As you’re well aware Colleagues, the topic of the last two SUMMIT TALK Podlectures (‘Yes or No on Vision Plans, Parts 1 and 2’) and the last BOWEN’s BLOG (A Colleague Dialogue About Giving Vision Plans the Boot! Part 1) has been a very “engaging” subject regarding vision plans.
As we continue that conversation, I just want to mention how much I appreciate all the dialogue with you these recent days. We’ve clearly hit on a topic on which many of us have strong and even passionate opinions, and I love that kind of power dialogue. So keep it comin’!
And from that dialogue, I can tell you this for certain, friends (as old Tony Baretta used to say on the TV show – “You Can Take It To the Bank!”): Colleagues across the country are already taking or considering steps to “un-manage” their patient bases.
At least to some extent, that is. We’ve talked about how the pendulum of society tends to swing back-and-forth (my theory on why history repeats itself). What I can tell you we’re seeing right now is the pendulum of managing care swinging back to un-managing it, at least to some extent (recall our conversation last time about Canadian optometry “de-insuring”).
If you’ve been with us in the conversation (and if you haven’t, I encourage you to go back and catch the last couple Podlectures and the last Blog), you know I strongly believe there is no set-in-stone answer to the question of yes or no on visions plans. We laid important groundwork establishing there is no end-all answer for a specific practice at any given time. And for any practice, the answer can change on a dime for that practice, given something like hiring a new associate, opening a new location or adding a new service. So, if and when we opt to cherry-pick the vision plans, we make sure (tempting as it is to tell them with exclamation to take a hike!!) we don’t burn bridges we might need should we need to cross back over them.
We also established the need for reliable, real-time data when making this and every important practice decision, and I shared my 4 A’s of Great Decision Making in doing so.
1. Anchor – designate the specific practice outcomes on which you will base this decision.
2. Accumulate – gather the data for those indicators (involving the team as able).
3. Analyze – determine what this information is telling you relative to the question of vision plans.
4. Affect – make the decision(s) and take the action(s) that will favorably impact your outcomes.
Literally just yesterday, I went through this exercise with a client. They’ve had each member of the team reporting a practice vital sign weekly for months now (this is THE ONLY way to do metrics!), and we have the data to make our decision. They are averaging 105% Production Capacity (meaning they are overbooked not just here and there, but as an every-day average for months now). We have the data, and CLEARLY it’s time they cherry pick some vision plans. To say SAYONARA to the bottom two dweller plans (and won’t it feel good!). But were they at 85% capacity instead, it would likely NOT be such a time.
OK, that said, let’s pick up where we left off sharing some HELP DESK conversations with colleagues in recent weeks on the hot topic of vision plans.
Tom: Does the practice offer a Vision Benefits Program for companies that don’t have a vision benefit for employees? And how about a preferred patient/VIP Savings Program for private pay patients?
Colleague: No, but you definitely have my ear. I know you’ve mentioned this, but we don’t have anything up and running.
Tom: This is a big one. I have worked with practices that were able to drop literally every single third-party vision plan by doing this. So let’s do it. Let’s extend a vision benefits program to companies that don’t provide vision benefits, keep the third-parties OUT OF THAT, get a good number of small to mid-sized businesses (perhaps even some big ones!) on board, then we can cherry pick the vision plans. But I prefer we have that in place and companies on board BEFORE we say sayonara.
A client many years ago in Missouri scored the public power company on their in-house Vision Benefits Program a year or two after we put it in place, and it completely changed the landscape of profitability in the practice. Their own “vision plan,” with no third party, displaced a huge portion of the third party vision plans (some of which were already showing their true colors and drive-drive-driving fees lower while expenses were drive-drive-driving higher – sound familiar?).
That’s a home run, of course, but the more likely scenario is that we hit singles, doubles and triples with small to mid-sized companies. And those employees have families, neighbors, friends, etc. If we figure in what I call ‘The 3-for-1 Rule of Cost Effective Marketing’ (average three referrals for every new patient), such a plan supercharges the referral system of the practice exponentially.
There are some things I really like about the concept of a “vision plan” for patients, including increased likelihood of an ongoing active plan for a patient’s family, AND the idea of helping make the best eye care in the marketplace more affordable (but NOT to an extent where you’re losing money seeing a patient!). And when we don’t have that third party constantly driving reimbursements lower, a “vision plan” concept can work really well. Let’s make this a priority, and let’s get your Marketing Coordinator all over it. The sooner we do so, the sooner we can cherry pick and drop the lame plans.
Colleague: Is that the same thing as what you mentioned about the VIP type program for private-pay patients?
Tom: Good question, and no – two totally different things. The VIP Program (and let’s brand that in your practice with a cool name – a “sub-branding strategy” within the practice) is for the straight-up, private-pay patient. So they don’t have a third party vision plan, and their employer has not chosen to participate in our Vision Benefits Program. This is where we bring in those “concierge” type extra-mile services and put some special VIP savings in place, etc. And if it were me, I’d full-on externally market this program (outside the walls of the practice). Not with a price emphasis, but with a “don’t be penalized because you want the best” type emphasis.
EDITOR’S NOTE: The really cool thing about marketing is you can literally target your new patients. You can choose who will be your new patient by the nature of your message. Can’t do that with third party plans!
Tom: What percent of your patients are purchasing second pairs and other items not covered in the third-party vision plans?
Colleague: I’m not sure how to track this, so I don’t know.
Tom: This is a really important thing to know when considering dropping some or all vision plans. Let’s have a team meeting soon specifically to discuss and quickly decide how we’re going to track this and get to it.
In the meantime, let’s start with an estimate by the doctors and staff with a practice-wide survey. From my experience with thousands of practices, I’m guessing they’ll estimate high, but at least we’ll have an idea and that helps with some decisions for now. Then let’s set an objective for this metric, and start tracking it ASAP. In a few weeks, we’ll have our our answer.
EDITOR’S NOTE: A similar conversation was had about contact lenses and other specialty services not as inclined to be covered by vision plans.
Tom: As with all matters of performance, our results are about making a decision. It’s always about making a decision before it’s a strategy or initiative. The decision has to power the initiatives, or they will fizzle for sure. I’m confident we could increase these outcomes considerably, and I’m perfectly happy for our motive in doing so to be dumping certain vision plans.
Tom: Shifting gears, what is the practice’s net profit percentage?
Colleague: I’m never sure exactly how to figure that one and we’ve been told different things. The way we’re calculating, net is around 26%.
Tom: I hear you on the net confusion. Let’s talk about that quickly. Net is typically calculated in one of three ways:
1. Practice Net is dollars left over after paying all practice expenses, NOT including (not deducting) any doctor compensation (owner or employed doctors) from this number. This is the one I have in mind when I hear “The practice is netting …”
2. Owner’s Net is dollars left over after paying all practice expenses, then deducting all compensation paid to employed doctors. This is the one I have in mind when I hear, “I’m (or We’re – meaning owner or owners) netting …”
3. True Net is Owner’s Net minus all owner compensation. This is the figure often scrutinized by practice consolidation groups when they are acquiring practices, but rarely the number referenced when independent colleagues talk about “net.”
I’m fine with any of these as the method we use to calculate net. The really important thing is that we figure net the same way every month so we know how the practice is trending. That’s when we can make decisions about cherry picking vision plans.
Colleague: OK, then I’m pretty sure we’re figuring it as “Owners Net.”
Tom: OK, so this is one I think we target to increase, and is likely key in our answer regarding dropping vision plans. I know you guys are doing a lot of medical optometry, which is less inclined to be impacted by the vision plans. But if we decide to do some cherry picking and drop at least the less desirable plans, and we can keep the schedule similarly booked up, we will increase your net. And likely considerably.
OK, colleagues, there’s a slice of the vision plans dialogue we’ve had the past few weeks for us all to share. I’ve learned most of us have similar ponderings on the topic, and my hope is this dialogue provides you with some insight right there at home where it matters most.
So let’s conclude this month’s chat with a few quick “true-isms” I’ve gathered over the decades working with you:
1. Not all business is good business.
2. It is what we make it (as opposed to “it is what it is” – I’ve never agreed with that!)
3. Results by design will ALWAYS outperform results by hope.
4. If we control what we can the best way we can, we will prevail over what we can’t.
If it would be helpful to talk more about these and other strategies to accomplish that booked solid production metric, shoot me an email (tbowen@mythrivecoaches.com). That’s exactly why we’re here, and I love the dialogue!
P.S. – DO NOT MISS next month’s Podlecture, “Yes or No on Vision Plans, Part 3 – Proof of the Pudding in a live client chat!”