Pro forma helps calculate effects of PRK services on your practice

Issue: September 1997

ByJerome A. Legerton, OD, MS, MBA, FAAO

The pro forma statement is used in business to describe the future outcome of a strategy or objective. Certain assumptions are made and assigned financial values. Now that the success of laser vision correction is realized and the number of procedures is growing at a steady rate, it is easier to clarify the assumptions to be used by the optometric practice to forecast the outcome of adding laser vision correction services.

After analyzing the statistics regarding laser vision correction (see "Quantitative Foundation" chart below), you may conclude that you want to add laser vision correction consultation and screening to your service menu. This can consist of an interview with minimal testing to determine if the patient is a candidate for photorefractive keratectomy (PRK) or laser-assisted in situ keratomileusis (LASIK). You are wise to charge a fee for this added procedure/visit category. If you are worthy of patients’ trust you need not provide the service for free.

Reschedule patients who, during the consultation and screening, are determined to be good candidates for a complete presurgical evaluation. The fee for the complete presurgical evaluation can be charged independently or derived as a comanagement fee from the global fee of the surgeon of choice. Select surgeons that respect and appreciate the value of optometric pre- and postsurgical management.

The final service that can be added to your practice is a laser vision correction after care agreement. This agreement will supplement any third-party coverage and provide the patient with continued access to your office for management after the postsurgical care period. Consider fee reductions for supplemental eye wear as part of this agreement.

Calculating the pro forma

With these three service categories in place you are ready to calculate your pro forma. You must now make assumptions for how many consultations and screenings you will do per month. This will depend on your practice size and marketing efforts. I suggest starting with your own patient base and using direct mail with a follow-up telemarketing call. The direct mail is a rifle shot to your patients selected from your data base for refractive error and age (older than 21 with up to 6 D of myopia and up to 4 D of astigmatism).

Most practices having 7,000 to 10,000 total records should easily produce a response rate that can sustain 20 screening/consultations per month. These screenings, in turn, should result in one in five candidates who proceed to surgery and another one in five thinkers. The strong candidates — in this case four per month — are rescheduled for the presurgical evaluation.

Most patients will buy eye wear

Over time, half of the patients who undergo laser vision correction will purchase eye wear for reading, night driving or sun protection. The accompanying pro forma describes the financial outcome with this scenario. Estimated fees have been used. To create your own pro forma substitute your forecast number of procedures and your appropriate fees.

It is important to determine the impact of including these services in your practice by comparing this outcome with your current methods of operating. To calculate an alternate pro forma, consider the following:

Many of the patients who reported for consultation and screening would not have otherwise reported for annual examination.
Some of the patients who were forecast to undergo surgery (48 per year in the accompanying pro forma) will be lost to your practice and have the procedure without you. Based on a 2-year examination frequency, assume half of the forecast patients report for comprehensive examination and 85% purchased spectacle eye wear or contact lenses.

Using the same net fee after laboratory cost ($150 in the accompanying pro forma), the revenue for the 21 patients (85% of 24) would be $3,150.

If your projected numbers and fees matched those given, your net income before fixed overhead allocation would be more than $40,000 higher by providing the laser vision correction services.

Enthusiasm factor

The final pro forma issue is the effect of patient referral. Documented referral tracking indicates that the average referral rate for a spectacle eye wear or contact lens patient in a model optometric practice is one patient in 3 years. Practitioners involved in laser vision correction have reported referral rates of three patients in 1 year. This apparent 9:1 ratio speaks loudly enough that it does not demand quantification.

I have, for years, defined value added as making a difference in the life of the patient. More than 85% of patients having laser vision correction reported that the procedure significantly improved the quality of their life. This improvement is manifest in enthusiasm that, in turn, generates referrals.

It is critical to develop a system that brings the referrals directly to you. Remember that only one in four of the referrals will, in turn, net a surgical procedure. The others will become revenue for spectacle eye wear or contact lenses.

Calculating a Pro Forma for Laser Vision Correction

New Service Description	Number per Month	Fee per Procedure	Total per Month	Total per Year
Laser vision correction (LVC) consultation and screening	20	$40	$800	$9,600
LVC presurgical evaluation	4	$200	$800	$9,600
LVC postsurgical case management	4	$400	$1,600	$19,200
LVC after care	3	$40	$120	$1,440
Residual eye wear (after lab cost)	2	$150	$300	$3,600
*First year net before fixed overhead allocation: $43,440

Quantitative foundation for adding PRK to your practice

Optometry provides the care for two out of three of the nation's 63 million myopic and astigmatic myopic patients.¹
57% of patients say they would seek the opinion of their family eye doctor prior to having photorefractive keratectomy (PRK).²
More than 95% of postsurgical patients say they are "happy" or "very happy" with PRK and would recommend PRK to a friend or relative.^3,4
Three out of five contact lens wearers say they are "very" or "somewhat" interested in PRK due to perceived inconvenience and discomfort of contact lens wear.
More than two-thirds of all patients who undergo PRK can see 20/20 unaided after the procedure, and 95% can see 20/40 or better.^5,6
More than 300,000 PRK procedures have been performed with no blindness as a result of the labeled use of instrument (no cases have been reported to Summit or Visx or federal agencies).
Post-PRK patients have been reported to refer 3 to 4 patients as a result of their satisfaction.^7,8

¹Lee J. Is Your practice ready for PRK? Review of Optometry October 1995:58-62.
²Persico J. What your patients know: Get ready for their questions. Review of Optometry.October 1995:94-97.
³Visx FDA multicenter trials.
⁴McGee CN, et al. Psychological aspects of excimer laser surgery for myopia: Reasons for seeking treatment and patient satisfaction. Br J Ophthalmol.1996;80(10):874-879
⁵Stein R. Results reported with the Visx STAR Excimer Laser System
⁶Williams KD. Results reported with the Visx STAR Excimer Laser System.
⁷Andregg, RL. An OD’s rewarding experience marketing PRK. Optometry Today 1996;9(suppl):10.
⁸Interviews with comanaging ODs.

The following inferences can be drawn from these facts:

The procedure is safe, effective, here to stay and likely to be further improved by technology.
Optometry has a primary and potentially leading role in this service.
The marketplace is demonstrating growing interest.
Most prospective patients are relying on consultation with their current vision care provider.
Satisfied PRK patients are referring at rates higher than patients treated with spectacles, eye wear and contact lenses.

For Your Information:

Jerome Legerton, OD, MBA, is Section Editor of the Primary Care Optometry News Practice Management Section. During his 26 years in private practice, he served as managing partner of a seven-doctor multispecialty practice in San Diego, Calif. For 2 years Dr. Legerton served as director of clinical research at Pilkington Barnes Hind, and now he provides consulting services to the ophthalmic industry. He is the Benedict Professor of Practice Management at the University of Houston, College of Optometry for 1997-1998. Dr. Legerton can be reached at 105 Sierra Morena Court, Los Gatos, CA 95032; e-mail: jlegerton@aol.com.