Step 1. Why change?

• Are you interested in improving patient retention?
• Would you like to give your practice every opportunity to grow?
• Are you avoiding fitting new patients with contact lenses, because you are not confident about your current pricing strategy?
• Would you like to be paid appropriately for your clinical time?
• Are you concerned about retail contact lens prices?

If you can answer ‘yes’ to any of the above, a professional fee based pricing plan may provide your practice with the opportunity to grow your contact lens and spectacle business profitably.

Following changes to the ‘Opticians Act 1989’ in June 2005, many new businesses have started to supply contact lenses, eg. supermarkets and internet based companies. Because they rely on high volume sales and may not have large overheads, their business model allows them to work with extremely low, often single digit, profit margins. This has caused concern for some traditional optical practice outlets that have continued to subsidise clinical care by charging relatively high profit margins for both contact lenses and spectacles.

Many optometrists and contact lens opticians would prefer to charge a realistic fee for the service and professional care they provide, as is the case in many other professions such as dentistry, than sell product to subsidise their services. However, the traditional optical pricing model does not allow for this. The Professional Fee Template allows practices to calculate how much to charge for their professional time, as well making calculations to help with product pricing.

The public are becoming more aware of the options available to them and some patients believe they can obtain similar products to those available from their local optician, for less elsewhere. Many may not appreciate that their product cost has some element of professional care built into the cost. Many will remain loyal to their existing practice as most consumers are not primarily driven by cost, but others, especially those who do not understand they are paying something towards professional care as well as for the product itself, may be tempted to go elsewhere.

Currently, the supply of contact lenses by volume through internet suppliers and supermarkets is very small as shown in figure 1 below. The contact lens market is growing faster than the spectacle market (see figure 2) so is certainly an important area of business to focus on in optical practice. Additionally a study by Opinion Market Research and Consulting GRMB in the 2006 showed that contact lens wearers in the UK are 12% more loyal and spent on average 3 times more per year in the practice than those that only wear spectacles¹.

Figure 1

Figure 2
Vision correction market in the UK

Contact Lenses +5.8%, Spectacles -0.6% growth year to year

 

GfK 2006

If you would like your practice to benefit from the current growth in the contact lens market, as well as improve the loyalty of your patients you may like to consider the professional fees model. The following steps should help you to tailor your own contact lens fee plan for your practice. The practices that have embraced this new way of charging for contact lenses to provide greater transparency for their patients have only one regret – that they did not do it sooner!

Practice staff will soon gain confidence offering the plan to potential new contact lens wearers and then move on to change existing wearers over to the new plan. Most staff are more confident talking about the new scheme because they find it easier to explain and there are usually a greater number of tangible benefits for the patient too.

VAT benefits

Of course, using a fee based plan has numerous advantages to your practice, as well as your existing and new patients. One of the benefits is a change in the practice’s VAT liability. Whilst you must take your own tax advice, BNB Tax Consultants advise “In principle, the professional fee basis should give a higher level of exempt income, which may be advantageous for businesses”. They also state, “What the professional fee basis does do is to provide the documentation to support the VAT position, which may be very helpful for those in protracted negotiations with HMRC”.

However, what does the practice have to lose if it continues charging higher prices for contact lenses with inclusive aftercare? For some practices, there may be no great loss of existing contact lens business, some may find the growth of new wearers is likely to diminish in time, and in some cases there may be loss of existing patients as the public become more aware of the availability of other schemes with greater transparency and to other channels from which to purchase lenses. Which category is your practice in?

¹ CIBA VISION data on file 2006