Optometry has evolved in many ways over the years, as have customer expectations. We’re operating in a mature market, but that doesn’t mean that business should be flatlining. There is plenty that can be done to enhance patient wellbeing, improve practice morale, and increase your bottom line. In the first of a series of articles, we set the scene for change.
Ever since I graduated from uni, optometry – and the optical industry in general – seems to have been at a crossroads. Whether it was optometrists gaining the right to prescribe therapeutics or the arrival of concepts like, ‘glasses in an hour’ or ‘two for one’, there has been anxiety about the future. Yet the industry is still here! It has survived all these challenges… challenges that almost every industry has faced as consumers and technology have shifted. Perhaps we’re still here because overall, the market gets most of the fundamentals right. Yet it still feels like the industry has a vision of the future that is more ‘a glass half empty’ than ‘a glass half full’.
Australia seems to be trending the way the USA did several years ago, with the independent segment regaining market share
Over the next few months, I will investigate some simple methods to fill the glass – to strengthen the fundamentals and be consumer centric – by focussing on what many consider the most mundane thing in practice: prescribing and dispensing lenses. Using information presented in seminars, podcasts for OA NSW, and an award winning program designed in cooperation with Essilor of America and Essilor Europe, I will review many aspects of the ‘practice process’.
Ask a consumer the number one reason why they come to an optometry practice and they will tell you they want advice about their vision. The fact that they have no idea about what optical device will help them to see clearly makes it a great irony that today, some practices place less and less importance on lens prescribing.
Our industry, and optometry in particular, is great at seeing parts of its future, however there is a collective tendency to drag our feet when it comes to our fundamental differentiator: our know-how in optics and lenses.
WHERE ARE WE GOING?
John F Kennedy – the visionary who took man to the moon and back – once said, “Change is the law of life and those who look only to the past or present are certain to miss the future.”1
In the midst of the ongoing changes that have come over the last two decades, the question is, “Where is the ANZ optical industry going?”
Figure 1: Three market segments coexist
Australia and New Zealand (ANZ) is a mature market with our base growth having rested at 2–3 per cent for some years. Maturity also means that three clear market segments have emerged:
- Price
- Fashion and
- Vision Care
A market that is overall healthy and growing is a ‘glass half full’ and there are clear factors that demonstrate this.
Figure 2. Value of eyeglass sales in America
Along with 2–3 per cent per year natural growth from the ageing population and the pool of about 15 million wearers, there are emerging needs. ANZ is a premium market with an appetite for innovation, and that applies not only to the latest in digital gadgetry but to eyewear as well. There are also areas for improvement, e.g. we have never gone much over 55 per cent penetration of anti-reflection coatings and hi-index plastics are still under-utilised.
Professor Paul Mitchell’s Blue Mountains Study and years of work by Optometry Australia in the area of children’s vision, have shown that around more than one million people are uncorrected or undercorrected across ANZ. School screenings, in conjunction with the Essilor Vision Foundation, have shown that 30–40 per cent of primary school children screened need an eye exam, a figure that hasn’t shifted since the 1980s. Naturally, this suggests that every child should have an eye exam prior to starting school.
Optics is a constantly shifting landscape in terms of share between corporate practices and independents. A submission made to a Select Committee of the SA Parliament by OA South Australia (SA), stated the industry was always going to move towards a balance of 50:50 between the two segments. At the moment, Australia seems to be trending the way the USA did several years ago, with the independent segment regaining market share.
It is clear that far from being a commodity, lenses are the means to reinforce the strength of any practice
Add all of these factors together and it means likely growth of 5 to 8 per cent per year… if we do things well.
As the segmentation has evolved over the last 20 years, so too has the income of the average practice across ANZ.
Clinical areas – consultations, contact lenses, and lenses – now represent 75 per cent of practice turnover. Based on Essilor AMERA benchmarking data, of the 75 per cent, lenses are the largest share at 44 per cent, followed by consultation fees at 25 per cent and contact lenses at 6 per cent. Practitioners are often surprised to see the importance of lenses within their practice but, as the performance and sophistication of lenses has increased, so too has their value. It is clear that far from being a commodity, lenses are the means to reinforce the strength of any practice.
Figure 3. Market growth = 5–8 per cent per year
CREDITS AND RETURNS: OPPORTUNITY COST
With such a large portion of turnover from lenses, there are some facts that we must face as an industry. Cost is a primary concern in the minds of many practitioners, but it is essential to understand what contributes to cost and a significant contributor in any business is credits and returns.
Let’s do a simple calculation:
If on average, the rate of credits and returns for lens non-tolerance is 5 per cent.
Extrapolated across the wholesale industry, that amounts to almost AU$18 million dollars, or around $2.18 per lens sold!
Translate that into a retail cost and it becomes really scary – it could ramp up to a staggering $55 million (around $20,000/ practice/year). Worse still this estimate doesn’t take into account factors like:
- The opportunity cost, (the potential earnings you lose because your chair time is taken up solving a ‘grief ’ case). In a single case study for Varilux Academy that I prepared with the team from Brien Holden Vision Institute, the total cost to the practice, including the opportunity cost, hit more than $4,000
- The impact on staff morale and productivity – remember for an average practice, 5 per cent of patients means eight people a month coming back with a problem
- Your reputational cost
- The potential to lose consumers who perceive that an investment in eye care is not good value for money. Loyal consumers who believe in the value of optometry contribute to the industry’s security.
Figure 4. Average total $ sales profile – ANZ optometry practice. Source: Essilor AMERA
Some studies published in Ophthalmic and Physiological Optics have looked at spectacle non-tolerance. Freeman and Evans2 found about 2.8 per cent non-tolerance but it did vary between 1.3 and 3.3 per cent according to the individual optometrist. Of these failures, 61 per cent were caused by refraction issues and 22 per cent were dispensing related. Patricia Hrynchak3 from the School of Optometry at University of Waterloo in Canada, found similar results: 59 per cent refractive and 21 per cent dispensing related errors. Earlier studies4 found return rates up to 6 per cent and an article in The Optician in March 2016 put dispensing errors at 25 per cent of non-tolerance cases.
DISPENSING ERRORS ARE AVOIDABLE
What is heartening is that studies have shown up to 80 per cent of dispensing errors are avoidable. There’s been a lot of research to prove this point, but there is little movement in the rate of errors. A contributing factor could be dispensing myths, which can form barriers to change.
A few of these myths are:
- ‘Dotting up’ is a legitimate technique for measuring progressive lenses
- The PD rule is as good as a pupilometer
- Monocular heights aren’t important/fit at the same or just split the difference
- Default values for customised double aspheric progressives are good enough.
My late friend, Dr. David Wilson, compiled a list of papers that tackle some of these myths. In particular they point to the use of technology as an aid to dispensers for more accurate and consistent measurements.
Resistance to adopting these technological changes can be found among both optometrists and dispensers. If we view this at arm’s length it is rather bizarre. The price tags on optical coherence tomography and wide field retinal cameras dwarf the small investment required for dispensing aids, which as we’ve seen, could bring instant return on investment.
Among the reasons for resistance to new dispensing technology are:
- Time
- Patient expectations
- Lack of trust
- Fear
- Lack of training
- Lack of understanding.
WHY CHANGE?
There are good reasons for practices to change and adopt new dispensing technology, most significantly, they will enhance patient well being and deliver practice benefits.
These include:
- Managing time and patient expectations – these should, and must, be handled by the practice – they are not your patients’ concern.
When asked, ‘How long does an eye test take?’, the common answer is, ‘About 30 minutes’. However, it is not unusual for a patient to spend upwards of an hour or more in your practice… so if they start getting agitated after 30 minutes it’s because you have set that expectation
- Control practice process – this allows for the smooth flow of patients through the practice, to the right person at the right time. Our research has shown that this is an emotional journey as well, which makes control essential
- Ensures patient outcomes and retention
- Manages the impact on the practice
- Differentiates your practice
- Allows for the use of customised and personalised lenses which are a path to sustainable growth.
In the next issue of mivision, I will delve more into the opportunity that customised and personalised lenses represent to enhance your patients’ well being and differentiate your practice.
Tim Thurn B Optom (UNSW); GDip (Photo) (SA School of Art, Adelaide University); GCertB (American University, Paris) is Director of Professional Services for Essilor Australia and New Zealand. A UNSW optometry graduate, he joined Essilor in 1988 having worked in private practice for eight years. From 1991–1998, he worked in Essilor’s International Strategic Marketing Department in Paris, during that time he obtained his Graduate Certificate in Business from American University. Prior to re-joining Essilor ANZ, Tim was regional Professional Services Director and in partnership with BHVI, ran Varilux Academy Asia Pacific.
References
- www.presidency.ucsb.edu/ws/?pid=9303
- Freeman CE et al Ophthal. Physiol. Opt. 2010 30: 1–11; Investigation of the causes of non-tolerance to optometric prescriptions for spectacles
- Ophthal. Physiol. Opt. 2006 26: 111–115 Prescribing spectacles: reasons for failure of spectacle lens acceptance Patricia Hrynchak School of Optometry, University of Waterloo, Waterloo, ON, N2L 3G1 Canada
- The Optician; Causes of Non-Tolerance – 10/03/2016.
