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BLOG: Securing your alliances
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There has been much chatter over the years on related topics in the ophthalmic industry such as: vertical integration, market consolidation and strategic alliances.
For those of us in the private practice sector, the beginning of this megatrend started with the early buying groups that allowed us to purchase wholesale optical goods such as frames, lenses and contacts by combining our purchasing power. This marked the beginning of independent optometrists working together to help each other compete with the franchise- or chain-based mode of the practice of optometry.
The buying groups have evolved into what is often termed affinity groups that offer more than just buying power and extend into marketing and management services. These groups continue to thrive and offer a broad range of services to assist the independent practitioner. But there is a cost associated with the membership in many of these groups. Providers in these groups, to variable degrees, have lost some of their independence.
Other independent providers have been less concerned with purchasing power or marketing and more concerned with securing contracted lives with employer groups, third-party insurance plans and managed care organizations. These provides have joined together to form optometry networks, integrated ophthalmic networks, independent practice associations or management services organizations. Most of these groups have secured some level of contracted lives and continue to play an important role in maintaining the strength of independent practice.
But these providers have also lost some of their independence.
At this point in time, one could ask the question, “Does the truly independent optometrist still exist?” And, if so, “Is this a viable mode of practice for our new graduates?”
This year, the level of consolidation in our industry hit an all-time high. The merger of Luxottica and Essilor should cause any optometrist that in any way identifies with some level of independent practice to stop and take notice. This is not just the merger of the largest frame company and the largest lens manufacturer. Between these two organizations, they own a large number of retail optometry locations, a large buying group, a large affinity group and a large vision insurance company. To varying degrees, they own a large segment of the practice of optometry.
Independent optometrists and, frankly, any segment of the ophthalmic industry that considers their respective businesses to be independent cannot afford to ignore this significant change in our landscape. We all must take a hard look at our practices and our various relationships and alliances. Because complete independence is no longer a viable option, we must take a hard look at current alliances. We may want to strengthen some of these and may want to sever others.
This hard look at our practices should extend beyond our supply chains, marketing and management. We should look at our clinical relationships as well. Where do we refer for ophthalmic surgery and advanced medical care? Where do our patients come from? Do the payors that send us patients prefer us or are we just “filler” that provides them a broader panel until they can at some point drop us from their network?
Knowledge of the landscape of our industry is an important part of informed decision making. Although I advocate a strong knowledge and understanding of the issues of health care reform, knowledge and understanding of the business side of our practices is equally important.
Be active in our local and state optometry associations and the American Optometric Association. The volunteers and staff of these organizations spend countless hours as our advocates. But also attend our industry meetings, network with your colleagues and work to strengthen your desired alliances. While in today’s world independence may be a relative term, it can still be an important part of our future.