Practice Profits: The Case For Contact Lenses
From a purely financial standpoint, which modality can be expected to deliver higher profits to your practice; spectacles or contact lenses?
The answer is, BOTH.
If you are an OD who views spectacles as more profitable for your practice than contact lenses, you may want to consider the following data presented at Vision Expo East by Dwight Ackerman, OD, Director of Professional Programs for CibaVision.
– First off, there is no argument. Practice owners generally realize higher gross margins on frames and spectacle lenses than they do on disposable contact lenses.
– CV's data show the average gross profit margin on spectacles is 62%.
– By comparison, their surveys puts the gross profit margin for contact lenses at 46%.
Don’t Overlook Long-Term Value
However, gross margin on one product sale does not accurately paint the whole profit picture when it comes to contact lenses.
The more important question for independent OD’s is: What is the long-term value of that patient to my practice? According to Dr. Ackerman, that’s where contact lenses can give you a higher financial return.
Based on CibaVision’s research, contact lens patients, on average, generate 91% greater revenue for the typical OD practice over a six year period.
Why Contact Lenses Are More Profitable On A Long-Term Basis
– Contact lens patients return to the practice more frequently for eyecare and eyewear.
– Those patients also require medical services more often for red eye, dry eye and allergies.
– And the key finding: Patients who purchase both contact lenses and spectacles are ultimately the most profitable to your practice.
Not surprising when you think about it.
Readers of drhayesblog.com are invited to give feedback by email or Click the red 'Click To Discuss' link below to share your thoughts. How would you handle this situation in your practice?
Regards,
Jerry Hayes, OD
Agree with this blog? Disagree? Have a comment or question of your own? Click the red 'Click To Discuss' link below to share your thoughts. Or, to send me an e-mail or suggest other topics click here.
Become a FAN of Dr. Hayes' Blog simply go to Facebook.
Disclaimer: The information and opinions contained on this site are for discussion purposes only and are NOT intended to serve as legal, accounting or investment advice. ©2010 Jerry Hayes, OD. Not to be reproduced without written permission of the author.
Back To Top
contact lens profitability
I think Dr. Ackerman has some valid points. Contact lens patients come in more frequently, each time creating the opportunity to purchase prescription eyewear or non Rx sunglasses. As for competing with the online suppliers and big box stores, price your lenses competitively and keep inventories in the office. The only thing more convenient than home delivery is to see your annual supply sitting on the table in front of you at the time of check out.
Contacts vs Spectacles Profitability
I would agree CL patients probably do require more care. But more profitable than spectacles? I don't think so.
Dr. Ackerman is a very bright leader in Optometry, however, he is not in the trenches anymore. The profitability in contacts is dwindling, and sometimes nonexistent. With Costco, Sam's and BJ's able to sell lenses for our cost, or pennies over cost, the profitability is nill.
Yes the patients still have to come in, but will they in the future? Canada has already made CL's nonprescription over the counter items. Online resalers are able to be competed with, and we can make a small profit. More often than not, patients come in willing to but not wanting to pay for fitting fees and follow ups, then want their Rx so they can buy at the Big box stores.
Rebates from the manufacturers help, but ultimately if you are not putting them in the newest products, the rebates are not enough, or you have to take a lower mark up so you can match the price with the rebate.
Not everyone is willing to pay the higher price of the new products, knowing that in the following year the rebate is likely to be lower, and the price of the contacts still higher than what they were previously wearing. It is a challenge.