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This year, the vision plan industry began to recover from the pandemic. We expect growth of 1.1% in 2022. However, every remaining optometrist in OKC and throughout the country will have to adapt to a newly complex landscape populated with heightened competition and fragmentation of the product offering.
Specialized niche markets continue to be a growth factor in the insurance market. This trend also impacts the vision plan industry as a growing selection of products, including PPOs, HMOs, POSs, indemnity insurance, and prepaid plans, abound. To access the millions of Americans whose insurance is a PPO (preferred providers) or HMO (health maintenance organization), providers must find their way into these networks. All managed care plans are significant participants in the work of an optometrist in OKC and nationally.
Vision Care Direct of Oklahoma can help you. A local provider’s knowledge of Oklahoma and its business needs can be invaluable. VCD of Oklahoma can guide them into specific networks and show them alternatives to traditional pre-paid vision plans that will fit into their local practices.
More than eight in ten providers are affiliated with at least one managed care plan. This statistic illustrates the industry-wide impact of the issues that arise under managed care:
- Ensuring patient access.
- Dealing with varied reimbursements.
- Qualifying for participation in a plan.
- Getting access to plans.
- Competing with optometry super-practices.
Indeed, providers should shop to gain access to plans and qualify for them. Finding plans that have the best reimbursements can help keep their revenues strong. In addition, accepting a wide variety of plans and offering various pricing structures through accepting those plans will help the independent provider compete with the vision care mega-practices.
Heightened competition from independent agents
The vision care industry is, at its heart, a vertical monopoly. A few giant companies dominate the market, offering insurance, products, and services to the industry. In the meantime, the vision care industry is also seeing an ever-increasing number of independent agents that have multiplied the competition for vision plan sales. One negative side for an optometrist in OKC and the rest of the United States, this increased competition results in providers receiving less access to acceptable plans.
Plan choice as revenue management
Choosing which plans to accept can be an essential part of any provider’s revenue management process. By declining to accept the plans with the worst reimbursement rates, a practice can increase its revenues. It can also help shorten long waitlists for busy practices.
The various kinds of plans available from companies like Vision Care Direct of Oklahoma allow engaging with more potential clients. Providers can choose precisely the right plan for their business models and accept various plans to expand patient access and revenue potential. As clients and employers change the range of plans, providers must change the range of plans they accept. Only then will revenues rise and chair costs fall.
Metrics for plan acceptance
However, deciding which plans to accept can be challenging for an optometrist in OKC and elsewhere. A critical analysis for providers to understand and manage is their chair costs. This can be calculated by adding total professional compensation/profit to the cost of goods, then subtracting gross collected revenue. Finally, divide the result by the remainder of fixed costs. Note that a more extensive practice will have efficiencies in costs of goods but will generally have higher staff costs. Other metrics to consider when choosing plans and finding ways to improve revenues include:
- Gross revenue per patient.
- Gross revenue per staff hour.
- Optical capture rate (number of patients who receive their prescription from you versus those who filled it with you).
- Inventory turnover ratio.
- Expense ratios.
Chair cost is a crucial metric because it gives optometrists everywhere, including in OKC, an effective way to establish professional fees and judge which managed care plans they should accept. Although there are some chair cost benchmarks, the most important goal is to ensure that chair cost is lower than reimbursement. As you navigate a newly complex landscape, Vision Care Direct of Oklahoma can help providers find their best cost-to-reimbursement ratio.