Staying Up in a Down Economy

Practices offer a wide range of strategies that can keep you standing tall.

BY JERRY HELZNER, SENIOR EDITOR

Ophthalmology practices around the country are currently feeling the impact of the slumping economy to varying degrees, with elective procedures taking the brunt of the hit, a survey undertaken by Ophthalmology Management has found. In response, practices are looking at creative ways to cut expenses, replace lost revenues and provide superior delivery of basic patient services. One highly respected cataract surgeon, Johnny Gayton, M.D., of Warner-Robins, Ga., has even resumed his professional wrestling career "to help pay the bills."

However, if you aren't capable of performing a reverse suplex or applying a "sleeper" hold, read on for some specific ideas on how practices are coping with the downturn. Because of the sensitive nature of some of the information in this article, Ophthalmology Management has departed from our usual policy and agreed to quote some sources anonymously.

The Bad and the Good

Let's start with the bad news. Responses to the survey from approximately 30 practices from around the country indicate that the slump is almost totally attributable to elective spending, with laser vision correction down anywhere from 20% to 50% compared to a year ago. Some practices also report smaller percentage declines in eye exams and in the optical, while premium IOL procedures have increased by as much as 25% year-over-year in some practices and dropped by as much as 15% in others. The practice with the biggest increase in premium IOL procedures reports that it has shifted its external advertising focus from laser vision correction to premium IOLs.

One Midwestern practice reports declining trends in "any area that depends on spendable income and non-covered services." This includes "refractive surgery, glasses, sunglasses, contacts and even routine exams. We have not seen, at least at this time, any decrease with premium IOLs, however. This may reflect the age group or the socioeconomic status of the population that is interested in these IOLs."

The good news is that practices that don't depend heavily on elective procedures are seeing at least some growth in the diagnosis, treatment and management of common eye conditions and diseases. Some of this is certainly due to the aging of the baby boomer generation with the accompanying increase in cataract, glaucoma and retinal disease. Cataract surgeons in particular report that their practices remain healthy. In addition, many practices say that they are now focusing on a "back-to-basics" approach to offset declines in elective revenue.

Another good sign is that ophthalmology is somewhat sheltered from the economic storm because of recent improvements in reimbursement.

"Aside from the favorable demographics, the Medicare Fee Schedule contains a 1.1% update for 2009. Reimbursement for ophthalmic ASC procedures has also been improved, and there are now opportunities to receive pay-for-performance bonuses," points out Mark Kropiewnicki J.D., LL.M, a principal consultant with The Health Care Group, Inc., and a principal and president of Health Care Law Associates, P.C., in Plymouth Meeting, Pa. "So I would say that ophthalmology is somewhat sheltered, at least for the next year. I would also note that the decline in laser vision correction procedures didn't begin in 2008; it's been trending down for a couple of years and we may be seeing the worst of it now."

One Approach: Expense Control

In difficult economic times, almost all businesses seek to reduce their overhead. Ophthalmology practices are no exception. However, responders to our survey say they are looking to make prudent cuts in expenses and have not found it necessary to take drastic measures.

One large practice reports that it is reducing the size of raises for staff members in the new year but not cutting out raises entirely. Another large practice says that it has been able to more easily retain staff members as opportunities for job-hopping with ever-increasing salary and benefits packages have dried up.

"We are encountering situations where our employee has become the primary breadwinner in the family for now," says a partner in this practice. "These days, staff are more motivated to keep the job they have rather than looking for greener pastures elsewhere."

Yet another practice reports that it has brought in a new practice administrator in the hopes of achieving cost control and more efficient operation. A large practice is cutting its marketing budget and putting a higher percentage of its advertising dollars into cataract and premium IOLs. Other practices say they are turning to consultants for help.

"This may be a good time to look at bringing in a consultant," says Kropiewnicki. "You may have a situation where a senior partner who is a couple of years away from retirement does not want to invest in the practice in this environment, while more growth-minded partners may feel this is a good time to make capital investments to be prepared for future expansion. A consultant who has experience in guiding practices through this sort of a crisis can play a positive role by providing a perspective that allows the partners to reach a compromise that works for everybody."

Still, Kropiewnicki says that many practices are looking at the current economic landscape and postponing big-ticket purchases and/or expansion plans.

"I have yet to see a practice that is holding back on purchasing the equipment and supplies they need for day-to-day operations," he notes. "But they are being cautious about making major investments."

The Search for New Revenues

Practices are always seeking to develop new sources of revenue, but the need is more acute for those practices that are seeing sizable shortfalls in non-covered services. Fortunately, almost all general ophthalmology practices have a diverse patient base.

One practice reports that it is attempting to boost laser vision correction procedures by offering zero-interest financing. However, other practices say they have been vigorous in promoting that option in recent years and have to find other avenues to create additional revenues.

William Trattler, M.D., of Miami, suggests that building a dry eye practice is one way for ophthalmologists to leverage their expertise while also creating satisfied patients who have not been able to find relief for their problem elsewhere.

"Many of these dry eye patients have seen other doctors for advice, yet are still experiencing dry eye when they come to us," says Dr. Trattler. "Once these patients experience improvement in their signs and symptoms of dry eye, I find that they can be quite grateful for the positive impact that we have made in their lives. They can also become loyal patients and valued referrers for the practice."

With cataract surgery viewed as a dependable revenue source for the foreseeable future, some practices that don't want to make the considerable investment required for a surgery center are joining together to share a facility, usually in conjunction with a hospital. The surgeons must first agree on how to equip the facility, as the same phaco machines and microscopes are usually used by all of the surgeons. The day-to-day servicing of the facility can be outsourced to a national firm that provides all of the equipment and supplies, plus a tech who assists in surgery. Normally, under this arrangement the outsourcing company receives a fixed fee for each case.

Clarence Tam, M.D., of the Marshfield Clinic, Marshfield, Wisc., has been performing cataract surgery in a Marshfield Clinic-managed shared facility serviced by Sightpath Medical (Bloomington, Minn.) for the past 4 years.

"Initially, the surgeons got together and voted by majority rule to use the Infiniti (Alcon, Fort Worth, Texas) for phaco," says Dr. Tam. "But when I recently expressed interest in using the Stellaris (Bausch & Lomb, Rochester, N.Y.), Sightpath said that they would work with me. There is some give and take when additional expense is involved, but I find Sightpath to be flexible in terms of providing the surgeons with new technology. If we had an ASC where we owned the equipment versus outsourcing, I would be limited to using one phaco machine, so this arrangement gives us more options."

Opportunities in Coding

One area that is often neglected by ophthalmology practices is coding. Coding consultant Riva Lee Asbell estimates that only about 10% of ophthalmology practices regularly employ the services of a coding consultant.

"Most practices have a tendency to undercode because they either fear being audited or they lack expertise in coding," says Asbell, "A good coding consultant can help a practice optimize reimbursement while also staying in compliance with the law."

Amir Arbisser, M.D., of Eye Surgeons Associates, with offices in Iowa and Illinois, notes that "in our practice simple attention to proper coding resulted in a six-figure improvement in the bottom line."

Dr. Arbisser says the practice has been highly proactive in dealing with the economic slump by initiating a multifaceted effort to develop additional revenue.

"Our ever-vigilant quality/compliance team monitors individual doctor's practice patterns to be sure all the patients benefit from the full range of diagnostic technology appropriate to their conditions," he says. "The team leader regularly meets with the individual doctors regarding proper coding and testing. We're educating our physicians and their scribes to properly document services to achieve optimal coding instead of ignoring defensive undercoding. Our staff is more vigilant about protecting the schedule and maintaining an active list of patients seeking earlier appointments who get moved up when cancellations occur. We now review recently inactive charts for untreated pathology and invite patients back for care."

Emphasizing value has worked to grow optical shop sales.

In addition, the practice is now offering hearing services, which Dr. Arbisser views as being complementary to ophthalmology because it is a service that is primarily directed toward many of the same seniors who require regular visits for eye care and who have great trust in their ophthalmologist.

"I would strongly urge practices to be careful in implementing this or any new service line," Dr. Arbisser cautions. "We benefited from our administration carefully orchestrating the introduction of this service."

Are Premium IOLs an Answer?

As mentioned above, many practices report that the number of premium IOL procedures has remained relatively stable — or even grown some — despite the sharp declines in laser vision correction. Clearly, the market for premium IOLs encompasses an older and often more financially secure demographic.

Alan Aker, M.D., of Boca Raton, Fla., reports that he has been enjoying significant bottom-line success with the Crystalens premium IOL (Bausch & Lomb) while serving a community that has a large percentage of upscale retirees.

Dr. Aker previously relied solely on word-of-mouth and internal marketing efforts such as office posters, a constant video loop highlighting the Crystalens on office TV monitors and a screening van that circulated through neighboring communities. However, more recently he has done some external marketing in the form of advertising in a prestigious local publication targeted to high-income subscribers.

"So far, this seems to be an example of advertising dollars well spent," says Dr. Aker. "We don't try to ‘sell’ these lenses. We let the lens sell itself. And we do encourage (premium IOL candidates) to ask other patients what their experience has been."

One caveat: While premium IOLs represent a major technological advance that can be an excellent choice for appropriate candidates, highly respected cataract surgeon David Chang, M.D., of Los Altos, Calif., worries that some ophthalmologists may be tempted to oversell premium IOLs in a difficult economic environment.

"Ophthalmologists should be careful not to change their indications or to sugarcoat expectations in order to increase premium IOL volumes for economic reasons," cautions Dr. Chang. "How much value individuals assign to reducing spectacle wear is a personal decision and we must continue to inform, rather than sell. The premium IOL channel is vital to the long-term future for cataract/refractive surgeons and our patients. Also, the value has not diminished — just the affordability for many. I would hope that ophthalmologists do not become more aggressive about indications or discount pricing for short-term gains that jeopardize the future of this channel."

Back to Basics

Rather than focusing on specific ways to increase revenues, many practices report that they are striving to improve the overall patient experience. They are accomplishing this through increased staff training, adding value wherever possible and evaluating their performance via patient feedback.

Bradley C. Black, M.D., of Eye Associates, Jeffersonville, Ind., says the goal of his practice now is to "maximize the service level of our staff and remember to reinforce all of the things that made us successful in the first place. Plus, we make sure we are as lean as we can be without sacrificing the quality of patient care."

An administrator at another practice says "back-to-basics" strategies that emphasize benefits to the patient are working, with optical revenues up about 5% year-over-year and premium lens conversions ahead of 2007.

"In these areas, we are putting less emphasis on the product and more focus on the value that choosing a specific option will bring to your life," says this practice administrator.

Optimizing the patient experience during difficult economic times is made harder by the fact that compliance can suffer when a patient's finances are stretched to the limit. Practices must be aware of increased compliance issues associated with financial hardship.

"I am greatly concerned about the impact the economy is having on patient compliance with both office visits and compliance with their daily medications," says one glaucoma specialist. "Patients with glaucoma often use topical medications on a daily basis. These topical medications are often the first to go for a patient on a limited budget. Because there are rarely any acute changes when patients miss doses of their eyedrops, they seem to be inclined to become less compliant as their financial picture worsens.

"Stresses like loss of a job, or loss of net worth due to market fluctuations, have caused hundreds of my patients to become sub-optimally compliant. In addition to missing their medications, they have become more likely to skip or miss scheduled follow-up visits. In this instance, a well-orchestrated and choreographed appointment center is crucial to maintaining patient follow-up flow. The failure to follow-up on a timely basis can render the physician at medical-legal risk for failure to ensure proper and timely delivery of care. The burden of ensuring that the patient returns for follow-up rests on the shoulders of the physician."

Lessons Learned

Though the current downturn has brought at least some pain to most general ophthalmology practices, they are learning that having a diverse range of efficiently managed revenue streams is the best way to guard against shortfalls in a specific profit center.

"We just had the best 2 months in the history of our practice," says a partner in an Arizona practice. "We have gotten back to basic ‘blocking and tackling’ and focused on the favorable demographics provided by the retirees who make up a significant percentage of our patient base. Those practices that offer a broad spectrum of services to a myriad of patients will have an advantage between now and the time when the economy improves."

Overall, ophthalmology practices grounded in diagnosing, treating and managing pathology appear to be in a good position to weather the storm. For practices that were heavily concentrated in elective spending, the awakening has been a rude one. OM