Vision – Long- or Short-Sighted?

In the past five years, the cost to provide Optometry services has increased significantly and the margins on products have reduced

Furthermore, IBIS predicts that the average annualised rate will be 1.4 per cent over the next five years to 2013-20141 . Growth is being held down by a real decline in the unit selling prices and a real decrease in Medicare rebates per service. Additionally, at present, there is also the battle for market share between the larger chains which is adding little value to the industry.

In the past five years, the cost of providing Optometry services has increased significantly and the margins on products have reduced. Like every other industry, Optometry is going through consolidation and rationalisation as market forces take hold. As the provision of the service is subsidised by the provision of products, this process is further accelerated. These market forces will ultimately determine Optometry’s road map and future.

Medicare Limitations

Currently Optometry through Medicare provides 75 per cent of all vision services within Australia, of which I believe, 98 per cent of Optometrists bulk bill.

Participation requires adherence to standards of practice and limitations on consultation fees charged. Medicare agreements were relevant to Optometry in 1975, however 34 years later, the world and eye care has changed in many ways. It is important to ensure that these agreements are still relevant to the present environment in which they operate.

Currently, Australia’s gross debt is about AUD$300 billion² . Health care spending is projected to cost the country an increased percentage of GDP as the population ages. In its present format, Medicare is unsustainable and a political ‘no win’ situation for the Government. Increasingly the Government must limit the cost of Medicare.

Let’s look at what the Government has done so far:

• In 1997-98 an agreement reached with the Australian Optometry Association resulted in the restructureof descriptions and fees for some items in the Medicare Schedule. This was budgeted to reduce Medicare payments by AUD$7.8 million in 1997-98 and by AUD$15.5 million in 2000-01.
• Areas targeted for restructure included payment of Medicare benefits for a second comprehensive consultation within two years except where there is a genuine clinical need and tightening of the conditions for contact lens prescriptions.
• Previously, patients with myopia at 4.00 dioptres or greater were eligible for Medicare benefits for contact lens prescriptions. The Government introduced the change as a result of the improved effectiveness of spectacle lens material, which is now available for a range of 4.00 to 5.00 dioptres.
• Each time the Government has reduced Medicare payments, it has argued that the reduction has been a result of technological advancement.
• In the May 09 budget, the Government halved the Ophthalmology cataract rebate citing the advancement of technology as its reason for doing so. Is this a portent of things to come? Perhaps this cutback signals an opportunity for Optometry to support and work more closely with Ophthalmology in lobbying against these cutbacks.

The Government’s Position

The Optometrists Association Australia (OAA) has successfully lobbied the Government to increase the amount of number items we can charge. This has added AUD$44 million to optometry revenue over the last five years³ , however, based on the total Medicare spend, this equates to only a 0.04 per cent increase in revenue each year.

How long will it be before the Government reduces or limits rebates and item numbers? Certainly in this economic environment they will have to look at cutbacks. Furthermore, the Government sees increasing the cost of health care to the public by allowing the uncapping of Optometry fees, as politically unpalatable.

The Government has, by default, nationalised eye care and therefore, controls the outcome. It has not been able to achieve this with any other health care profession. If you look at doctors for example you will see that the Government hasn’t been able to limit the doctors from charging above the scheduled fee. A recent survey of GPs found that only 28.7 per cent bulk- billed Medicare for all patients, and 20 per cent only bulk-billed for pensioner/ Commonwealth concession cardholders⁴ .

The reason for this, according to the Australian Medical Association (AMA), is that GPs can no longer afford to bulk-bill all their patients. When Medicare first began, many GPs bulk-billed because rebates were close to the cost of providing the service, but the AMA says this is no longer the case. The estimated cost of providing a standard (Level B) consultation is AUD$55 but the rebate is AUD$31.45.

Reducing the bulk billing rates is a political disadvantage to the Government. In real terms the cost of eye care has been limited and controlled. The Association has clearly shown via its submission to the Government in the Productivity Commission that the cost of the provision of examination under Medicare has not kept up with inf lation or the increased services provided by Optometry.

However the Government has been able to maintain tight control over Optometry and wishes to use the same model to control medicine and Ophthalmology. This provides Optometry with an opportunity to work more closely with the other health care professions. In particular, ophthalmology and the AMA, to provide a more co- ordinated effort in shaping and lobbying health care policy in relation to eye care.

The Government has offered a suggestion for selective optometrists to opt out of Medicare if it is an issue. This option is not commercially viable and the Government is counting on this to ensure the status quo continues. Imagine the political outcry if Optometry opted out of Medicare. Perhaps, then, the Government would need to review the situation.

As Optometry derives 80 per cent of income from dispensing, if things don’t change, retail market forces will drive eye care. Ultimately, this in turn will affect the quality and ability for Optometry to be a true primary care provider as opposed to a ‘refractionist’ providing spectacles. More patients will be referredinto the public system and Ophthalmology as it is not cost effective to manage eye disease. This will result in increased cost to Government and increase waiting lists and stress on the public system.

The future for Optometry

With an ageing population, the cost of vision loss to the Government and the community will run into the billions. Optometry is being positioned to be able to manage primary eye care, freeing Ophthalmology to be able to concentrate more on procedures and extensive disease management. The cost of prevention and early management is much more cost-effective than dealing with vision loss in the community. In order for Optometry to be able focus on primary eye care the payment for the service must adequately ref lect the cost of its provision.

In Optometry over the past ten years, there has been an increase in clinical assessment, report writing, referrals, increase risk exposure and ongoing continuing education. Additionally, there has been an increase in the capital cost required to conduct examinations. Optometry has become the ‘loss leader’ i.e. a service sold at a substantial discount in order to produce additional sales, in generating income in the eye care market.

If Optometry is not able to increase the billing rates to cover the true cost of eye care, we will have difficulty in the future in attracting the best students with the desired qualities to take up Optometry as a profession to provide primary eye care.

Additionally Optometry will experience high attrition rates, wasting public training dollars and increasing cost to government.

Commercial forces will not spend time in managing eye disease. It is far more profitable to attract scripts, sell glasses and refer. Ultimately, it will cost the Government a lot more money and ophthalmology and the public system will be overloaded.

Quantity and Quality

The other issue Optometry will need to deal with if it is to develop into a primary eye care provider is that more Optometrists will be required in Australia. IBIS reports growth in the number of employed optometrists in the five years to 2003-04 averaging around 2.5 per cent per year⁵ .

At present there is a supply and demand imbalance in the labour market for Optometrists. Demand far exceeding supply. Like any labour market imbalance, it results in undesirable consequences. In eye care it is affecting the quality of the provision of the service and undesirable work practices and impedes the profession from developing.

The OAA reports there are 2,866 active Optometrists in Australia which is adequate per head of population and that no one waits for an eye exam⁶. This data is based on a survey completed of less than 50 per cent of Optometrists and assumptions projected for the remainder⁷ .

The Association believes that there is an adequate number of Optometrists being trained and that the problem lies in uneven distribution⁸ .

Interestingly the Victorian division of the OAA had to abandon its rural locum relief program due to the lack of available Optometrists.

The figures are based on the assumption that each Optometrist conducts 1,825 consultations per annum, based on 45 minute appointments for an initial consultation, fifteen minutes for subsequent consultations and 60 minutes for contact lenses⁹ .

To determine more accurately the number of active Optometrists it would be desirable to know:

• How many hours each optometrists actually works within a year?
• How many leave the profession and the reasons why?
• How many have left the profession and now work in other professions?
• How many optometrists have changed to part-time or locum?

In addition, the data available does not provide an estimate for gender or the ‘Gen Y’ generation and the effect on labour hours and desire to own their own practice.

Making Some Estimations

The only real way to determine the number of active optometrists is to analyse the number of Medicare itemnumbers per provider number and equate this to the number of total Optometry hours worked per provider for each year, for the past five years, along with the trends established.

These figures could be obtained from Medicare and would be the most accurate way for Optometry to determine its current labour market.

These figures could be obtained by a special submission request to Medicare to provide the information in a way which would address any privacy concerns. This would be the most accurate way for Optometry to determine its current labour market.

I have put together some ‘back of the envelope’ figures determining the ‘Billings Per Hour’ (Table 2) and the number of ‘Full-time Equivalent Optometry Hours Relating to the Number of Services’ (Table 3).

The calculations from these tables indicate the following:

1. There is an under utilisation of active Optometrists.
2. A number of Optometrists are not working full-time or are working limited hours.
3. A number are not working at all as Optometrists.
4. There is no accurate estimate of true of true attribution rates¹⁰.
5. Optometry is an inefficient industry in the number of hours worked for the number trained.

There appears to be a disproportionate utilisation of Optometrists due to there being an uneven spread and the immobility of where Optometrists are prepared to work. Whilst a number of Optometrists are working far below full capacity, seeing only a small number of patients each week; others are working at full capacity.

The lack of labour limits the growth of the profession as it does not allow more efficient successful operators to grow and in turn, reduces growth and holds back the industry. It may also contribute to higher attrition rates as it makes it more difficult for some Optometrists to achieve a work-life balance and take holidays.

The issue, as I see it, is we need to understand the key drivers of our labour force within the profession more clearly to improve the efficiency and the mobility of the profession.

Increasing the number of Optometrists will result in an increase in the mobility of the labour market more so than is currently occurring. Additionally, in the Optometry Associations projected estimates for future planning, it has not taken into consideration the changing utilisation rates of the population of Optometry services. The utilisation rate of Optometrists for projection in the future has been based on the historical figures i.e. approx one per 3.8 years³ or current utilisation per head of population¹¹.

As more primary eye care is being encouraged, examination and follow up care is increasing. We have seen more regular review of diabetics, children, etc. As a result, the utilisation rates in Optometry will increase from 3.8 years to one to two years. In other words, up to a 30 to 50 per cent increase in utilisation.

Consequently there is a significant increase needed in the number of Optometrists in Australia. The question is – how is the present labour shortage in Australia going to be re-balanced in the short and long- term for the betterment of the profession?

One short-term solution could be to increase immigration and reduce the barriers to registration to make it easier for suitably trained Optometrists to work within Australia. Reducing the barriers could involve reducing the cost of sitting the qualification examinations, recognition of appropriate university qualifications or even allowing supervision of clinical practice until registration is achieved. There are many ways this could be achieved.

Table 1. Let’s compare Optometry to other professions and trades

Table 2. Estimates of Full-time Equivalent Optometry Hours Based on Billings Per Hour

This table is based on Optometry Association’s estimate on the number of hours spent under Medicare and Vet Affairs.¹² Demonstrates there is a 50 per cent difference between active Optometrists and the number of full-time equivalent Optometry hours.

Table 3. Estimates of Full-time Equivalent Optometry Hours Based on Minimum Number of Possible Services

Table demonstrates the under utilisation of 2,866 active Optometrists.

In Summary…

If Optometry is to take on the role and develop to be a true primary eye care provider which includes disease management to fight the loss of vision of an ageing population, it needs to ensure the service is remunerated to ref lect the true cost in its provision. Otherwise, market forces will ensure these goals will make it unlikely.

The most cost-effective way for the Government to achieve this is to uncap the fee charged or allow additional charges. The Government is unwilling to change the status quo unless there is more of a political imperative to do so.

The Association has worked very hard at lobbying the Government however they have proven to be inf lexible. Why should the Government change anything when it holds all the cards? Unless of course, the profession makes it a more political imperative for it to do so. Consequently a different approach may be required. Extensive funds need to be raised to set up targeted lobbying campaign.

The key stakeholders in the industry need to come together and develop a strategic co-ordinated lobbying campaign to re- enforce the unsustainability of the present situation; outline the detriment it will cause to preventing and managing eye disease and the resulting electoral impact this will have. A fighting fund could be established by levying the industry and each member.

Take the success of the lobbying expertise of the Pharmacy Guild which is very active in putting its point of view across all sectors of Government. After all, Optometry just like pharmacy is located in all communities and electorates.

There is an opportunity for the eye care industry to become more dynamic and play a more important role in the provision of eye care and the prevention of eye disease. The community will benefit as a result. It becomes even more important now as health care and the restructuring of Medicare is going to be one of the main issues fought over at the next election.

The eye care profession needs to take the lead.

Jim Papas graduated from the University of Melbourne with a double degree in Biochemistry and Pathology and went on to Study Optometry. He started his practice in 1986 with an interest in contact lenses and practice management. He has gone on to develop a number of companies with the optical industry, one of which has been the ‘eyeclarity’ brand which has received a number of awards for its innovation and professional services.

Opinions expressed in this article are those of the writer and not necessarily those of the Publisher. Opinion and feedback to this article are welcomed and can be sent to [email protected]

References:

1. IBISWorld industry report, 12 February 2009.

2. ABC News, televised interview with Prime Minister Kevin Rudd, 7 July 2009.

3. Optometrists Association Australia (OAA), www.optometrists.asn.au

4. Choice Australia, Choice Online, www.choice.com.au

5. IBISWorld industry report, www.ibisworld.com.au

6. OAA response to Productivity Commission Issues Paper: The Health Workforce, July 2005

7. Horton, P., Kiely, P.M., Chakman, J. The Australian Optometry Workforce 2005, Clinical Exp Optometry, 2006. 89(4): pp. 229-240

8. Chakman, J. Guest Editorial Enough is enough, Clinical Exp Optometry, 2008; 91: 4: 331

9. Horton, P., Kiely, P.M., Chakman, J. The Australian Optometry Workforce 2005, Clinical Exp Optometry, 2006. 89(4): pp. 231

10. Horton, P., Kiely, P.M., Chakman, J. Optometric supply and demand in Australia: 2001-2031, Clinical Exp Optometry, 2008; 91: 4: 351

11. Horton, P., Kiely, P.M., Chakman, J. Optometric supply and demand in Australia: 2001-2031, Clinical Exp Optometry, 2008; 91: 4

12. Horton, P., Kiely, P.M., Chakman, J. The Australian Optometry Workforce 2005, Clinical Exp Optom 2006 89 4: 229-240