As the population ages, demand for eye care continues to grow, causing many health systems to consider optometry as a part of their growth strategies.
Learn about the strategic considerations for a successful optometry program investment
We spoke with several leading organizations to evaluate optometry's major benefits, challenges, and success drivers. Here are three key findings to help guide your planning efforts:
1. Optometry can help health systems increase profit, generate downstream revenue, and better manage population health.
Optometry may help health systems achieve three common goals, to varying degrees.
First, optometry can be directly profitable. While it commonly has a low profit margin, its high volumes can generate a substantial profit. In fact, some of the largest systems report seeing nearly over 50,000 optometry patients a year, generating upwards of $6 million.
Second, optometry can generate downstream revenue both by increasing cross-service utilization of co-located optical shops and allowing ophthalmologists to focus on higher acuity, more profitable cases. In the first case, optometrist prescriptions can act as referrals to optical shops. In the second, using optometrists as lower acuity level eye care providers can increase the profit margin and the acuity of ophthalmologist visits.
Lastly, optometry can advance population health, specifically for diabetics, by improving diagnosis and delaying the onset of diabetic retinopathy. According to study findings in the U.K., optometrists may have the capacity to diagnose an additional 150,000 diabetes cases a year. Applied to the United States demographics, this would translate to at least 880,000 additional diabetes diagnoses annually, generating almost $250 million in savings.
2. Retail competition and insurance gaps pose a threat to optometry programs.
While optometry can help health systems achieve various goals, steep competition from massive online and national retailers and gaps in insurance coverage can limit the scale of return, depending on the market of interest.
According to one survey, online optical shops are the number one perceived threat among optometrists. Warby Parker, for example, has grown since 2011 to be valued at $1.2 billion and mass retail optometry offerings from Walmart and Costco also report approximately a billion in annual sales.
Further, many commercial and public insurers omit routine vision care or offer vision plan carve-outs that contract eye care coverage to low-reimbursing vendors. These realities threaten already low margins, which is why planners must evaluate their market's competition and closely consider whether their area’s potential saturation and payer mix will undermine investment in an optometry program.
3. Strategic co-location and hard-wired referrals are key to successful optometry investments.
Aside from optometry's benefits and threats, health systems should focus on two keys in order to maximize the success of an optometry investment.
To capitalize on optical shop referrals, health systems often co-locate optometry offerings with optical shops. In fact, every stakeholder interviewed emphasized the importance of having optometrists and optical shops co-located at the same site.
However, co-location alone is likely not enough. Successful optometry programs also had hard-wired referral protocols in place for both optics prescriptions and patient triaging. For example, Peninsula Healthcare (a pseudonym) increased sales in its optical shop by 15% to 20% by directly routing prescriptions through the co-located site.
Strong referral protocols also impact quality measures. This was the case at Wilmer Eye Institute, where direct scheduling of same-day eye exams, accompanied by the triaging of patients to co-located or nearby sites, has increased diabetic patients who meet CDC eye exam guidelines by 78%.
Overall, optometry can be directly profitable and lead to significant population health benefits and downstream revenue. However, organizations should be sure to evaluate if they can effectively compete in their market and successfully operationalize the program.
Check your strategic vision and focus on ophthalmology
In the game of ambulatory strategy, have you zeroed in on ophthalmology? Keep your eyes open and evaluate this high-growth service line as a component of your ambulatory strategy.