A New Kind of Optical
Virtual dispensing can remove the barriers between you and a substantial revenue source.
By Gil Weber, M.B.A., Consulting Editor, Davie, Fla.

In ophthalmology today, optical dispensing represents a significant slice of total revenue and net profit for many general practices. For the most part, the days are gone when it was viewed as crass commercialism, and higher surgical fees made it the exception rather than the rule. The current economic picture, particularly as influenced by third-party payers, makes it necessary for most general ophthalmologists to provide optical dispensing services. Not to do so leaves potentially significant amounts of money "on the table."

Yet despite this almost obligatory need, many other general ophthalmologists have either not entered the business or entered it with great reluctance. Many will admit that they don't understand or want to deal with retail sales, frame purchasing, inventory control, labs and lens fabrication, or designing facilities for "shoppers." Furthermore, they'll tell you that they're not interested in managing a business focused less on eye health than on fashion, and they have no idea how to hire qualified opticians and dispensary managers, or how to maximize optical profitability.

A marketplace and patient service in transition

That leads to this discussion of an embryonic technology that may affect the very nature of optical dispensing, and change the dynamic of who gets into it and how they go about it.

About 3 years ago, I saw the first activity in this emerging segment of the ophthalmic industry -- virtual dispensing. I wondered then whether by reducing or eliminating most of the perceived barriers, this technology might be an effective vehicle for facilitating increased entry into optical dispensing. It's still too early to answer that, but given the rapid advances in technology, nobody should be surprised if the answer turns out to be yes.

The first efforts at virtual dispensing seem almost comical compared to today's and what we'll see tomorrow. In the early days, a Web site or kiosk-based system might allow the Web-surfing patient to view a small selection of frames. Clicking through the frame "collection," the user could select styles, colors, and sizes, but not based on anything more than pictures of the frames (or, perhaps, the frame placed on a model's face). The user had absolutely no idea what that frame would look like on his face, if it fit his face, or if it worked well with his prescription.

Frame selection was limited, and lengthy image refresh rates made frame comparison frustratingly slow. In addition, users could only order single-vision lenses (in some cases, only reading glasses). Some of the early systems purported to eliminate the need for a doctor-generated prescription. These systems were tied to autorefractors. The readout from that device was entered as the fabrication Rx. Some of those systems, particularly those selling reading glasses over the Internet, didn't even account for pupillary distance.

In all of these early systems, the patient would choose glass or CR-39 lenses, select a tint if desired, and order the glasses. Then, good luck. What he received might or might not be fabricated properly or appropriately suit his physical (facial) needs and/or visual requirements. It was all very hit-or-miss back then and, needless to say, these early attempts at virtual dispensing weren't rousing successes.

Fast-forward to the present

In contrast, today, several companies are on the Internet, or will soon be there, with innovative systems for selling eyeglasses online. Some also offer their systems for in-office use as freestanding, office-based virtual dispensaries or, in some cases, as complements to existing, traditional dispensaries.

These companies are bringing to patients large frame selections and the capability to order practically any type of lenses, including multifocals and progressives. They also give patients the ability to see the frames on their own faces via an uploaded, digital image captured either in the doctor's office or at the user's home. And today's most sophisticated systems allow for the measurement and proper placement of reading additions, temple length, and nose-pad flair.

The technology has evolved from wishful thinking to practical reality. And though it's still in relative infancy, we're now seeing an option for some to add optical dispensing without inventory management, costs and taxes, without price mark-downs, discounts and closeouts, without returns and freight costs, without a room full of frame displays and dispensing furniture, and without operating costs except for the virtual dispensing hardware and software.

Alternative or complement?

Nobody should take this to mean that virtual dispensing portends the imminent death of traditional optical dispensing. That's not going to happen. Lots of patients will still prefer the "touchy-feely, try-on-every-frame-in-the-optical-shop" style of shopping. Those patients (especially those who can't see without correction) will still ask your optician or receptionist "Which frame do you like better?" And many patients will always need a certain amount of TLC and reassurance when it comes to their eyewear.

Certainly if you were to consider virtual dispensing either as an alternative to a traditional dispensary or as a complement to an existing one, you'd want to know exactly how the computerized selection and ordering system facilitates the dispensing of properly fabricated eyewear, particularly if the finished glasses are shipped directly to your patients. And you'd have to be concerned with how that eyewear will fit the patient, especially if you didn't have a trained optician on staff. This last concern, that the patient will receive finished eyewear with the frames pre-adjusted for proper fit, will prove to be one of the most significant discriminators for those considering virtual dispensing systems in lieu of a traditional dispensary.

It's probably safe to say that if the system is well designed and user-friendly, and if the final product represents good value for the money, then lots of patients will enjoy shopping in a virtual dispensary. And that includes scenarios where they're shopping online, in a virtual dispensary attached to a traditional dispensary, or in a stand-alone virtual dispensary.

Other issues to consider

As you consider whether any form of virtual dispensing will benefit your practice, and compare systems, you should ask:

• How large a frame selection does a particular system offer? Certainly you can't expect it to include every one of the thousands of frames in the Frames catalogue, but some reasonably sized offering must be there.
• How often will the frame selection be updated?
• How many images can the system memory capture and display? And does the system allow rapid comparison of multiple images? Patients simply won't sit and wait very long for the screen to refresh and display a different frame, a different color, a different eye size. Also, what is the quality of the images?
• Is the system "smart" enough to know when an Rx isn't right for a particular frame?
• Is a quality lab standing behind the system to enure fast and accurate fabrication? What kind of guarantee is there that the patient will be satisfied with the final product? What kind of turnaround time is guaranteed for fabrication?
• Will the virtual dispensary help your practice retain sales that previously were "walkouts"?
• Will the system provide a "guided shopping experience" and thereby promote higher margins via add-on sales?
• What are the initial and recurring costs for hardware, software, and peripheral gear, such as digital cameras?
• Can you lease or must you buy?
• What are the training costs?
• What are the staffing requirements?
• Can you customize the system?
• What about managed vision care plans? Will you be able to participate in third-party optical dispensing using a virtual dispensary? Each vision plan has specific participation requirements that you'd need to check out. For example, VSP mandates that the owner of the practice also own the associated optical dispensary, and the dispensary and frame displays must be physically located in the same suite as the examination rooms. So, would a virtual dispensary qualify under VSP as "owned" and "displaying frames in the same suite"? Other vision plans mandate that you display a certain number of their frames. If those frames can be displayed "virtually," would that qualify your practice for participation?
• How will the profits flow to you, and how will the profit margins in a virtual dispensary compare to those you'd get if you ran a traditional dispensary? You'd certainly want to run some numbers before heading down either path (or before adding a virtual dispensary to complement an existing one, for reasons such as capturing business when your office is closed).

Is it in your future?

In the next year or two, you're sure to hear more about virtual optical technology. If you're not currently dispensing but have been thinking about it, now is a good time to begin researching the opportunities. If you do have a traditional dispensary, now is the time to start looking at your cost structures and profit margins to determine whether an alternative or a complementary means exists to improve performance.

It will be an intriguing next few years.

Gil Weber, Ophthalmology Management's consulting editor, is a nationally recognized author, lecturer and practice management consultant to the managed care and ophthalmic industries and has served as Director of Managed Care for the American Academy of Ophthalmology. He advised a virtual dispensing company during its start-up. You can reach him at (954) 915-6771 or gil@gilweber.com.