Eyecare Business. Marketing and Strategy

340 Pages·2001·1.692 MB·English

by  Gary L. Moss, O.D., M.B.A., F.A.A.O., and Peter G. Shaw-McMinn, O.D. (Auth.)

Copyright © 2001 by Butterworth–Heinemann
Amember of the Reed Elsevier group
All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopy-
ing, recording, or otherwise, without the prior written permission of the
publisher.
Every effort has been made to ensure that the drug dosage schedules within
this text are accurate and conform to standards accepted at time of publication.
However, as treatment recommendations vary in the light of continuing
research and clinical experience, the reader is advised to verify drug dosage
schedules herein with information found on product information sheets. This
is especially true in cases of new or infrequently used drugs.
Recognizing the importance of preserving what has been written, Butterworth–
Heinemann prints its books on acid-free paper whenever possible.
Library of Congress Cataloging-in-Publication Data
Moss, Gary L.
Eyecare business : marketing and strategy/Gary L. Moss, Peter G. Shaw-McMinn.
p. cm.
Includes bibliographical references and index.
ISBN 0-7506-7238-2 (alk. paper)
1. Ophthalmology—Marketing. I. Shaw-McMinn, Peter. II. Title.
RE72 .M67 2001
617.7'0068'8—dc21 00-049806
British Library Cataloguing-in-Publication Data
Acatalogue record for this book is available from the British Library.
The publisher offers special discounts on bulk orders of this book.
For information, please contact:
Manager of Special Sales
Butterworth-Heinemann
225 Wildwood Avenue
Woburn, MA01801-2041
Tel: [phone]
Fax: [phone]
For information on all Butterworth–Heinemann publications available, contact
our World Wide Web home page at: http://www.bh.com
10 9 8 7 6 5 4 3 2 1
Printed in the United States of America
Foreword
The publication of Eyecare Business: Marketing and Strategy is a
milestone in the education of the eyecare business clinician. The
student resident and practicing doctor seeking success in today’s
dynamic health care marketplace now has a textbook that meets
the competitive challenges of the future. For the first time in eye-
care, one book blends the seasoned experience of successful prac-
titioners with contemporary knowledge of management science.
Drs. Gary Moss and Peter Shaw-McMinn have the right
stuff: quality care clinicians with business savvy able to teach
their colleagues the management pearls of success. I have the
benefit of firsthand knowledge of their talents since I served on
the faculty of both Peter’s academic home at the Southern Cali-
fornia College of Optometry and Gary’s teaching base at the New
England College of Optometry. I remember Peter’s successful
early efforts in practice management teaching and curriculum
development in the 1980s. In the mid-1990s, Gary was a bundle of
intellectual energy as he was in the midst of his MBA studies,
actively publishing management articles, and already plotting
out his vision for a series of practice management textbooks.
Gary and Peter are truly experts to be respected and should
be revered for translating the essence of their experience and
knowledge into this text on strategic management. Expertly ad-
dressing the topics of market research and strategic planning for
all levels of clinical experience, this text gives the student resi-
dent, new practitioner, and later-career doctors a sound founda-
tion for practice building and business development in eyecare.
xi
xii Foreword
This is a book to study, explore, reread and, most impor-
tantly, help you learn each day on the frontline of patient care and
health care business. It is the first substantive text, seeped in the
science of today’s MBAprograms, which serves the sophisticated
information needs of today’s eyecare business clincian. This work
is rich with solid referencing, crisply written narratives, and real-
life examples. Simply put, Drs. Moss and Shaw-McMinn have
delivered the new standard bearer for excellence in eyecare prac-
tice management.
My advice—tackle this book head on. Immersion in this work
will catalyze you to reinvent your approach to health care busi-
ness, and of course, don’t forget to enjoy reaping the rewards.
Barry J. Barresi, O.D., Ph.D.
Preface
Our intent in this book and additional texts to follow is to assist
the eyecare professional (ECP) in developing the select skills and
knowledge essential to succeed in today’s marketplace. The
health care environment has become quite challenging, requiring
providers to accept and adapt to changes more rapidly and fre-
quently than ever before. This need for continual monitoring is
the result of ongoing events, causing the transformation of tradi-
tionally accepted models of eyecare delivery. Astable marketplace
is predictable, offering few chances for creativity and break-
through developments; today’s relatively uncertain marketplace
offers greater obstacles yet more opportunity to capable ECPs
willing to accept the challenge. To compete effectively and achieve
maximal goals and profitability, the ECPmust be flexible, able to
plan for and adapt to rapid change, and able to predict likely
future events by recognizing and understanding recent trends
affecting the ophthalmic industry. According to Bhatt Vadlamani,
Ph.D., instructor in strategic management, developing strategy is
“like navigating in the fog.”1 Given the rapid changes in health
care reform, consolidation, oversupply of providers, dwindling
resources, projected increase in consumer demand, increased reg-
ulatory and employee pressure, managed care certainly will con-
tinue to interject elements of uncertainty for the eyecare strategist
throughout the first decade of the next millennium.
1Stated during lecture in a strategic management class of the MBAprogram at University
of Massachusetts, Boston, summer 1996.
xiii
xiv Preface
Our intent is to enhance the reader’s understanding of influ-
ential forces in eyecare provider decision making. Our goal is to
redirect discussions relevant to eyecare business from a traditional
foundation based on anecdotal experience to a foundation rich in
generally accepted business principles. This enhanced under-
standing is achieved through proven academic business theory
supported by current research. These basic concepts should facili-
tate strategic business planning and implementation; “success in
challenging times requires extraordinary commitments to operat-
ing efficiency, technology utilization, product quality and cus-
tomer satisfaction.”2
This text is directed toward the roles and tasks of the oph-
thalmic decision maker, whether it be as leader, owner, partner, or
manager. The eyecare decision maker must possess a basic under-
standing and minimum level of competence in the six major disci-
plines affecting decision making: management, marketing, strategy
development, communications, technology, and finance. These dis-
ciplines should be well understood to effectively direct personnel,
promote a practice, and develop the necessary tactics to achieve
desired business objectives.
When developing strategy in any business endeavor, future
planning is based on assumptions made from recent industry
trends and performance. The text will identify whenever such
assumptions have been made. This text is not meant to be a com-
plete, solitary resource on business theory but rather a discussion
of concepts on specific topics to enhance your daily practice oper-
ations. As Johnson & Johnson CEO Ralph S. Larsen states: “Repu-
tations reflect behavior you exhibit day in and day out through a
hundred small things. The way you manage your reputation is
by always thinking and trying to do the right thing everyday.”3
Recent trends in health care delivery show that HMOs and
managed care organizations are either losing profits or have been
forced to increase premiums due to rising costs.4 This trend will
affect eyecare practice in the future in several different ways.
2Schermerhorn J. Management.New York: Wiley and Sons; 1999:4.
3Fortune. February 10, 1992:40–70.
4Boston Globe. July 29, 1999:D-1.
Preface xv
First, patient benefits, offered by employers, may become a de-
fined contribution in partial payment toward the employee’s
health plan at an amount substantially reduced from their pres-
ent levels or, in some cases, eliminated entirely. Reimbursement
for existing services will either remain constant or possibly de-
crease. Additional mergers and consolidations within the man-
aged care industry may result in fewer, larger managed care
organizations.
Each chapter includes an action plan that reiterates what we
believe are standards of performance that should be developed
by each ECPwho endeavors to create a strategic marketing plan
for his or her eyecare business. Chapter 1 describes several fun-
damental components of a marketing program based on the
needs of contemporary eyecare practice. Chapters 2, 3, 4, and 6
build on an understanding of the components necessary to create
a marketing plan for the ECP’s particular situation. Chapter 8
focuses on marketing high-quality service and the components of
quality ECPs should consider when creating a marketing pro-
gram for eyecare settings.
The concept of “moment of truth” analysis is elaborated on
in Chapter 5, dealing with building long-term patient relation-
ships, while “service blueprinting” is explained in Chapter 9, on
implementing strategy. These are methods of identifying crucial
interaction points between patients and ECP staff members that
greatly influence the patient’s perception of quality in the office.
Many studies have been undertaken to determine what providers
can do to enhance the value patients receive during office encoun-
ters. The effect of high-quality service delivery on patient satisfac-
tion is examined in Chapter 7, because high-quality care is not
synonymous with patient satisfaction and does not always trans-
late into increased revenue or patient loyalty, both essential ingre-
dients of practice longevity. Finally, Chapter 10 describes new
marketing technology, using the Internet, that offers ECPs first-
mover competitive advantages; and Chapter 11 covers marketing
a practice for sale or purchase.
G.L.M.
P.G.S-M.
Acknowledgments
I would like to acknowledge the following people and organiza-
tions for their various contributions to this book: Cindy Hutchi-
son, Claire Rork, Marc McGee, and Marek Jacisin of the New
England College of Optometry Library. They were instrumental
in supplying me with hard-to-find electronic journal articles in
a timely fashion, and in making the Library such a wonderful,
cutting-edge resource with a great atmosphere in which to work.
Laura Cochrane for the vast amount of downloading and typing
she did for me, and Nikki Slagle for the fine job of refining and
editing my initial thoughts and phrases. The Kirstein Branch of
the Boston Public Library, possibly the finest, most complete
business materials resource in the world. Christine Bell of the
Newton-Wellesley Hospital Library for supplying specific, cur-
rent healthcare business journals. Audrey Ashton-Savage and
Ellen Bentoudja of Emmanuel College for giving me the opportu-
nity to practice and refine my own knowledge base. My coauthor,
Peter G. Shaw-McMinn for contributing the portions that filled in
the voids, making this book practical and relevant for practicing
ECPs. The American Optometric Association for developing the
Practice Enhancement Program Monograph Series and The Asso-
ciation of Practice Management Educators for setting the high
standard that we strive to achieve.
I would like to thank Master Un Hak Jung of Alpha Tae
Kwon Academy for helping me find the internal energy, and my
wife Traudi, and daughters Amber and Blaise, for providing the
xvii
xviii Acknowledgments
external motivation I needed to complete this project. I can’t forget
my mother Eva, sister Jamie, and nephews Hunter and Tanner.
Finally, I dedicate this book to the memory of my father, Herbert
L. Moss of Woodbridge, NJ, a pioneering breed of optometrist that
will soon become just a memory to our profession.
G.L.M.
Gary has acknowledged many of the individuals that helped us
write this book. In addition, I’d like to thank Dr. Richard L. Hop-
ping, who has been a mentor to me and oversaw the development
of The American Optometric Association Practice Enhancement
Programs; Dr. John Larcabal for the support and marketing ideas
he has provided us; Dr. Craig Hisaka for constant reminders of the
humanistic side of marketing; the many doctors who contributed
quotes to this book; and most of all, thanks to Gary L. Moss him-
self, for keeping on me about completing this book together and
giving me the opportunity to contribute.
I’d like to acknowledge the tens of thousands of eyecare
practitioners all over North America who have dedicated their
lives to patient care and contributed to the positive images of the
eyecare industry. Sometimes we forget who our competition is.
The consumer has many different services and products asking
for their time and money. Marketing is communicating, and who
is better at communicating what we have to offer than the eyecare
practitioner who effectively communicates the benefits of our
services, improving the lives of our patients while enhancing the
entire eyecare industry. We acknowledge the past efforts of these
individuals who have made marketing and the opportunity to be
successful easier for all of us. Thank you.
P.G.S-M.
CHAPTER 1
Creating Your Practice Identity
The road to success is always under construction.
—Lily Tomlin
Why Do You Need to Market?
Marketing as a distinct function occupies a position of promi-
nence in the business plan of many eyecare offices. According to
the U.S. Bureau of the Census,1 nearly one third of American
households relocate annually, adding to the challenge for the eye-
care professional (ECP) to retain patients. For your practice to
remain a high priority to patients, an ongoing communication
program is necessary to strengthen your identity and to avoid
becoming the community’s “best kept secret.” A well-crafted
marketing program can enhance practice revenue growth, pro-
vide greater future benefits, and act as an annuity by increasing
practice value. ECPs compete against other industries for
diminishing consumer dollars. The better we position the busi-
ness and image of eyecare professionals in our society, the more
secure the eyecare profession becomes and the stronger our
ability is to endure downturns in the economy.
In most communities, ECP offices are not overwhelmed by
competition from other providers. However, ECPs consistently
are confronted with the challenge to increase patient volume or
local market share while attempting to decrease expenses and use
fewer resources. Traditional advertising goals aim to create aware-
ness of one’s practice within the community and encourage pa-
tients to return for regular care. Today’s ECP must use effective,
1
2 Eyecare Business: Marketing and Strategy
measurable, and well-targeted marketing tactics. Without a prop-
erly implemented business strategy, a practice may encounter
flat revenues, decreasing market share, minimal growth of new
patients, and loss of retained patients using the office.
Why does an ECP need to market at all? Many patients
quickly forget about their ECPand many move to a location that
is less convenient, making them less apt to return to your office. It
is estimated consumers receive over 2,000 marketing messages
per week through a variety of media.2 Because of this bombard-
ment of media communications, your marketing must be contin-
ual, iterative, and focused to maintain patient loyalty. Despite the
vast penetration of managed care in creating a patient base, many
ECPs mistakenly assume that managed care plans drive patients
into their offices. Potential problems may occur for the ECPwho
willingly delegates the marketing responsibility to a third party.
Patients and insurance programs are in a constant state of flux,
often changing annually, either through a change in benefits or
change in health plans offered by employers. This creates a great
deal of uncertainty for the ECPplanning business strategies and
making revenue projections. However, by taking the time to
develop specific marketing goals and programs, you can find
opportunities within the changing health care marketplace.
The primary goal of marketing is to obtain, retain, and edu-
cate patients by creating a practice image that embodies the trust
you develop with your patients. The processes by which this goal
can be achieved are:3
• Develop a strategy that emphasizes the unique features
your practice offers.
• Educate patients to influence their purchase decision making.
• Identify patients most likely to value your services and to
respond to your marketing.
• Position your products and services favorably in your local
community.
Each of these requirements presents different challenges to influ-
ence patient spending patterns while matching practice sales tac-
tics to current local marketplace conditions. The ECPresponsible