who shows up 30 minutes late. The no show. The patient who said she did not have insurance, but two weeks later The patient whose husband says she should return the glasses for a refund. The patient who calls and wants to cancel his glasses, but they are already made. When do you draw the line? Do you want to avoid attracting more people like this? Do we get more of these people with certain vision plans? My staff is always looking for the exception; they feel protective of the practice. Do we want to stop people from taking advantage of the practice and if we give in, will they take more advantage? When do you draw the line? Have basic rules in place. Know how to say yes first. Fees, payment policies. Health concerns. Tell patients these things in advance. Once you start drawing the line, it keeps getting drawn sooner and heavier! Our policy is yes! Set policies based on patient s wants and needs the definition of marketing Not on doctor s or technician s Don t teach policies to staff teach principles Policy is just a way of saying NO 4

5 Examples of poor service Odd office hours closed for lunch, closed Friday afternoon, closed Wednesdays. Not enough evening and Saturday hours Long patient wait times. Rude and rushed staff; attitude No one at the front desk No one answering phones (voic ) A small waiting area; small optical Am I being too harsh? Examples of poor service Not enough parking close to door The out-of-date office The arrogant doctor Back orders Staff members with odors, coughing, worn clothing Embarrassment and confusion over fees and insurance Slow eyeglass delivery time You aren t being a wimp Letting patients win is a very smart strategy. Don t let your ego get in the way of practice growth. Saying yes right away prevents small problems from becoming big ones. So does saying I m sorry. Set or change policies for the future. It makes life in the office more pleasant. Entrepreneurial thinking Realize the advantages of a large practice Visualize the dream practice Stretch to make yours look like that Make changes before you need to Act as you mean to go Reinvest, even if you must borrow Grow in a step by step fashion Develop a system that does not depend on you There are only three ways to make more money 1. Raise fees. 2. Sell more things to each patient. 3. See more patients. Which of these can you do? Cutting expenses is a fourth way, but you can t cut your way to prosperity. Optical staff Master optician Office manager or optical manager Frame buyer Marketing director Optometric technician (super-tech) Frame stylists/opticians Lab technicians 5

6 Optical staff The handoff No one is available How many staff do you need? Rule of thumb for optometric practice: 1 staff FTE per $150,000 gross revenue $600,000 practice needs four full time employees (non-od) Delegation in your practice Too much not enough Pretesting Scribing Optical dispensing Office administration Medical eye care Associate OD Scribes I m very pleased to see scribing finally gaining popularity among ODs! I first wrote and lectured about the concept over 25 years ago. Widely used by ophthalmology, but optometry is slow to embrace. It is far more practical and affordable than you might think. My super-tech model A high-level of cross-training. Technician = optician = scribe. A group of super-techs who go where they are needed; paged to do pretesting, dispensing or special testing. I try to have three technicians per working doctor. It is a big cultural change for many practices, but it can just become the norm. An innovative system for patient flow Technician is with patient through entire visit. Patient never left alone. A bonding experience. Great customer service. Doctors don t page techs techs page doctors Benefits of scribes The only thing better than a good patient handoff is no handoff. Tech hears doctor consult first hand and carries it out. Seamless flow from exam to optical. Doctor leaves the room first The greatest time saver ever! How long do you take on your records paper or EMR? Patients are impressed with the process No walking patients or searching for an optician or technician. 6

7 When to bring in an associate OD The goal to work toward Part time or full time? Are you booked solid more than 2 weeks in advance? Same as cash sitting out there Is your practice highly delegated? Do that first Does not have to be a partner or owner. Goal is to move patients from the owner. Hiring a new employee does four good things: 1. Customer service improves. 2. Increased delegation. 3. More productivity. Number of patients per day Number of eyeglasses sold Number of contact lenses prescribed 4. Can improve performance of existing staff. Less stress The role of the doctor With patient As CEO of the practice In both cases, we need the doctor to be very involved, informed, proactive and interested. I believe strongly in delegation, but the doctor s knowledge and leadership plays an important role. The doctor as optical advisor Prescribe and recommend The power of the doctor Makes sales very easy for opticians Set the stage for them Do not act like you know nothing about glasses and think that impresses patients it does not. You know plenty. The doctor as optical advisor Review the patient s current glasses. Recommend the best eye care. There is more to the exam than just the Rx change. Use a lens feature notepad as you talk with the patient; give to optician. Prescribe the lens features you think are best. Lecture notes ngailmard@primaeyegroup.com Questions are welcome. 7

8 Lecture notes Questions are welcome. Management Tip of the Week #1 Do this and optical sales will increase. Staff takes case history in pretesting. Ask every patient: Are you planning to get new glasses today? Checkbox yes or no. Amazing, really, that as eye care professionals, we might neglect to ask that question. When the yes box is checked (often is), I can assure you that the patient gets new glasses that day. Do not pre-judge the patient Staff and doctors do it all the time. Talk about it at staff meetings. Teach sales techniques to staff. Inspire staff members and tell them how to advance their careers Recommend the best eye care first Presumptive selling Pre-judging the patient s ability to pay is a huge mistake! What factors do you use? oage young or old. o Occupation. oclothing. o Grammar and speech otype of car they drive It is disrespectful and discriminatory. My screen door story. How to sell anything Don t make the biggest mistake in selling: start by telling patients what we have to offer. Always start by asking the customer questions and listening. They will tell you how to sell them! Whatever they tell you, you will know the products that will help them! How to sell optical products Tell me how you use your eyes at work. Do you participate in outdoor activities? Do you have any hobbies? Do you use a computer, ipad or smart phone? Do you watch TV? 8

9 How to sell optical products Enthusiasm sells! Even if you have to fake it. Mrs. Smith we just received a shipment of the new XYZ collection and they are soooocute! I d love to see you try on a pair! How are your multiple pair sales? Do you track it? It is extremely important with vision plans! What is your discount policy on multiple pairs? Why it should be 50% off! Helps you bring up the concept. Raise prices first. Labs offer pair 50 programs. Presenting lens options to patients Stop presenting options! Patients want to know what you recommend for them! The technician/optician is an eye care professional. Patients trust you to give them the best. How to sell premium lenses Stop presenting the premium vs. standard option; just tell patients we are using the most advanced lens technology ever made the lenses are called digital meaning they are designed and surfaced by a computer. We use XYZ lenses, the finest optics made. These lenses are clear and sharp from edge to edge, with no swim and no distortion. Clearer night vision, less eye strain. Other patients I ve fit love them! How to sell premium lenses Move on to next aspect of lens design: antireflective. Don t prejudge there either! Don t presume the patient won t want it! Don t presume the patient wants the cheaper AR! Presume they want the best! How to make patients love you and your practice Smile Use their name Eye contact Introduce yourself and shake hands Compliment them Ask them questions about their favorite topic Make notes in the record 9

10 Is there still a market for high-end eye care? Why should people choose us? Why not go to Costco or Wal-Mart for exams, glasses, contacts? Why not buy online? After all we are not the cheapest? Why do people stay at a Ritz-Carlton when there is a Day s Inn nearby? do people dine at Ruth s Chris Steakhouse when there is an Applebee s nearby? do people drive a BMW when they could drive a Ford? do people go to Disney World when they could go to a local amusement park? High-end vs. low price Do people who buy the former feel they got good value? Which one drives more word-ofmouth referrals? Are the high-end options only for wealthy people? The lab relationship Price is important, but so is service and support. Frame board management So many misconceptions with conventional wisdom Don t carry designer brand names that can be found elsewhere. Don t carry too many frames; too much money sitting on displays. 3 or 4 turns per year. Don t accept a frame line with a large buy-in. Frame board management Use a higher mark-up formula; 3X is out of date Buy smart for vision plans. What is the typical wholesale frame allowance in your area? Should you carry low-end frames? High end frames? 10

11 In-office lab Great way to increase profit and improve service What people like about our offices Trust the doctor Relationship with staff Local support Personal touch Continuity Records Takes insurance Could be fast internet is not fast in-office edging Service after the sale What lures people away from our offices High price -maybe? Inconvenient Maybe out of date? Poor customer service Most of these you can overcome What can we do to compete? Better customer service. Better technology. Better staff with continuity. Larger offices. Larger optical. Same day service. What can we do to compete? Vision plans that is only for the first pair! We don t always like vision plans but they bring patients in to our office. Work on strategies to increase profit with vision plans. Start by actually measuring your profit with each plan how? Track your Rx retention rate We need a more accurate method than dividing number of glasses sold by the number of refractions performed. A. Count Rxsthat walk out per month (staff knows). B. Count all jobs made per month. Deduct multiple pair sales and Rxsthat came from outside. C. Add A plus B for total Rxswritten. D. Divide A by C for percentage Rx walkout E. Inverse is percentage Rx retention 11

12 What retention rate is OK? Glasses: 90% Contact lenses: 80% Track every month and look for sustained change in your practice. 10 Reasons to Buy Your Glasses at We offer a huge selection of frames and sunglasses that you can actually try on to see how you look and how the frame feels on your face. Our opticians will help you find the perfect style, size, and color in your price range. Frames start at $95 and go up to include models that are made with real gold or exotic woods at over $1,000. We carry well-known designer brands and also many exclusive frame lines. We are happy to order additional frames or colors for you to see and try-on if desired. You will be assured of getting the highest quality lenses and frames. We are optical professionals and we use the finest products available to provide you with the clearest eyesight and good durability. Online vendors often use inferior products, because it is hard for the consumer to tell the difference - at first. Our opticians perform 10 precise measurements of your eyes and facial features which are used to place your eyeglass order. We use advanced computer software and facial imaging technology. A PD measurement alone is not enough to make a good pair of glasses. We do not provide our proprietary measurements to other sellers. We accept your vision plan insurance. Most online vendors and optical stores do not. We are innetwork providers for all major vision plans and we can check your benefits and accept payment directly from your plan. In addition to accepting major credit cards, we accept Care Credit, which is a health care financing service. You can apply in our office and select a six month payment plan that has zero interest. Our opticians are experts in lens products and features and they can be rather complex. We will guide you through the multitude of choices and explain what the lens features will do for you. We want you to get the best glasses and not pay for things you don t want or need. We verify your prescription lenses for accuracy, we check the frame size and we approve the overall quality of workmanship before we contact you to pick up your new eyewear. If the job does not meet our high standards, it is returned to the lab and made again. Most online vendors do not check your What do you say when you dispense glasses? Compliment Enthusiasm Review everything about glasses why? Sell again What are your services worth? Doctors tell me they would raise fees but staff are concerned ODs generally have fees that are too low. Consider what plumbers charge lawyers ophthalmologists? Forget the low-priced market Stop thinking of your practice as a place with great service at reasonable prices. o You can t be all things to all people. o High end businesses have high prices. Help your doctor achieve a high fee practice. The discount world is too hard to compete in so don t. Exam fees optical prices contact lenses Generally all too low. Keep fees simple. Can you tell a caller in advance what an exam will cost? 12

13 What if you are dominated by vision plans? Then you should definitely raise fees! Why not raise them? Patients won t complain but their perception of your practice goes up. Vision plan patients still buy non-covered services and when they do Maximize profit with vision plans Delegate more and work faster. Practice the medical model bill medical Coordination of benefits. Aggressive frame mark-up and smart frame buying. Raise all fees. Fit more contact lenses with allowance plans. Sell multiple pairs of glasses more often. Maximize profit with vision plans Order and sell non-covered services and products. Examples: screening retinal photos, nutritional supplements, Non-Rx sunglasses. Sell eyeglass warranties not with Davis or Spectera. Charge a shipping and handling fee for frame and lens repairs. Charge a patient s own frame fee not with VSP. Only offer premium lenses not all options. Install an edger and cut lenses in house under the IOF program with VSP. Analyze your profit margin Do each plan separately Pull 20 random cases in the past 6 months, but check your usual percentages of five categories of sales: exam only, exam and glasses, exam and two pairs of glasses, exam and contacts, glasses only. Pull the same pro-rated percentages in your sample of 20 cases. Analyze the medical billings separately or just know that some of these vision plan patients are billed medically and you will do better when those are in the mix. Include retinal photos, second pairs of glasses, warranties, vitamins -- everything you sold that was not medical. Pro-rated case types Exam only: 10% or 2 cases Exam and glasses: 60% or 12 cases Exam and two pairs of glasses: 10% or 2 cases Exam and contacts: 15% or 3 cases Glasses only: 5% or 1 case Analyze your profit margin Total your U&C fees for all services and products at that visit. Show and total all payments from all sources: from the vision plan and from the patient. We often just look at the vision plan payments and the charge backs and it appears that we get killed. Deduct any COGS this could be the chargeback, the frame cost if you supplied it (what you actually paid not the Frames Data price), the contact lens product cost if you supplied them, or it could be the lab bill if you sent the job to your lab. 13

14 Analyze your profit margin The gross profit on each case is the total of all payments less the total COGS. Calculate this on each case. Add up the gross profit for all cases and divide by 20 for the mean gross profit per patient. Consider if this amount is better than nothing if you have some empty exam slots. Compare to your gross profit with private pay for routine exams not medical. What can we do to compete? Market your practice! Invest in instruments. Website and Facebook page Online reviews Community outreach Host events in your practice Marketing Customer service Community outreach Trunk show In office seminar, open house Visit physicians extend discount Vision screenings Direct mail Groupon Reactivation phone calls (Brevium.com), (Tip #510) Practice name, logo, signage Website Social media Your practice website The cornerstone of marketing now and in the future. The internet is how today s consumer researches health care services and expensive purchases. What image does your website project? Interactive feature rich impressive. Investment money and time: content, copy, photos, videos. Not generic photos with fake people! 14

15 Facebook business page Facebook: personal page An interactive networking site about your practice Your website requires people to visit; Facebook lets you push content out to the public through fans. Word of mouth on steroids. Need for good content Events, promotions, contests, news Facebook only discounts Facebook: business page Reputational marketing Online reviews This is huge and growing! The power of the internet. People read and respect reviews do you? Positive and negative comments Ask patients How was everything? at checkout $50 gift cards Online communication services Solutionreach Websystem 3 Demandforce 4PatientCare A broad range of services Provides Facebook app Appointments, reviews, promotions Time to get serious about marketing How many patient addresses do you have? What percentage give it to you? How to get addresses. 15

16 or texting Recall notices Appointment reminders Glasses or contacts are ready Welcome to our office Please take our satisfaction survey or write a review Thank you for the referral Appointment waiting list Happy birthday greetings Practice newsletter General announcements and promotions ngailmard@primaeyegroup.com 16