Power Hour Optometry: Is It Time to Drop a Vision Plan? Steve Alexander on Retaining 50-70% of Patients as Cash-Payers

Release Date: November 20, 2024

In this insightful episode of Power Hour Optometry, hosted by Eugene Shotsman, the conversation delves deep into a critical and often contentious topic within the optometric industry: Should practices consider dropping vision insurance plans? Joining Eugene is Steve Alexander, a seasoned consultant with over two decades of experience in enhancing practice profitability. Together, they explore the nuances, data, and strategies surrounding this pivotal decision.

1. Understanding Independence in Optometry

Steve Alexander opens the discussion by challenging the commonly held notion of "independence" among optometrists. He draws a compelling analogy:

[03:44] Steve Alexander: "When you go in network with some of these vision plans, you're giving away a fair amount of control for the quality of experience that your patients have."

He emphasizes that true independence is compromised when practices enter into vendor-like relationships with vision plans, relinquishing control over pricing, product offerings, and patient interactions.

2. The Hidden Costs of Vision Plans

The episode underscores that while vision plans are often perceived as valuable marketing tools, they come with recurring costs:

[05:20] Steve Alexander: "With vision plans, that is not the case. You're paying acquisition every year."

Unlike traditional marketing, where customer acquisition is a one-time expense, vision plans entail residual customer acquisition costs, continually impacting the practice's bottom line.

3. Patient Retention Insights

A significant portion of the discussion revolves around the data supporting the retention of patients when a vision plan is dropped:

[06:18] Steve Alexander: "If you've been in network for a period of time and you decide to no longer be in network the following year, you can expect to retain about 50 to 70% of your patients from that vision plan."

Steve highlights that 50-70% retention is achievable, especially in practices that prioritize quality patient experiences. Remarkably, many patients who initially leave may return within a year, recognizing the superior service your practice offers.

4. Financial Implications and Profitability

Eugene and Steve delve into the financial mathematics of maintaining versus dropping vision plans. Steve provides a clear framework:

[20:10] Steve Alexander: "A private pay transaction will drop way more money to your bottom line, typically two to three times what an in network vision plan patient on the lower reimbursing side of things would."

By transitioning patients from low-reimbursing vision plans to private pay, practices can significantly enhance their bottom line revenue. This shift not only increases profitability but also simplifies administrative processes, eliminating the need for reconciliation and reducing overhead.

5. Effective Communication with Patients

One of the pivotal strategies discussed is how to communicate the discontinuation of a vision plan to patients:

[24:21] Steve Alexander: "We've decided to end our contractual relationship with that vision plan. However, we will find what out of network benefits you have available to you, and we will file the claim on your behalf."

Steve advocates for transparency and support, ensuring patients understand that they can still leverage their out-of-network benefits. This approach fosters trust and encourages patients to continue their relationship with the practice despite the change.

6. Leveraging Technology for Seamless Transitions

The conversation highlights the importance of utilizing software solutions to assist patients in maximizing their out-of-network benefits:

[43:22] Steve Alexander: "Anagram software for out of network insurance eligibility is called open access. So, as an open access provider, which is basically an out of network thing with slightly nicer language, it allows the practice to convey to the patient what the benefits actually are."

Implementing such technologies streamlines the process, making it easier for both the practice and the patients to navigate insurance benefits without the typical administrative burdens.

7. Operational Efficiencies and Growth Opportunities

Steve brings to light the hidden operational costs of being in-network with multiple vision plans:

[49:38] Steve Alexander: "There are hidden costs associated with being in network with too many plans... those things take time and effort where your team isn't doing something else."

By limiting the number of vision plans, practices can enhance operational efficiencies, reduce administrative workload, and open up more opportunities for practice growth. This strategic focus allows for better patient management and the ability to accommodate new patients more swiftly.

8. Benchmarking and Profitability Metrics

Eugene challenges Steve on establishing profitability benchmarks, to which Steve responds with practical advice:

[36:25] Steve Alexander: "Your per patient profitability should always be above how much time you're spending on that patient or the cost of spending that time with the patient as it sinks to even, or your cost is higher than you're getting back from the vision plan, then that's a clear indication that you should step away from that plan."

He emphasizes the importance of understanding fixed and variable costs, ensuring that each patient interaction contributes positively to the practice's financial health.

9. Addressing Patient Objections and Value Communication

Handling objections is crucial when transitioning away from vision plans. Steve advises:

[42:50] Steve Alexander: "If you are able to confidently convey we're out of network or with Anagram customers, say we're an open access provider, then your patient knows that you know what you're talking about."

By positioning the practice as an expert in maximizing out-of-network benefits and emphasizing the superior value and services offered, practices can effectively convert potential objections into opportunities for engagement.

10. Final Reflections and Best Practices

Concluding the episode, Steve highlights the importance of strategic planning and foundational skills:

[41:01] Steve Alexander: "If you're able to develop those skills, those conversion skills on a low patient volume, and then you move to the next one up and you're able to convert at a higher clip, and then if you're converting half of your phone calls who are out of network to patients, then it doesn't matter what vision plan you Drop."

He reiterates that success hinges on the practice's ability to adapt, communicate effectively, and prioritize high-value patient interactions.

Key Takeaways

• Assess Profitability: Regularly evaluate the financial impact of each vision plan, focusing on bottom line revenue and profit margins.

• Strategic Dropping: Prioritize dropping lower-volume and lower-profit vision plans first to maximize financial benefits.

• Enhance Communication: Develop clear, transparent communication strategies to inform patients about the change, emphasizing the value and quality your practice offers.

• Leverage Technology: Utilize software solutions like Anagram to streamline benefits processing, making it easier for patients to access out-of-network reimbursements.

• Operational Focus: Reducing the number of vision plans can lead to operational efficiencies and growth opportunities, allowing practices to better serve high-value patients.

• Team Training: Ensure your team is well-trained to handle patient inquiries, articulate the value proposition, and convert out-of-network patients into loyal, profitable customers.

Notable Quotes with Timestamps

• Steve Alexander: "With vision plans, that is not the case. You're paying acquisition every year." [05:20]

• Steve Alexander: "If you're able to develop those skills... you are more profitable than if you captured both in network." [41:01]

• Steve Alexander: "Anagram software for out of network insurance eligibility is called open access." [43:22]

• Steve Alexander: "Your per patient profitability should always be above how much time you're spending on that patient." [36:25]

Conclusion

This episode of Power Hour Optometry provides a comprehensive exploration of the strategic considerations involved in maintaining or dropping vision plans. Steve Alexander's expertise offers optometric practices actionable insights into enhancing profitability, improving patient retention, and optimizing operational efficiencies. For practices grappling with the complexities of vision insurance, this episode serves as an invaluable guide to making informed, strategic decisions that align with both financial goals and patient care excellence.

For more information and to access resources discussed in this episode, visit www.PowerPractice.com.