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Managing Managed Care, Capture Rates and the Missing Middle for Practice Growth with Todd Lossone
01:00:35
Navigating managed vision care can be complex. Between reimbursements, benefits, and patient expectations, finding the balance between patient satisfaction and profitability is no small feat. But what if the key isn’t fighting the system,...
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- [00:00]
A
If you were to bucket every patient that walks into the practice and put them into easy to understand categories that you can action on, came down with three categories. Number one is new patients that are new to us, we have no data on. Then the last two are the people you have in your practice. We have our existing captured patients, right? The people that come in and get the stuff every year. They're the people that we make our money on. Then we have the existing uncaptured. If the existing uncaptured patients are our largest group of untapped profitability, why are we not targeting them? Why. Why are we not absolutely going out and trying to get those patients back into our system?
- [00:37]
B
What are the biggest findings in terms of where their biggest opportunities are?
- [00:41]
A
So for the majority of people, there is. One of the other key things within my learnings over the last few years is the importance of frames in the practice. It's my feeling that doctors don't understand the frame game. If you can better understand the frame game, it'll enrich the practice. There are doctors that actually have a capture rate over 100% on VSP. The one thing that I saw that's in common with them, that those are the doctors that have the best frames. Because what's happening, the dynamic is they'll see their thousand patients and they'll have their 90 or 80% capture rate. And then they'll have a bunch of other patients that will come from other practices, get their exam, come there and buy their glasses because they like the frames there. So frames do matter. Is that that emotional component? They're like, oh, I like the way I look with this one.
- [01:25]
B
If you take my VSP report and you open that report up, what are the top five numbers that you're looking at to tell me what I can do?
- [01:33]
A
The single most important number to me when I'm going through this is.
- [01:46]
B
Welcome to the Power Hour, Optometry's biggest and longest running show. I'm your host, Eugene Shotsman. And today we're tackling an important and, let's be honest, frustrating topic in practice management Vision benefit plans. So my guest is Todd Lassone. He is the senior manager of Strategic Partners, which is a nice corporate title at SLO Exotica, but really, Todd is an amazing human with over 30 years in the industry and he started on the ECP side of the table running optical and optometry practices. And now he works closely with practices across the country to help them better navigate the nuances of get this managed care. So more specifically, he's worked for vsb, now he works for el. So he seems like the perfect person to bring on the show to discuss the role of managed care and optometry. And honestly, the show went a little bit differently than I had planned and probably in a good way. Todd talked a lot about the capture rate opportunity that practices have and we discussed what's missing from most practices to capitalize on it. So he has this term that he calls the missing middle of patients who are walking out with exam only, which we know is a really big focus of mine and something I'm pretty passionate about. So he talks about various techniques and even things like how your frame board could be a big lever of profitability for recapture there. And just you'll hear this, but this is one of those episodes where there's a ton of little golden nuggets throughout. For example, I love Todd's folder idea which we'll have to listen to the episode that figure out what it is. And given the diversity of perspectives that I like to feature on the show, you might just be convinced that managed vision care is not anatomy but a source of opportunity. Maybe not. But what you should look for at the very end of the episode is also a few numbers to see if you're handling managed vision care right to drive profitability into your practice. Before we get started, just a quick reminder. I do respond when you reach out. Are you convinced? Are you not convinced? Do you have episode ideas, questions, or you just want to connect? Head over to Eugene Shotsman.com or the power Hour website. Drop me a note. And of course make sure that you're subscribed on YouTube, Spotify, Apple Podcasts or wherever you listen so that you never miss an episode. So let's get into it. Here's my conversation with Todd Lassone. All right, Todd Lassone, welcome to the Power Hour. Excited to have you on the show, Eugene.
- [04:08]
A
Thanks for having me. This is a fantastic experience. You know, I've been hoping that one day I would be invited to come on.
- [04:16]
B
Well, here we are and I'm grateful that you made some time for us. So Todd, for everybody listening, explain to people what your job is and what your and what you try to do over the course of your day to day.
- [04:30]
A
Sure. So currently my position with Essler Luxottica as is the senior manager for strategic partners and I usually joke about it. That means I'm wrong.
- [04:40]
B
That's a really clear title. I know exactly what you do from that title.
- [04:44]
A
Exact. It's like I'm old and I get to work with very cool people, you know, and what I basically what, what, what ESL Exotica has asked me to do over the last, you know, 10 plus years is because I, this is year 33 for me in the industry and I started off like working for like a master optician and being trained there and worked for optometric and ophthalmology practices, you know, before I even became, you know, got into outside sales. I've got a very different, you know, perspective on the industry. I always see it through the lens of the ECP because that's where, that's my foundational experiences. So it's kind of, it's kind of in many ways gratifying that, you know, during my day to day I get to come in and talk with these doctors who have a fundamental lack of knowledge within the managed care space. Being from California and working in California, there is so much managed care, especially around the major metropolitan areas that there's not enough private pay to make you healthy if you don't get the managed care right. So if you can't get that piece right, you know, we're always going to be on our back foot. So my, my job on a day to day basis is helping people better understand where the money is, what they're leaving on the table, you know, what they're doing well, and what are the avenues that they can take to, to be able to improve the practice and.
- [06:08]
B
Do something specifically, specifically in the, in the realm of, I mean, your specialty. And one of the things I've heard you talk about in the past in a very enlightening way is this whole concept of integrating managed care and these vision benefit plans right into, correctly into your practice.
- [06:27]
A
Absolutely, absolutely. You know, you figure, you think about these managed care plans, you know, they're just pipelines of patients that are in your community that flow into the practice. If we have this pipeline of patients that are coming through, we want to make sure that A, we're serving them great, we're giving them great healthcare and then B, that we're being able to close the circle of care and dispense the contacts and the spectacles. They'll help and see well and we want to do so. Technically speaking, you should want to bat for the highest average possible.
- [06:59]
B
So you said you're kind of on the side of the ECP and you got a chance to see the world through the, through the lens of the ecp. So I have to ask you this question because, you know, I think a few weeks ago we had the members of the AOA on The show and they talked about how managed managed benefit or sorry, Vision benefit managers as they call them, which is same term for managed care, same term for eye care insurance or as our patients call it, whatever we want to call it. You know, there's that, let's just take the mask off and call it vsp, iMed. These are big companies, they have a lot of influence in the industry and AOA was saying, hey, they have too much influence in the industry and that needs to be curbed. What's your perspective? And you know, this show is a lot about diversity of thought, but also you, you have a unique perspective because you worked inside the practice, you help practices with your work that you're doing on a day to day basis that we're going to get into. So I'm curious, you know, you're kind of on the other side looking in, what's your perspective on that?
- [08:09]
A
Yeah, that's a great question. So when you think about it, you have, you have three entities in that, in that conversation, right? You have the, the optometric community, right. You have the insurance community and then you have the patients who by the way, they're patients to the ecp, but they're members to the insurance company. Right. And both sides think that they should have the primary position in front of the member or patient. They think that their relationship is the most important. So you could see how this is going to set up some friction, right? You think about, you think about the patient, you know, which is where we should start thinking who do they want to be their primary contact between them and in their care? Do they want A, the doctor or B, the insurance company, Right. If once you start looking at it from the, from the lens of the patient, right, which is the piece that's kind of left out of the conversation, right. So once you kind of look at it through their eyes, it's like, okay, I totally see, you know, why, you know, the AOA would want to be pushing back and they should, they need to, they're going to drag the conversation this way the same way that the vision benefit managers are going to try to drag it that way, you know, and it's, it's that natural break on each other that, that is kind of happening right now. I think that's very healthy, you know, and it'll hopefully, you know, as you start to see more and more of these state legislatures putting through these, these opt out legislations, you know, the natural, the natural pathway for this is to probably have more and more of those states join in with that That'll be the piece that, you know, is the natural outcome of this, of this tension that's happening right now between optometry and the insurance world. But in, in the, in the final analysis though, they both need each other.
- [10:01]
B
Yeah. Well, it's interesting because I, and I want you to elaborate a little bit more on that because the thing that obviously the biggest gripe that the optometric community has with the vision benefit managers is reimbursements, right? Those reimbursements haven't increased as much as the cost to provide the care has increased over the years. And so that's obviously, that obviously presents a conflict.
- [10:26]
A
Totally. I mean, you could, you could make the, you could make the, the point that like, even like companies like VSP who are, you know, who have for, for ages and, and for just closure. I, I've previously worked for them. You know, they haven't raised people's exam benefits for, well, ever. In fact, you could make that, you could make the point that they actually reduced them because when they made their, their, their different carve out for choice, they actually reduced the professional fees for some people, like up to $10 on their exams. So a lot of these doctors have been taking a net hit, especially as that portion of their other practice goes from signature to choice. You can totally see, you know, the squeeze that they're under. And it's not like, it's not like expenses in the office are going down, they're only going up.
- [11:17]
B
Right. So how do you account for that? And if you're trying to take the side of the, of the vision benefit manager, how do you respond?
- [11:28]
A
Well, you know, what's, you know what's funny is that I don't think I, I don't think that the ECP really has the luxury of, of taking a state, a pitched battle. It's, it's kind of like, you know, it doesn't, I don't want to invoke politics, but you think about politics, right? You have people on the left, you have people on the right, but it doesn't matter who's in power because we still need to make money, right? We still need to be successful. It doesn't matter who's, who's in the White House. The, the business of business and the business of patient care must go on, right? So in many ways there's a lot of noise and there's a lot of drama around it, but day to day in the practice, really, it shouldn't, we should be motivated by a completely different set of priorities. One around making sure That I lovingly say this, like your capture rate, especially on managed care, we have these reduced, reduce benefits or reduced amounts of revenue. If you, if you, if you were to bat, if you were a baseball player, right? Eugene, if you, if you had. What's your favorite baseball team? If I could just ask. Make it. Take a position.
- [12:35]
B
I live in Cleveland, so the Guardians.
- [12:36]
A
There you go. So, so you think about it. If you were, if you were to be, if you were to be in the starting lineup for that guardians and you hit.300 for your 15 year career with the Guardians, you go the hall of Fame, right? Hitting, hit, hitting three out of every ten. Every ten of bats, you go to the hall of Fame.
- [12:56]
B
Sure.
- [12:56]
A
What happens to our optometrist if they, if they go 3 for 10 on patients coming through their practice?
- [13:03]
B
Don't make very much money?
- [13:06]
A
Yeah. Sad trombone sounds and, and this is. To me, to me, it's almost like one of the things that I try to leave people with when we're, when we're done working together is like, look, fundamentally you have everything you need for success in your practice. It's just how much of it is actually aligned with success, right? Are you, are you taking care of as many of your patients as possible? Because you know what my biggest fear is, Eugene? So if we've got capture rate that's kind of like in the 50s, right? Some may be a little higher, some may be a little bit lower, but it kind of, it kind of swims in that rate, right? The natural byproduct of this, of this lower capture rate is that we've watched the percentage of, of revenue and profit from materials versus professional fees, where it always used to be like 60, 40, we've now watched it invert, right? And we have people that are making more money on their professional fees than they do on their materials. And before, before there's, there's somebody getting pissed off right now in the audience, but it's like, no, no, I'm not saying that you should decrease that. You should grow that to whatever you possibly can. But how much more money would you have on your bottom line if you continue to grow your professional fees? But yet your capture rate was in the 70s, you know, and all of a sudden you have 60% of your revenue from your materials. That's a lot, hundreds of thousands of dollars more money for doctors. And that's the, that's the pain that they're speaking to when they're saying these things like, we need this and we need this and we need protection. It's like no work your practice, you have everything you need.
- [14:48]
B
So your point is, look, these, these vision benefit managers is, I heard you say, are providing you with a pipeline to your practice. Now maximize it. Just take, take the patient flow and maximize it. So maybe that's what we do for a large part of this episode as we talk about the different ways to maximize it. And I'm thinking we'll split it up into two conversations. Number one has to do with maybe that point of capture rate of what you're seeing with practices that are successful versus practices that are not successful. We've addressed this a lot on the show. Exam only is one of my, one of my top sort of pet peeves with the, with, with practices. And I think that it is absolutely just a way to set money on fire is to not watch that closely. But the other side of it, where I think you have a really unique advantage and this is maybe where we'll start, is let's talk about understanding how the money moves around with these vision plans and how you really maximize your what, what you're getting from the vision plans if you're, if you are in practice and maybe what you should do and really keep an eye on.
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A
Yeah, so, so where do you want to start with that? Where, how do you want to start?
- [16:09]
B
Let's start with the money moving stuff and then we'll come back to the capture rate stuff.
- [16:14]
A
So when I look at, at data for different practices, you know, in, in the run up to having conversations and working with them and just in aggregate, you know, being able to understand different trends. One of the things that I've realized is that the ECP community has done a really great job of building out the top end of the practice, the premium portion of it. They've done an amazing job. And this can be anybody, any doctor that looks at their VSP annual report, you look through it, you look at the dispensing metrics back on page six or seven, I think it is, you'll see that they'll benchmark you and then they'll benchmark the national average and you can see how the majority of that works, especially in the higher end. Progressive lens space is all in the top two tiers. They've done a great job of being able to push their utilization up there because they've been rightfully told that the higher up you go on these tiers, the more money you make. So there's been this concerted effort over the last decade where people have been gradually moving more and more people to the top end. That's the place where they get the most money. And quite frankly, that's the place where, where they tell their, Their. Their dispensers, their, Their staff members, this is what we do. Right? Okay, so that's great. And that's true. You'll have the most up there. But in every one of these, when you look at how the money comes through, you know, like, can I, can I use iMed? Because that's one of the more dramatic ones, you know, iMed's top tier, which is the place that everybody wants to go because they can be making, you know, $100 and $150 more than VSP per, per interaction. You watch it. The, the head of it has this wildly profitable top end that, you know, people just desire to be there and they're getting it in greater and greater numbers. But as you walk down through the different tiers, strange thing happens. The tail, right? The piece that's not getting as much levels out. And when I look at that, I'm like, this is, this is an invitation for capture rate. Because if the last three tiers are all about the same and you have people that are there that, you know in that, in those middle tiers that are trying to move up. Wait a second. If that's, if this is worth relatively the same amount, if it's only like a $10 difference between standard with the, with the same AR coating as is in the. And like in that, that middle tier, that last, you know, categorized tier, why aren't we taking more money there?
- [18:54]
B
So break, break down an example for me. Just give me a few, give me a few examples of what this means inside the practice. And just like maybe, maybe a couple examples of what I would need to do to be able to capitalize on that tier.
- [19:07]
A
So, so perfect, perfect, perfect segue. So the number that I try to socialize with doctors is $200. And they're like, what do you mean, $200? I go think about $200 of net profit from that insurance patient, right now. That's going to be the lens and the frame and the profit, you know, from that. So if half your patients are walking, let's say you have 20 patients a day, 10 of them are walking, right? So what if you sit there and take that $200, right? Add an extra zero to it, you know, make it 2,000. If you were to capture all 10 of those people, you know, $2,000, multiply that by 253 working days in a year, how much money is that?
- [19:56]
B
Millions, yes.
- [19:57]
A
So what if you only get 25% of that? Is that a number worth playing for? And everyone always says, absolutely. The problem is, is that they institutionalize this process where we only take the top. And I have to lovingly tell him, look, purity is not a virtue in this, in this, in this situation, you know, purity of just having only top end is, is you, you can look at it and say, you know what, I am doing a great job of, of skimming the cream, but there's a whole lot that you're missing out on. And that's the comfort portion of it. Right? That's the part that when that money is in the bank account, you just like, I'm just absolutely killing it. And that's the piece I want doctors to have. I want them to be able to look at their strategy, say, you know what, we're missing a ton down here on this tail. And there's no good reason because, you know, Eugene, if, when you talk to doctors, you know, because you're out in the community a lot, do any of these people truly believe that the patients that leave them and go elsewhere are going to get better care elsewhere than they will inside their practice?
- [21:02]
B
Oh, of course not. Yeah.
- [21:04]
A
Yeah. So doesn't that behoove them if they truly feel deep down inside their heart? And I truly believe they do because I've worked for these people, I truly believe that, that they want the absolute best for that patient. It's just that at this moment they're so focused on, on their, on what they feel is best for them that they realize that, they don't realize that that patient, you know, even in that mid tier portion. Right. Those value centric patients that are growing anywhere from 4, 40 to 49% of consumers, you know, in the United States could be a value centric consumer. If you can, if you can reproach these people and get them to close the circle of care in your practice, all that does is strengthen the foundation of the practice. And you don't need a single new patient unless you have a large population that's dying. You know, you're just mining the intrinsic wealth that's in your practice that you have yet to take it out. It's like an giant ATM that you, that you refuse to go and stick your card into.
- [22:01]
B
So, so your point, I, I think if I'm understanding this correctly, is you're saying, hey, many of the practices are, they, the stuff that's on their frame board is too high end and their lens packages might be a little bit Too high end. So that it, so we need to offer more things that are in that mid range, which you'll tell me how much that actually would, what mid range means to you so that we can have a more affordable, more affordable set of offerings. Because one of the reasons potentially the patients are walking out the door is because they're not finding something they can afford. Is that right?
- [22:37]
A
Very much or they don't understand the intrinsic value of what they have there. There's so many people that have VSP and EYEMED that walk out of practices every day, exam only, and then use their benefits at big box stores in an out of network, you know, situation where they're not getting the full value of their, of their benefits that they quite frankly have been paid for and taxed on. Because everybody's medical and dental and vision benefits, that's considered income by the irs. So you are taxed on the value of that. So you're paying for it and you're being taxed on it. And then you go and you, you leave your ECP where you're going to get the absolute, the best care and most value for your plan and you walk out and you take 75 bucks towards a pair of glasses that's cheaper. And, and they see that as value. To me, that's a failing of the ECP to, to clearly articulate, you know, why they should be staying there. And, and what's in the patient's best interest is the patient doesn't know how to utilize their benefits unless somebody tells them. And who's the only person in the ear of that of the patient chirping about how you use your benefits? Yeah, exactly. The managed care plan. Oh, by the way, Eugene, for a managed care plan, who's their most profitable member? Which members do they make the absolute money on?
- [23:55]
B
The one who doesn't use anything.
- [23:57]
A
Absolutely correct. So isn't that kind of set up this strange dichotomy where ECPs need the patient to come in for care and transact and the insurance company is like, no, no, no, don't go in, it's okay. Yeah, you know.
- [24:13]
B
Right, exactly. So I think you're, you're absolutely right. So let's go back there just for a moment because I'm trying to get you to share some of the things I've heard you talk a little bit about in terms of, you know, some of the, some of the things that you share with practices when you're in the door and you kind of review their, review their reports and what are the biggest Findings in terms of where their biggest opportunities are.
- [24:44]
A
So for the majority of people, there is, especially because I get, like I said, I get a chance to work with a lot of the high performing practices around the country, which is an absolute treat. It makes my job so much more pleasurable. A lot of these people, because they are so good, they have kind of fallen into this mindset that it's okay to just do what they're doing, you know, take what we're getting. They've, they've kind of, they've kind of like left behind, you know, that that patient, they consider it to be like, well, you know, it's okay, if they want something from us, we'll give it to them. If not, they're not. The problem with that. We try to get doctors to understand with that. Is that so. So if, Eugene, if you've been coming to see me as my patient for the last 10 years, but you stopped buying glasses from me about four years ago, right? You've been getting your glasses or your contacts elsewhere. How many years does it take for you to stop seeing me as your doctor and go to something that's much more closely aligned with wherever you are? This, to me is one of those pieces that I've been trying to work very hard with doctors on. It's like, you know what, I get the fact that you feel like you're comfortable, you know, that you're underperforming and you want more of that top end. Right, I get that. But it's the point now that your materials have gone down, your exam, your professional fees have gone up, right? As far as the total percentage of revenue, what happens when those patients that you have failed to bring back to the practice start walking on the exam side? Now all of a sudden, now all of a sudden it's going to be a rebalancing, but truly the floor is going to go down because the total revenue, the patients the practice is going to make is going to go down because now, now you've got less exams coming through. So there's. It behooves these doctors to understand that, you know what, I get what you want. But if, if your true desire is to be the most successful business person that you can be, what about that missing middle?
- [26:48]
B
They're there for that missing middle component a little bit more. There is this, that there's this principle of you've got a lot of patients who are, and again, you believe, and you have data on this, is that there are a lot of patients who are coming to doctors because they like the exam, they like the technology, they like everything. But they end up, you know, they end up buying somewhere else. And your point is, hey, maybe they're buying somewhere else because they're not finding an affordable solution in your practice. Maybe, right? Or maybe, yeah, I, I, we could talk about, you know, maybe you're not prescribing it the right way. Maybe you're not discussing the full set of benefits of buying from you. Maybe you're not doing full, a full scope of the education of how, how your vision benefits work at the point of care. Maybe the handoff is terrible. Like there's lots of different ways we could kind of try to identify what people should be doing differently. But let's get into like super tangible things that the audience can take away. So if we want to talk about this missing middle, define that concept and then talk about things that you've seen work specifically to re, engage that.
- [28:01]
A
So, so the, the missing middle, the more that I looked into this, you know, the more I found that, you know, it's, it's, it's, it's people, you can define it. You really can. You know, if, depending upon the source, they'll say that anywhere in, if you take the, the, the total population of the United States, you know, what percentage is going to be that, that value based shopper at this point? And they'll tell you it's anywhere from 40 to 49%.
- [28:27]
B
Right.
- [28:28]
A
So what does that look like when you're in, when you're in the practice? Well, a lot of people would, I would. If I ask people, it's like Eugene, who do, who do you think's walking the most? And a lot of times they'll say us, the kids, it's the younger ones, they're going to Zenny, they're going to Warby Parker, they're doing this, that and the other. And it's true. If you look at Gen Z, you know, and the millennials, they're, they're, they're getting hit in the teeth. You know, this isn't the best economy. You know, they're having a hard time. I got, I have a 27 and a 22 year old and they, all they talk about is how hard it is for some of their friends to find work. Well, if those people need glasses and contacts, yes, it's going to change their buying habits, right? It absolutely will. But a lot of times the one that's the most animating to me is that they call out specifically the baby boomers and Gen X as being a lot more focused on value right now, simply because here you have these two generations that are either in retirement or getting close to retirement. Right. They're probably looking at their retirement savings. They're like, I don't know if that's enough. So it's animating them to make different choices. And that's really, you know, I see a lot of times that sometimes the greatest amount of people that are walking from a practice, when you kind of reverse out the numbers of capture rate and how many single vision, how many contacts, how many multifocals. A lot of times it's the progressive lens wears. It's our most profitable patients that are walking out.
- [30:05]
B
I was just gonna say, yeah, if you got patients over the age of 50 that are walking out the door, you're losing way more money than, than, absolutely. Those are our progressive patients.
- [30:15]
A
Yeah, yeah. And a lot of times, you know, you think about how, how this happens in the practice. You know, that person might be okay spending 800 on a complete pair of eyewear. They might be, you know, and they do it for a number of years, but then something changes within their situation and they need to all of a sudden reprioritize how they spend their money. So they come in to see you, Eugene, and you're like, you're thinking that this is going to be the conveyor belt right back into the dispensary for this person and then they walk. Because in their mind, they know they can't afford that $800. And that's all they've ever been told that we have, is that, that top solution, right? So in many ways. And then, and then the next year they come back and we, we talk to them and we give them the same $800 solution. They're like, nope, not this year. And they walk. How many times does it take that patient hearing that same number, right. Or one that's equivalent up or down just a little bit to where they're just like, I just, I, I have, I, I used to be able to get stuff here, but I can't. It's, they're now out of my range. And that's, it's, to me, that's the craziest thing because as an independent ecp, you have the widest range of availability. You can get everything from the absolute best to the most foundational. Right. And you get to choose what you put in your practice. Some what we found is that a lot of times these people don't even need something at the very bottom of it. They self manage someplace into the middle. You know, I hate to sit there and use like. Like. Like, I'll. I'll do it in categorizations. Say they're used to, like, on VSP or an iMed, getting the very top tiers, but they need. Now they. They can afford something in the middle, but it's never really presented to them. Or maybe they need something just a little bit lower. That's not that much different in profitability for the doctor from where they are. The fact that we don't even offer them. We don't have that conversation, right? We leave them with this bias in their mind that, you know what? They're just too expensive. And I had that play out with one of the doctors that we were running this. This capture rate experiment on. And I remember getting ready to take him to lunch, and a patient walks out, and she's so excited, Eugene. She's just looking at him. She's giddy, wild eyes. She's like, doctor, I'm so happy that you finally have something that I can afford to purchase here. I've wanted to buy from you for years, but I never thought I could ever afford anything here. And now I can. Thank you so much. And instead of smiling this big, warm smile and giving her a hug, right? It looked like he had just. Just, you know, had Christmas canceled, right? He just. And I just walked out to the curve with him. I'm like, that hurt, didn't it? He goes, we've had all of this stuff the entire time I've been in practice. We just never used it.
- [33:09]
B
I just mean, he had. He had the. He. He had the selection. He had the inventory. He had the.
- [33:15]
A
All he had to do. All that guy had to do was change his frames, right? Because he. He was one of those people that mistakenly thought that I shouldn't have a frame under $225 in my practice. No, no, no, no. Yeah, you. You need that 160 to. To 220. That's how. That's the best bait, especially if you can have nice brands that are recognized by the consumer, right? That was actually a huge piece of it, Eugene. You know, we found out that brands matter because a lot of times they would try to run like these. These $5, $7 inexpensive frames that had a high margin, right? But the patient picked them up and was like, this looks like the same stuff I get everywhere else. Feels like the same stuff I get. No. No name on it. I'll just go back where I'm getting my stuff. We figured out that frames matter a Lot because they resonate with the consumer because of the branding. And that was a huge piece of it. Once, once he actually, you know, entered and brought in inventory that would serve that group. Oh my God, that group exploded because they had never had anything to, they had self gated their prosperity by not having products that their patients wanted to buy, which is crazy in business.
- [34:30]
B
So what, what happened in that particular example? What happened with capture rate once they, what was it before, what happened after?
- [34:37]
A
So he was, he was hovering in the 50s, you know, down into the high 40s, low 50s. He would kind of porpoise back and forth. Right when he started, you know, the whole concept there was, what we want to do is we want to, we, we need to be able to understand who that patient is in the practices they're walking through. So we, we set about trying to figure out if you were to bucket every patient that walks into the practice and put them into very clean, easy to understand categories that you can action on. What are those categories? Because you have to be able to understand who's in which piece. So we came down with three categories. Number one is new patients that are new to us, we have no data on. We have to figure out where they've been, what they've been doing so we can integrate them into our system. Okay, easy. Then the last two are the people you have in your practice. We have our existing captured patients, right. The people that come in and get the stuff every year. They're the people that we make our money on. Then we have the existing uncaptured. And the whole concept was, okay, if the existing uncaptured patients are our largest group of untapped profitability, why are we not targeting them? Why are we not absolutely going out and trying to, to get those patients back into, back into our system. And we devise some very simple conversational items. You know, that, that is best run, quite frankly, I think a pretest because the pretester, to me, I lovingly say that they're like the hairdresser of the practice. And what do women tell their hairdressers?
- [36:19]
B
Everything.
- [36:21]
A
So you can get these patients to have these very frank, unguarded conversations with this, with the pre testers and not feel like they're like that person's in a selling role. They're in an.
- [36:32]
B
Tell me more. Zoom in on that. Well, what does that person ask? What are the conversations?
- [36:36]
A
So a lot of times like, you know, the whole thing, like, see if I even have something I can do problem with. Yeah. So let's Say that. Let's say that you have a patient that walks around the practice, right? And they. For, you know, everyone's got their system that runs to the practice. Let's say, you know, the patient, you know, the patient chart goes in a black folder, and it walks its way through what happens if you put existing uncaptured patients in a yellow folder. Now, every single person in that practice understands exactly who that patient is and what they mean to the practice. Right? Now we put a spotlight on those patients so that we can actually change what we do. We. We know that for this person, we are going to change how we act, right? The rest of them, it's business as usual. But for these people, we want to bring them back. They're in a different spot than we are. We want to bring them back. And it's just around, you know, having very soft questions. Oh, so, you know, Eugene, I, you know, I can't find this pair of glasses in the records of, of materials we've made for you. May I ask where you got these? And they will tell you, oh, I got them at Costco. I got them at, you know, whatever it is. And from there, from that answer right there, now we kind of have an understanding of where they're going and about how much money they're spending, right? Then you can sit there and develop it a little bit more. You know, is it one of those frames where you're feeling it and it's just flopping all over the place? It's not. It's not in a good shape. You know, it's good shape. You ask them. So have. Have those glasses always been this loose? Do they constantly loosen up like this? Yeah, they do. You know, unfortunately, I'm constantly trying to do it now. They just don't even. They don't even hold writing down the notes, you know, that are going to be handed to the doctor. Right. The whole idea is using the. The pretester as a way to be able to gain additional information and insights that make the doctor not have to sell. I want them to be in solution mode. If they're looking at the glasses and it's like, do you find it's hard to see or drive at night because of the scratches on the lenses? Did they get scratched early on? You're trying to figure out how well they see, but you're also trying to figure out where we speak to, what we are going to do once we get to solution mode. And the doctors are free to sit there and add things, you know, because they always have A boilerplate list of things that they want to have asked and, and information gathered at that station. But if they add a few extra points, oh my God, how much easier is it to have a conversation around them? So here's a, so here's a crazy one for you too, Eugene. One of the things, points that came up talking about the value, the value shopper, right, Is that they like to know that the person that they're working with has something for them. Okay, so what does that look like for us? Right? Who's the. Probably the, the one person that's the most impactful in having that conversation about, about welcome, welcoming them back to the practice. It's most likely the doctor. They can have a very simple conversation. It's like, so have you been getting your glasses for the last four or five years from, from this place? You know, you know, because, because, you know, we're too expensive and they're like, yeah, it's like, you know that we've got a ton of other stuff, right? I, I kind of feel, you know, you think about how, how at that point the doctor has the ability to really humanize and empathize with that patient and create that bond that will be very difficult to break if it's solidified. They're the ones with the most skin in the game. They're the ones that are the primary source of the relationship. They're not coming to see the front desk girl. They're coming to see Dr. Chapman. Right? And that when you can have, once again, who do you want between the patient and yourself, right? Is it the insurance company or is it the ecp? Well, doc, act like it have something for them, right? Talk to them about it. Because you know what? They will they. No one ever said the doctor spent too much time with me. Right? And no one said the doctor. You know, it's more about when we don't serve their needs, that there's animosity or, you know, or hard feelings. So the doctor has this great opportunity to have a very simple conversation about what they can do to help.
- [41:02]
B
And then I think to, to that same point is that highly personalized solutions tend to also do really well with value based shoppers. At least the data shows from our vantage point. So, you know, if you're having that conversation, you're also having lifestyle conversation. So these glasses that you have, do they. You. You told me that you like to golf and that you like the boat and that you like to. And that you also work at home and you use the same pair of glasses. For all of that, for all your screens and for the golfing and the boat like that, those are, they are big. And, and so that's where you know, the doctor has an opportunity to educate and again create a value driven conversation to say, well you know, in, in cases like this, my job is to optimize your vision and for me to be able to optimize your vision or for me to be able to give you the best possible vision in all those SC goes. Here is what I'm prescribing. Right. That's at least I, I've heard from practices that, that's, that type of conversation tends to do well. And that type of conversation in our data, if you have a personalized solution for a value based for, for a value driven patient, they feel like they're getting better value because then they're saying oh yeah, yeah, that one thing, it's not really going to get the job done.
- [42:19]
A
Yeah, absolutely. And once again kind of tying it back to the, to what comes through the practice. You know, there's, you know, there's, there's parts of the country where 50% of the, of the work that comes through is, is private pay. You know, they have, that's a, that's a great advantage in many ways. But it also could be a great disadvantage because all of a sudden you're talking about the highest price points, you know, of materials. But the other half is, is managed care. And quite frankly a lot of those patients that are walking, that have those plans are underutilizing them. So there's that, there's that benefit utilization conversation as well. And telling them what, how, why it's more beneficial for them to use their plan here right Than it is to go elsewhere. Because once we get them, I don't think we give them back. I really don't. Because we've reintegrated them in, we've reset our relationship with them. It's going to take something really big to dislodge them because we have made them change from wherever they were back to us. Now all we got to do is keep going and quite frankly, every year that patient will get a little bit more premium just because in course that's what the dispensaries are geared to do. Increase the visual experience for those patients, whether it be with lenses, coatings or better frames. They'll, that patient will be more profitable in the end years to come.
- [43:41]
B
I want to take a short break and when we come back, I'm going to ask you the one question that I know Everybody's thinking, which is about cannibalizing high end sales by adding cheaper options. All right, we'll be right back in the power hour. Okay, we're back on the Power Hour with Todd Lassone. And Todd, you were telling me that one of the solutions to capture rate is that we have to have more affordable product available and presented to patients, especially patients who are returning, patients who haven't, who didn't buy last time. Right? That's the idea. And of course, everybody thinking, everybody listening is thinking, okay, but the second that I show you the less expensive candy in the candy shop, that's the candy you're going to buy. You're not going to want the premium candy because so what happens about, oh, so how do you tell people to both make that available and also not cannibalize the higher end sales, which are of course more profitable?
- [44:45]
A
Yeah, absolutely. So I think that, I think that the basic misunderstanding with, for a lot of people lies in the fact of, of where the, where that patient is. I kind of think that quite frankly that most patients want the nice stuff, right? They want, they, you know, they, what's the whole thing that they have champagne taste on a beer budget, right? They want the nicer stuff and quite frankly, they will pay for the nicer stuff. But to the, to the cannibalization piece, this was, this was a huge topic. It was actually there I was doing a vision source meeting up in Spokane, Washington. Right. And that group is one of the more higher performing groups. I love that group. They've been great partners, you know, through the years, how we've been able to grow together. They asked that exact same question. Well, Todd, you said that we're brutally premium, that literally all we're doing is skimming the cream and leaving the rest, you know, out to, you know, to go bad. You know, it's like, how do we now sit there and continue to skim the cream, right, and but not have it cannibalized? And that kicked off basically a year and a half conversation, you know, with some doctors, including this one doctor, I'll call him out by name, Dr. Aaron Banta. You know, he literally was the single biggest detractors, like, how can you do this? This is going to be horrible. And he turned into the single biggest advocate and actually proved the model, you know, and it was all about what we had talked about, right? If, if our existing captured patients are our money makers, if we have them in a black folder, everybody knows exactly who they are and what they are. And for us, it's the, the mo. Right. The way we go to market in our dispensary is it's more of the same for them. Continue to delight and exceed their expectations. Right. It's the segmentation and the targeting of it. These are the people that we have to change for.
- [46:42]
B
Right.
- [46:42]
A
These are the people that need a different solution to bring them back. And quite frankly, when we can bring forward those customized solutions for them, we can meet them where they are. It's that time where we're going to bring them back to the practice. We don't have to change what we're doing except for those people. Everything else is business as usual.
- [47:03]
B
Yeah. And it's, it's interesting because you're saying for those people, we start with a value, value based presentation and maybe the doctor talks a little bit about less premium. If the doctor is prescribing lenses from the chair, then they maybe spend a little bit less time on premium lenses and they just talk about the principle of progressives, for example. And at the same time, the optician starts when they take away, when they present frames or whatever way they do it in their practice. You're saying the people in the yellow folder get a start at a lower, lower price point than the people in the black folder, for example. Because we know that the folks in the black folder bought before, so they're more likely to buy now.
- [47:49]
A
Yep, it's very much that, you know, and it's, you can almost see it as two different pieces, you know, the anchor. Because most people have been taught to dispense the lenses first. Right. We need to have, you know, we need to know what we were going to put, you know, slot in for those, for those value based patients probably need two different ones. Your mid and then your, what I lovingly call not my value, but our baseline for great vision. You know, I love that because when you say, it's like, you know, Eugene, this is our, this lens is our baseline for great vision. It's the best selling progressive lens in the history of progressive lenses in the world. It's, it's been fit on more people than anyone else. I know that it's going to work on you. And people would be like, oh, that sounds good. I'm not getting something, you know, you know, from, you know, down by the river, out of a van, you know, fly by night optical. Right. But then it comes the big one. Right. What frame are you going to put them in?
- [48:45]
B
Yeah, right.
- [48:46]
A
Because the frame, if you think about the frame is, has always been the one piece that you can get the patient to spend more on a nice frame because it resonates with them. It's something about it is that emotional component. They're like, oh, I like the way I look with this one. Right. And you'll find that the frames are one of the biggest ways that we keep people in the practice having stuff that, that's in that foundational or like know some of that, that entry level premium fashion frames that they can look at and go oh, I like this. They'll spend more money for that than, than they will on lens simply because it, it resonates with them. And you shouldn't care a damn bit about it as a doctor because you should think, I'm so glad you found something, you know, to wear in my practice. You're going to look great and you're going to see amazing.
- [49:35]
B
Well and I like how you talked about the role of emotion and maybe let's expand on that a little bit because I think you're right. There is. In order to connect with the consumer in, at their, at their greatest moment of excitement right when they're making the purchasing decision, you need to be able to connect with their emotions. So I, and I agree with you. Frame. Frames could do that if presented correctly.
- [49:59]
A
Yeah, if, yeah. If you have, if you have nice, if you have nice. A nice selection. One of the things that it's. Here's a curiosity we can bolt onto the side of that. You know, there are doctors that I'll look when I'm looking through their, their, some of their reporting that actually have a capture rate over 100% on VSP. Now how the heck do you have a Capture rate over 100 on VSP?
- [50:21]
B
Multiple pair.
- [50:22]
A
Nope, because most people have one and done. You don't have this large populations, you know, 35% of your patients don't have two plans.
- [50:30]
B
Right. Okay.
- [50:31]
A
You know what it is is that the, the one thing that's, that I saw that's in common with them that those are the doctors that have the plan best frames. Because what's happening, the dynamic is they'll see their thousand patients, right. And they'll have their 90 or 80% capturing and then they'll have a bunch of other patients that will come from other practices, get their exam, come there and buy their glasses because they like the frames there. So frames do matter. You see it in, in every, in, you know, I've seen it in every single way where it's like a capture replay there or just enticing people to come on in because like I think we said before, it's like if the frames that you have for those value based patients look and feel like the ones that are, that the, their, their current supplier has, are you really going to get them to come over? Probably not, because they've already got something that looks just like that and it costs less. You know, we'll be a little bit more, but it's within reason, you know. You know, the emotional aspect also explains why somebody you know will, will show up for an exam with a managed care plan. Right? They'll have their exam, but they will take their, they will take their prescription, leave and go elsewhere and literally underutilize their benefit. You know, these are people that are, that are trying to save money but something has turned them off. They don't feel that there's anything for us here. They will literally take their benefits, take them elsewhere and underutilize them just because they think that that's the only way that they can get what they want. And that's kind of crazy because nothing else explains it other than the emotional component because they're certainly not looking at the numbers, they're certainly going to look at the financials.
- [52:14]
B
That's interesting. And kind of going back to that report, you just kind of sparked something for me when you were talking about your capture rate for bsp. If I have my BSP report or if you have my, if you, if you take my VSP report and you open that report up, what are the top five numbers let's say that you're looking at to tell me what I can do? Let's just kind of rattle them off rapid fire.
- [52:40]
A
So the single most important number to me when I'm going through this is the first number you will see on the report when you open up the page. It's in the top right hand corner of the second page and it's average revenue per patient. That's the speedometer, right? That's how fast are we going? And VSP does you the favor of benchmarking you against your state average so you know exactly where you are. I've worked with people in some states where highly successful practices and I literally had to tell them, it's like, you know that, you know that if you just became average, if your average revenue per patient on BSP was the state average, it's worth a quarter million dollars a year to you. And they're like what? And this is only 18% of what you do think about how much more is, is all around there. So you know that's the big one. From there we understand where things are happening, right? Or you know, how things are policies. My, someone must be at my front door because my doorbell dog is ringing. The next one, if you were to look at it, definitely capture rate and capture. It is so brutally easy to figure on VSP because it's mostly likely a one and done plan. Like, like we had said, take total number of patients seen, right. Divided by total materials, right? So it's not spectacle or cap or contact lens. It's in total, gives you a global number. Divide those two and get your capture rate and then ask yourself two questions. And if you can't answer those two questions, you have a problem. Who's walking and why? And don't give me some fluff. Oh, it's Costco. Oh, it's Warby Parker. It's like who's walking? Which, which types of patients? All of a sudden it becomes, they're like, I don't know. You can't fix something if you don't know what the problem is. The other ones that I would look at, I would look at your, I think it's page six or so that I lovingly call it the dispensary scorecard that has all the progr of lenses on the top and then the materials and, and non glare and photochromic on the bottom. Do you see a well balanced practice or do you see, you know, something that is completely top heavy? Because if you, if you've just calculated your, your, your capture rate and it says 62%, it's my, it's my feelings based upon how that integrates with the rest of the practice, that that number is probably 15 to 20 points higher than every everything else in the practice. That's the high watermark. So oh my God. If it's, if I'm only 65% here and I'm looking at, I'm looking at my dispensing and it is 98% non glare and it's all top end pals. Go back and look at the demographics, right? You know, calculate what percentage of your patients are 45 plus. Right? And then look, look at the percentage of your pals and your, and your, in your flat tops. Do that and say, oh my God, is it my pals that are, that are walking or my wife said no, no, I have a lot of contacts. But no contacts are usually for the young, do I? No, I don't fit that many multifocals. So do the math in your head. It's like, no, wait a second, you can literally go back and it kind of extrapolate out who, if you had to put 100 bucks down on educated guests and that's the easiest way to do it, you know, Interesting. Between that and then look at your frames, you know, the average out of pocket revenue for frames that number. It's, it's my, it's my feeling that doctors don't understand the frame game. And it's, it's, that's, that's a horrible thing because the dispensary is the only room in the office that's literally wallpapered with fifteen hundred dollar bills. And every single one of those hooks that they have a frame on is just like an apartment in a complex. They should be paying rent.
- [56:41]
B
Yeah.
- [56:41]
A
And if that frame ain't paying rent, you know, then you're, you're, you, you got other problems, you know, but if you, if you find that you're, you're, you're not, you're, you don't have your frame revenue if it's below average or if it's just average, you know, start, you know, this is. If you can better understand the frame game, it'll enrich the practice, you know, and, and I'll, I'll just put it out there before someone asks. I love when Doctors Run static board because it leaves the best sellers on the board to be sold again and again and again and again. And I don't care what your optician says, if this is the frame that will sell six times in a day, then you know what? Don't get bored of profit, don't get bored of success. Sell it to them and then next year find them a new one. Right. Don't complain, don't be, don't let stupid things like that derail you. No, sell it again and again and again and then find them something new that's slightly better next year.
- [57:45]
B
I like it. Yeah. And I think, Todd, there's so much here and I think there's lots of nuggets that we covered throughout this episode. I think you've made the point really abundantly clear that capture rate is the thing that ultimately helps a practice move from complaining about the managed care plans that they have to wildly profitable. And we talked about the role, which I think is a unique take. Talked about the role of really the inventory you present and the selection and how you segment your patients to better understand that. I think it has been a fantastic conversation. Anything, any parting thoughts or any last bits of wisdom you want to add before we close out the episode?
- [58:29]
A
I'll Leave. I'll leave everybody with. With one thought. You should consider your dispensary as the laboratory of commerce in your practice, right? It is. You know, and what do you do in the laboratory, Eugene? You experiment, right? If you're. You can't be married at this state and time, right, to whatever you're doing today because the model is changing underneath your feet, right? You should be looking at ways that you can improve the practice, right? Where you don't need to be relying on more people coming through. They're like minded with you, but mine, the intrinsic wealth that is currently in your practice. You have a wonderful relationship with these patients, even the ones that are existing but uncaptured because they continue to come back to you. Engage with those patients, right? In a manner that allows them to revisit what you have to reintegrate back to the practice. Because that is where we will see the practitioners at their absolute most successful. Kind of like, you know, I hate to bring up Covid, but, you know, because that was just a horrible time. But what we saw in Covid was that as we reopened and capture rate was high, patient people saw a lot less exams and they made a lot more money, right? And as we sped the wheel back up, we started spitting out, spitting out patients much like mud from a four wheeler, you know, as he's just gunning it, you know, to me, I want to, I would rather these doctors be much more slow and steady through this. Bring these people back in and really benefit, you know, there's no downside to having a balanced portfolio that serves the grand majority of your practice.
- [60:13]
B
Fantastic thoughts. Todd. Thank you so much for joining me on the Power Hour today. I think you've shared a lot of really interesting tidbits and wisdom, and I'm grateful for your time, grateful for the invitation.
- [60:23]
A
Eugene, thank you so much.