Choosing the right business model for your optical lab

October 15, 2008

Many ophthalmologists are investigating dispensing as a secondary revenue stream. The decision to dispense is tied to providing optically correct lenses with a keen fashion sense. During the decision-making process, ophthalmology practices will find that essentially two lab business models exist-version "A," buying only uncut lenses and doing all the lens processing work in-house, or version "B," dispensing eyewear to the patient only as a finished product. Understanding the advantages and disadvantages of each lab business model can help determine the most effective option for your practice.

In an increasingly dynamic economic environment, a growing number of ophthalmologists and ophthalmology groups are looking toward adding dispensing eyewear as an adjunct revenue stream. The analysis and decision itself is beyond one of an investment, but is tied to the intricacies of both providing optically correct lenses and in a growing number of dispensing locales, a keen understanding and sense of frame fashion going forward.

The backdrop to all of that is technology offerings that can accommodate a dispensing practice in a complete manner, but is increasingly challenged or offset by a wholesale lab environment predisposed to all facets of current lens evolutions, lens coating, and finishing prowess. Simply put, the ophthalmic dispenser is and will continue to be more and more defined as a practice that is either supplied completely with "uncut" lenses or lens blanks-to be processed or finished in the practice lab-or only provides "cut" (already finished) lenses in the frame and as supplied by the wholesale lab directly to the practice.

The more traditional aspects of an independent practice dispensary that finishes a significant percent of its own work while still sending some percent of the more high end or specialized style jobs to a wholesale lab is a waning condition, based on costs (needs) to be productive in the most complete manner possible. A finish-only dispensary or "fully integrated retailer" that also generates, surfaces, coats, and finishes lenses will be either model "A"-buying only uncut lenses and doing all its own lens processing work-or model "B," dispensing only eyewear as the final product to the patient. Rising costs of lenses in the aggregate and therein the potential for lens waste (out of pocket) risks require processing completely versus just partially is leading to an either an all-in-the-pool or not choice.

A level playing field

The ability to develop and implement a full lens process that is extremely accurate with minimal waste is now more possible than ever due to technology advancements. Recent edging equipment advances have led to the onsite ability to produce the most high end/high fashion most commonly with very high base curvatures.

With the advent of digitally surfaced/direct/freeform lenses, the need for a secure lens production and finish process with minimal human intervention-except for mounting-also is critical. The still relatively new and advancing form of lens processing is effectively the mathematical clarification of curvature resulting in the customization of individual prescription visual acuity.

In laymen's terms, the lens itself becomes one big optical center that can enhance critical visual areas, such as peripheral vision. Any ophthalmology practice considering in-house lenses processing and finishing must factor in the likely continuing market penetration of those types of lenses in the coming 2 to 4 years. The cost/benefit ratio of the growth of that type of patient optical choice and added value could make the decision to go forward with a full-scale, in-house lens processing system a straight-line decision.

Alternatives to the business rationale or consideration of adding in-house surfacing/generating, coating, and lens finishing to a decision to dispense exist. Opportunities are available and will continue to evolve from the major lens companies already positioned to take on all this for the practice and with relatively quick turnaround for the patient.

Major lens companies and the larger retail chains have made significant investments in their capabilities to offer a complete choice to the individual eye-care practitioner (ECP) and ophthalmologist that dispenses. They have either acquired pre-existing independent labs and made them part of their own lab network or enhanced and advanced their individually owned labs with new technologies to improve cost efficiencies while introducing continually new lens treatments, coatings, and technologies.