What's your contact lens inventory turn rate?

Optometric Management, Apr 2000 by Juneau, Annette

If you're like most of the O.D.s interviewed for this exclusive study, then you probably haven't calculated one. Try this formula to save yourself money, space and time.

If you expect a minimum of four turns per year from your frame board inventory, why would you tolerate a contact lens inventory with no turn data?

In my research with more than 100 O.D.s, I've found that they inventory an average of 25 brands of contact lenses. Three of these sets they never use, and they use three others only twice a year on average. This is an astonishing fact in today's competitive business environment.

I'll take a look at how the O.D.s I interviewed handle their contact lens inventories. Plus, I'll highlight how the most successful optometrists manage theirs. This will offer you insight for paring your own inventory to a more manageable size to get an optimum turn rate, which will save you money, space and time.

Finding the perfect technique

At first glance, contact lens it ventory and space management is a confusing problem for most O.D.s and their staffs. Frequent comments I heard when I asked O.D.s why they would continue to inventory a product that neve turns included:

"I never know when I'm going to need it."

"I want my patients to know I'm an expert with many brands."

"I want to spread my business around."

If you're keeping too many contact lenses in your inventory, then read on for some solutions.

Who participated

The study had a clear objective: to compile data to develop a strategy that efficiently manages the contact lens inventory and the space consumed by those inventories.

The 100 O.D.s who were selected for the research come from 35 states and have an average gross revenue of $570,700. The value of their owned contact lens inventories ranged from $1,500 to $35,000.

Each O.D. was asked to list the brand names of the contact lenses in his office. In order for the brand to appear in the study, the brand had to be:

in the office as either a trial lens set used as a sample to trial fit a patient.

a revenue product purchased by the O.D. for stock and resold to patients.

The O.D.s were then asked how frequently each brand was fit or dispensed - weekly, monthly, quarterly, twice a year or never. See "Contact Lens Prescribing Habits" (at right) for the study results.

Successful strategies

The results of the survey indicated that 16 O.D.s reported gross annual sales of more than $800,000. Their data were significantly different from that of the other 84 O.D.s. They reported 2.5 revenue sets and 16 trial lens sets, all of which are fit and dispensed weekly to monthly. Clearly, these optometrists had a strategy in place that allowed them to meet their contact lens patients' needs and manage their inventories wisely and profitably.

To tap into their methods for success, I interviewed them indepth about their contact lens inventory management strategies. They all decided to pare the numbers of brands and units. Refer to "Why These O.D.s Pared Their Inventories" on page 50 to see what these optometrists revealed as their basic reasons for doing so. Here are the strategies they used.

Analyzing dispensing

Dr. Joel Fieffer and Dr. Ivan Hyde of Linwood, Wash., sampled their contact lens patient charts to determine what was being fit and what was actually being sold as replacements (but not actively fit on new patients or patients changing their modality).

Their sample also included the number of visits each lens required and the fees collected for each lens. They evaluated the charts of patients who used their vision plan benefit for contact lenses to understand what the fitting, dispensing and purchase patterns entailed.

Developing a niche

Dr. Ivan Bank of Metairie, La., made the decision that in order to be a major player as an independent optometrist surrounded by 60 other O.D.s in a small, heavily populated area, he must decide on a niche, develop a plan and stay the course. He decided to specialize in contact lenses and high-end fashion eyewear. He made this decision based on the fact that he was attracting a high-volume of Baby Boomer professionals. He evaluated his fee structure in relationship to chair cost and chair time. With space at a premium price per square foot, he would have to wisely choose what to stock to meet his patients' needs of selection, service and price.

Dr. Bank selected a small number of contact lens manufacturers who provide high-quality products that met the St. Charles Vision niche. He focused on companies that had recognizable brand names and market share with consumer marketing of their own to drive the market. Managing space

Dr. Neil Erickson and Dr. David Butler of Lantana, Fla., say that a clear trend for managing space and cash flow is doctor-controlled patient delivery. Dr. Erickson noted, "We order the patient lenses, and they're shipped directly from the manufacturer to the patient. This way, we enjoy favorable margins and cash flow from a product that's never on our shelves.

This strategy reduces the administrative activities of checking orders, calling patients for pick-ups, and managing the pickup process. We experience enhanced patient compliance, which translates into patient retention." Dr. Erickson said that this service is a deciding factor in choosing a contact lens brand.