Optical Shops Can Be Key Profit Centers

Outlined here are the benefits of an in-house dispensary.

BY LESLIE GOLDBERG, ASSOCIATE EDITOR

In today's marketplace, it may become necessary to research new revenue-producing avenues in order to continue to grow your practice and keep your patients happy. Below, two experienced optical dispensary managers explain that when run effectively, a dispensary can be an excellent revenue source.

Growth Despite Competition

Missy Wright, an optician at Eye Centers of Tennessee, in Crossville, Tenn., says that her dispensary sees about 350 patients in the course of a week. She says that while the dispensary has experienced increased competition in recent years in the form of a large chain store and an increased number of ophthalmologists and optometrists with dispensaries, their business continues to thrive.

"We get lots of walk-in traffic because of our street visibility," says Wright. "Our dispensary was designed so that people could see us immediately once they walked in the door. This helps patients feel more comfortable when they come in to see us."

She says that many people will actually leave the larger chain store and come to their dispensary because of the higher-end frames and, more importantly, because their optical shop accepts many forms of insurance. For example, the local chain does not accept Medicaid.

Eye Centers of Tennessee is also proactive in recruiting new patients. "We have factories in town with health insurance plans that we accept. We will send out flyers saying 'Eye Centers of Tennessee accepts your insurance,' in order to get them in the door," says Wright.

Relationship Building

Wright says that about 85% of the time, the technicians will bring patients to the dispensary. The ophthalmologist will recommend the dispensary visit during a patient's exam. "The optician will take measurements of the patient while their pupils are dilated and help them pick out frames. We stress to the patient that it makes sense to have the exam and glasses done at the same place," she says.

"Those patients not brought to us by the technicians or doctors come due to word of mouth," says Wright. "We are very close to a retirement community and most of our new patients from there are neighbor referrals."

The dispensary also started grinding its own lenses about 4 years ago to create efficiencies and save costs. "This saves a lot of time with certain orders. We are more in control of what we are dispensing — 90% of the jobs are done in-house. It's nice to have that kind of quality control," says Wright.

Many returning patients trust and ask for a certain eyecare professional, says Wright. The store has very low turnover – with most employees staying with the practice for more than 10 years. They have also added a new optometrist, who brings in more and younger patients. "He is there on a daily basis, and that makes a big difference," says Wright.

The Bottom Line

"In 2000, optical represented 24.6% of our total charges," says Ray Mays, who oversees the administration of four offices and one ASC for Eye Centers of Tennessee, LLC. "In 2007 it is 30.5%. Although that is a very small increase over 8 years, the real growth has been in profits. In 2000, optical represented approximately 30% of our profits, now it is 50%. We have grown from $98,000 per month in sales in 2000 to over $205,000 per month in 2007."

Mays says the practice spends zero dollars on marketing. "All of our marketing is done during the exam process. We do a couple of things that are unique that have really added to our sales, but as for external advertising we don't do any at all," he says.

"About 5 years ago, we decided to stop doing things like everyone else in ophthalmology. There were just too many consultants and 'experts' handing out advice that just didn't make sense to me," he says. Mays says that most of the advice going around focused on gathering numbers, like capture rates, and turning those numbers into graphs so that the doctors could look at the charts.

"I started contacting retail consultants from outside ophthalmology/optometry and then applied those techniques to our practice," he says. "Our focus now is on sales, pure and simple. I know that sounds basic, but it has worked for us."

The optical manager tracks frame sales, single-vision lens sales and progressive lens sales, but the practice's focus is on making a sale to every patient who is a candidate.

The practice averages 1,900 coded exams each month. Of that 1,900, approximately half of the patients are in need of new glasses. The remaining half are being seen for other conditions relating to a particular eye problem. "The glaucoma patient who sees us four times a year is only a candidate for new glasses once that year. If all a practice tracks is total optical sales divided by coded exams, then the result is a number that is really not relevant," says Mays. "It's the same as dividing sales by number of refractions. It does produce a number, but not a good one. We track sales divided by candidates, total revenue (from all sources) divided by coded exams and total profit divided by coded exams."

An Optician's Value

Greg Veatch, optical manager at Eye Centers of Florida, Fort Meyers, Fla., says that maintaining a high capture rate of prescriptions is an important benchmark in optical success. "The income is generated from sales of frames, lenses and additional add-ons," says Veatch. "The optician develops a long-term relationship. An optician may see a patient six to eight times over a 2-year span — adjustments, repairs, picking up a new pair of glasses. An ophthalmologist may only see them once during that time.

"The value of an optician is tremendous," says Veatch. "For example, if a routine eye exam converts to a dispensary purchase of a pair of progressive lenses and prescription sunglasses, that may translate into upwards of $1,000 worth of eyewear sold in an hour," he says.

Veatch also notes that a good optician can often turn a repair into a sale. "For instance, if a person has broken a frame and wants to put the lenses into a new frame, I will explain to them that the mechanics of trying to take that lens, made for a specific frame, and fit it to another pair of glasses may not work. Then I say, 'Oh, when was the last time you had an exam?' We can often change that meeting into a complete exam and, hopefully, a sale."

Veatch says little things like free adjustments keep patients loyal and coming back. Additionally, warranties can help endear you to a patient. He says that while the normal dispensary covers items for a minimum of 1 year, Eye Centers of Florida offers a 2-year warranty on many items. By providing this extended warranty to the customer, you are increasing the chance that he/she will come back in the future due to the superior service they receive.

Vendor Assistance

"We hire licensed opticians with great knowledge and in-depth control of the industry," says Veatch. Eye Centers of Florida provides monthly in-house sales and marketing courses. They have implemented these courses through close relationships with various vendors (most specifically, Hoya, San Jose Calif.).

"Our opticians develop relationships with experts in the field and we save the practice money as well, as the training is in-house," says Veatch. "Additionally, we want to bring this new knowledge and technology back to the ophthalmologist, so that he/she can present the newest material to patients.

"We allow a percentage of each location to be managed by a given frame vendor," says Veatch. "I choose those vendors. Then, each vendor communicates with the lead optician at the satellite offices and that optician chooses products from the line that best meet the needs of their individual demographics. The facility, well-trained staff, vendors and loyal patients add up to a successful equation for a dispensary."

Doctor Assistance

The proactive actions of doctors enhance the capture rate of patients, says Veatch. "They advise in the lane based on lifestyle needs and medical concerns," he says. "It is an extension of their professional responsibilities to offer the latest in design and technology in eyewear. This information is relayed to the optician by the doctor or tech, enabling the optician to fulfill the doctors' desires and meet the patients' needs." OM