More stable management, a consistent and clear strategy, and doctor partners who feel well remunerated for their efforts are behind the significant improvement in financial results reported by Vision Eye Institute (VEI).
In its half year reports to 31 December 2011, Vision Eye Institute announced increased net profit after tax of AUD$4.5m (up 181.3 per cent). Revenue was AUD$56.5m (up 5.2 per cent) and Earnings before Interest, Tax and Depreciation (EBITDA) was AUD$13.9m (up 30.1 per cent).
As the announcement became public in late February the company’s share price rallied strongly and the Australian medical services business Primary Health Care, increased its stake in the company to 18.6 per cent.
Performance Recognised
Geoff Thompson, the Chief Executive Officer of VEI said the market has rewarded and recognised VEI’s stronger than expected results and the upgrade in the company’s full year 2012 financial outlook.
We have no new left field strategies – it’s about doing the right things and following through on them. We’re now benefiting from a period of stability…
“The numbers are better than what we budgeted and there were no negative surprises. As a result, the market has responded well to the positive news,”
said Mr. Thompson.
He said that although Primary Health Care has taken a significant stake in the Group there has been no indication that they have any intention to go further. “We see their investment in Vision as a positive – they’re in health care but with a different business model… I believe they see value in Vision and therefore have increased their investment.”
Mr. Thompson said those who are selling their shares into the market are most likely speculative investors. “There has been no substantial doctor selling. It’s just a mixture of shareholders coming in and out of the stock.”
Doctor Partner Relations
When we spoke to Mr. Thompson in June 2011, the company was migrating existing doctor partners to a new profit sharing remuneration scheme that better compensated them for their exertion and aligned them to the Group. At that stage 17 of the 39 partners had migrated to the scheme and two partners had chosen to leave the Group.
Now, just nine months later, five more doctor partners are contracted under the new remuneration scheme and two new doctor partners have joined the Group.
In other developments one partner, Dr. Colin Chan, was recently appointed as an Associate Professor at the University of New South Wales School of Optometry and Vision Sciences. Another doctor partner, Professor Gerard Sutton, divides his time between his VEI Clinic in Chatswood and a role as the Sydney Medical School Foundation Chair of Cornea and Refractive Surgery.
Mr. Thompson said it’s positive to see many doctor partners extending their work outside their practices to assist in the community. “It’s not all about bringing in fees. Our doctors have medical sovereignty – they’re empowered to combine their clinical work at VEI with volunteer and charitable works, work in public hospitals or in academic environments.”
Re-branding and Communications
Mr. Thompson told mivision that in addition to strengthening its doctor partner relationships, Vision Eye Institute has worked hard to build relationships with other businesses and the community.
“We embraced a new marketing strategy this financial year – and part of this was to simplify how we communicate to the market. Previously we’d been communicating through multiple brands – which was confusing to referrers and patients. So we’ve returned to our core brand, Vision Eye Institute (VEI), which now represents us in all media – including the web, correspondence and our current television campaign.”
He said the company is very happy with the impact of their recent television campaign, which aims to create awareness of the brand and the quality of patient care. “Healthcare advertisers are not allowed to use models or pay people to make testimonials, so all the people who appear in our advertising – on the television campaign and on our new website – are genuine patients who wanted to be involved on a voluntary basis. They are real patients who are reflecting on their experience.
“We’re seeing a lot more enquiries coming through to our website and our contact centres as a result of the campaign – its early days as to whether that will translate into business.”
Business to Business Building
Part of Vision Eye Institute’s business strengthening strategy has been to build partnerships with key national organisations and recently, the company announced an arrangement has been finalised with Australia’s largest health fund, Medibank Private. Under the agreement VEI will offer Medibank Private’s members on ‘Top Extras’ and ‘Ultra Health Cover’, as well as corporate equivalents and selected overseas visitors, reduced fees for certain laser vision correction procedures.
Mr. Thompson said another significant strategic partnership has just been finalised with Rotary District 9790, which is based in northern Melbourne and regional Victoria. Rotary invited VEI to partner with the organisation in its aim to make every Australian over the age of fifty aware of Macular Degeneration.
Part of the strategy included VEI’s Dr. Devinder Chauhan speaking on Macular Degeneration to 1,000 delegates who attended the District 9790 conference on 24 March. VEI also had an information stand
at the conference.
Mr. Thompson said VEI is delighted to be working with Rotary. “I couldn’t think of a better not for profit organisation to partner with, both in terms of their ethos and their demographic. Seeing our two organisations come together to do something very positive for the community is exciting – it’s very powerful.”
The Future
Mr. Thompson said the company expects to continue on a steady growth path although the substantial increases in profit achieved in the six months to 31 December 2011 are unlikely to be repeated.
“Our growth will be driven by the things that are now in place and all working in concert – the Earnings Before Interest and Tax (EBIT) based remuneration model has proven to be very effective – doctors can see they are being paid for their exertion and are driving growth, our marketing and business to business strategies are having a positive impact and our day surgeries continue to perform very well,” said Mr. Thompson.
“We have no new left field strategies – it’s about doing the right things and following through on them. We’re now benefiting from a period of stability –we’re unerringly focused on the fundamentals.”
will continue to manage the company very well – to ensure one off costs are kept to a minimum… With good governance and good management we aim to minimise surprises.”
