Merchant Processing Services

It's illuminating to consider how many professional services opticians perform when providing ophthalmic lenses:

• interview of the patient and assessment of optical wants and needs

• interpretation of the written prescription

• evaluation of the previous correction

• lens design

• measurements

• supply of materials

• quality control processes

• dispensing and fitting of prosthesis

• patient education

• Aftercare such as periodic adjustments and maintenance, warranties and manufacturers' defects, management of prescription non-adaptation and prescribing errors.

The vision industry has adopted the term "dispensing" to globally describe the professional services rendered by optical professionals. As can be seen, "dispensing" grossly under-represents the level of service involved.

In my opinion, optical professionals have the right and responsibility to charge for their time and expertise. In that regard they are no different than any other professional - plumber, personal trainer, or physician.

Physicians and the insurance industry have classified and graded aspects of physicians' service for the purpose of establishing equitable third-party reimbursement. In general, the following division has been made:

• medical history level

• examination level

• medical decision-making complexity

Essentially this means time spent interviewing a patient, time spent doing physical work, and expertise applied devising a plan—logical and very straightforward.

I believe this paradigm translates well to optical services:

• Interviewing/qualifying a patient is akin to medical history, and can be done, for example, by questionnaire amplified by interaction with an optician.

• Measuring, dispensing, adjusting, and maintenance is a technical skill not unlike physical examination.

• Interpreting a prescription and designing an ophthalmic lens is professional judgement and expertise.

What would be the relative value of each component of optical professional service? Consider this example:

Interview services: 15%
Technical services: 50% 
Interpretation & Lens design: 35%

This represents a rough 50/50 allocation between "technical skills" and "cognitive skills/people skills".

Towards professional fee-based pricing for ophthalmic lenses

Let's further assume that an ophthalmic product's retail price can be broken down to the simple formula:

Retail price = Cost of goods sold + Professional fee

Expanding the formula:
Retail price = Cost of goods sold + 15% of professional fee for interview + 50% of professional fee for technical services + 35% of professional fee for lens design services

The formula above is an appropriate way of establishing ophthalmic lens fees. It also is a formula that can be:

• directly adjusted for increase in labor costs not only cost of goods sold

• instructive in correctly setting fees for multiple pairs or promotions by analyzing amount of service involved

• helpful for analyzing profitability of vision care contracts

Traditionally, optical customers have "package-purchased" professional services with optical goods. Newer market forces such as internet optical supply houses, low-service discount opticals, and low-reimbursing vision plans "unbundle the package" - goods are often sold with minimal or sometimes no appreciable service. Perhaps the most critical marketplace advantage available today to the independent optician is professionalism and expertise.

While I'm not sure the consumer is yet ready for retail lens prices itemized as cost of goods sold and professional fees, I do believe there are strategic and even job-satisfaction benefits from internally quantifying professional fees when pricing ophthalmic lenses. In a future article, real-world application of professional fee-based ophthalmic lens pricing will be considered.

Jeffrey Kiener, OD