6 financial challenges ODs will face in 2017
To gauge what the new year will bring, we asked experts to weigh in on what challenges they expect optometrists to face in 2017
With a new year comes new challenges.
Take a look back at our financial challenge predictions from 2016-were we right?
So to gauge what the new year will bring, we asked experts to weigh in on what challenges they expect optometrists to face in 2017.
Optometry Times Editorial Advisory Board members John Rumpakis, OD, MBA, and Carl Spear, OD, MBA, FAAO, were joined by Bryan Rogoff, OD, MBA, CPHM, founder and consultant at EyeExec Consulting and president of the Maryland Optometric Association.
They identified six financial challenges for ODs in 2017:
• Legislative changes
• Fate of the Affordable Care Act (ACA)
• Increased online disruption
• Cost challenges for providing services
• Consolidation, consolidation, consolidation
• Managed vision care (MVC) plans
Next: Legislative changes
Legislative changes
The change in political views that come with a new administration can affect new bills introduced to Congress-and existing bills that are awaiting approval.
“As professional challenges and changes in legislation by non-healthcare providers begin to shift, the market should be a concern to us all,” says Dr. Spear. “This is reason for everyone to get involved in their local, state, and national politics that can affect ODs.”
Dr. Rogoff says that eyecare professionals (ECPs) are in for a big struggle with the change in political parties controlling Washington.
“With new faces taking over, bill endorsers must build the relationship with the newly elected representatives-which can take some time to do,” says Dr. Rogoff. “The fact that a business-minded administration is coming into office may hinder the passing of any type of healthcare act.”
In December 2016, a federal judge upheld the decision that allows for a Utah law, SB 169, to prohibit the enforcement of minimum pricing standards, or unilateral pricing policies (UPP), on contact lenses. This was after an attempt in 2015 by Johnson & Johnson Vision Care, Bausch + Lomb, and Alcon to appeal the UPP law in Utah.
This law is designed to protect patients from price-fixing by retailers, but Dr. Rogoff says the law’s passage may change the way ODs prescribe contact lenses.
“With SB 169 being upheld in Utah, ECPs will have to work harder to compete with online retailers selling contact lenses,” says Dr. Rogoff.
Legislative concerns stretch far and wide-especially with the appointment of Tom Price (R-GA) as Health and Human Services Secretary.
Rep. Price wants to redo the structure of Medicare, says Dr. Rogoff-which could ultimately affect the reimbursement process to ODs.
“Rep. Price is supported by the American Medical Association, and that may affect his restructuring process,” Dr. Rogoff says. “Members of the AMA have voiced frustration in the past with the ACA and Medicare-so in 2017 we are likely looking at changes.”
The fight to keep optometry as part of Medicare has been an ongoing process regardless of administration.
“Optometry professionals, along with the American Optometric Association (AOA), fight year in and year out to keep optometry included as part of the definition of Medicare,” says Dr. Rogoff. “Currently, optometry is listed as a part of physician-based needs, but that can change at any time if Congress changes the federal law classification.”
Next: Fate of the ACA
Fate of the ACA
In addition to optometry-specific legislation, the questions that surround the ACA remains a hot button.
“The uncertainties on the future of the ACA may cause some stagnation in the market as both patients and providers take a cautious wait-and-see approach to the future of health care,” says Dr. Spear.
One of the main areas of concerns is how ACA-covered children’s exams may be affected.
The ACA currently covers what it deems as the “10 essential health benefits,” including pediatric eye exams once per year.
“If the ACA is repealed, then pediatric eye exams will no longer be required,” says Dr. Rogoff. “Children’s eye exams could no longer be mandated or covered by Medicare. This may translate into fewer patients coming into your practice for preventative care due to out-of-pocket costs.”
Related: Looking back at 2016
In fact, the new Congress has already begun the process of dismantling the ACA with the introduction of its four-step plan.
According to Dr. Rogoff, the AOA has nurtured key relationships with legislators to ensure optometry continues to be included with healthcare changes in Medicare and other areas. However, he says there is tremendous uncertainty with these programs, and ODs must not take for granted their position in the healthcare industry.
“President-elect Trump is not completely sold on the final rule of the Medicare Access and Child Health Insurance Program (CHIP) Reauthorization Act (MACRA) and may seek changes within six to eight months after the new administration is sworn in,” says Dr. Rogoff.
Changes to these programs could change the way optometrists are reimbursed by the Centers for Medicare & Medicaid Services (CMS) for their services. Rep. Price favors a system in which doctors are in more control and getting paid from insurers without the extensive paperwork or questions-according to Forbes.
Because of this, Dr. Rogoff says ODs need to support the AOA and continue advocating for optometry to be included in the definition of healthcare.
Next: Increased online disruption
Increased online disruption
Online disruption as well as increased competition from online retailers continues to be a major player in 2017.
But our experts think there are two types of online disruption-some positive, some negative.
“There has been a tremendous effort from private equity venture capitalists (EVC) to enter the market and get in on these new technologies,” says Dr. Rogoff. “The interest from these EVCs is the convenience and cost to do big business.”
As technology continues to evolve, Dr. Rogoff says the volume of product these companies are able to move will affect how your patients purchase-and obtain-their contact lenses and glasses.
“With more of these companies entering the marketplace, and the fast pace with which they are able to push product, patients may begin to do more online rather than in your offices,” says Dr. Rogoff.
Dr. Spear says the answer to facing the online disruption may start from within.
“Outside forces are filling a space and patient need that we are not delivering,” says Dr. Spear. “The need exists, and we must look inwardly at ourselves to see how this is happening.
Related: Low-cost contact lens site looks to improve compliance, drive exams
“The business of optometry is robust,” says Dr. Spear. “This along with aging baby boomers and the overall number of people needing eye care in the U.S. make it a highly profitable business.”
Couple this with the fact that the practice of selling and fitting contact lenses online is not heavily regulated-Dr. Rogoff thinks this may be a recipe for disaster in patient complications.
But there is a good form of online disruption that may benefit ODs in the coming year, says Dr. Rogoff.
“Insurers have been working to try to lower the cost of health care and ‘triaging’ different forms of health care,” says Dr. Rogoff. “This would be beneficial to patients and ODs along with assuring proper handling and care of Class II medical devices-contact lenses.”
As more people try online services, ODs are seeing mixed reviews. Numerous patients have voiced their dissatisfaction with the results of these online screenings, and some are returning to their ODs for traditional eye exams.
“The AOA has been receiving patient complaints, both from members and patients, regarding online and app-based refractive technologies and is compiling and sharing this information as appropriate with state and federal officials,” says Dr. Rogoff. “ODs should continue to share these instances of patient harm with the AOA so we can better identify and communicate the risks of these online and app-based businesses.”
Next: Cost challenges for providing services
Cost challenges for providing services
Dr. Rumpakis believes that the biggest financial challenge ODs will face is right there in their exam rooms.
“The biggest financial challenges for 2017 and beyond will lie within the analysis of the cost of providing professional services within the practice without the overlay of retail profitability,” says Dr. Rumpakis. “The shift to an outcomes-based payment system is going to provide significant challenges to offices that have not analyzed their internal costs of providing services.”
Related: 5 steps to creating a budget
Understanding the “true” cost of providing an annual episode of care for a specific ICD-10 diagnosis will also be a major hurdle, says Dr. Rumpakis.
“Those practitioners who can calculate the cost for an annual episode of care for their top 30 medical diagnoses treated at their practice will have the ability to make much smarter business decisions with resource allocation and categorical spending,” says Dr. Rumpakis. “This will ultimately result in a positive effect on a practice’s profit by understanding how to be efficient and effective in its care delivery.”
Next: Consolidation, consolidation, consolidation
Consolidation, consolidation, consolidation
Consolidation and vertical integration will be another big factor in 2017, according to our experts.
These two things create opportunities for ODs looking to sell their practices and transition out of practice, says Dr. Spear.
Consolidation is also good for practitioners who are trying to maintain relationships and build upon them.
“For those not looking to transition, consolidation provides an opportunity to deliver a high-end customer service experience that maintains a loyal and profitable patient base,” says Dr. Spear.
Related: 6 steps to open a practice
As companies continue to consolidate and merge in other industries, Dr. Rogoff says the same is happening in optometry.
“Consolidation is becoming more prominent in eye care,” Dr. Rogoff says. “If we look at other industries like pharmacy, we can understand how the industry is converging regarding optical, vision insurance, and ophthalmic care.”
He believes that attractiveness of optometry to private equity firms has fueled the uptick in consolidation across the industry.
“There is tremendous interest from private equity, both in the U.S. and overseas, to capture market-share,” says Dr. Rogoff. “It is especially important for private ODs to distinguish their practices as a destination, continue the highest quality of customer service, and differentiate with specialty services and products.”
Next: MVC plans
MVC plans
With the future of the ACA in question, ODs should brace for changes in MVC plans in 2017.
However, ODs must remember they have a choice to accept the MVC plans in their practices.
“Nearly 180 million lives are covered by MVC plans,” Dr. Spear says. “In our strategic planning, we encourage offices to make a decision to accept the plans or not.”
Both scenarios can work as long as the practitioner actively makes the decision about accepting plans.
Related: 10 tips to surviving an insurance audit
“In either case, we work to build a business model around that decision,” Dr. Spear says. “For those choosing not to take MVC, we develop a strategy around sub-specialty practice and high-end customer service. For those practices that do accept managed care, we focus on pricing strategy and product selection to maximize profitability.”
Consolidation in the insurance market along with changes in reimbursement may play a major role in MVC plans this year.
“ODs should expect to see changes with reimbursements from both medical and vision insurances,” Dr. Rogoff says. “They may see shifts on how services are covered. It is extremely important for optometrists to maintain a healthy mix of services and products when shifts in reimbursement change.”
Next: Moving forward
Moving forward
Although optometrists are facing a number of financial challenges in 2017, Dr. Spear says change doesn’t have to always be for the worse, and ODs should embrace it.
“We do know things are going to change, and with change always comes opportunity,” says Dr. Spear. “I encourage practitioners to lean forward and innovate the way they deliver products and services.”
Take a look back at our financial challenge predictions from 2016-were we right?
