Future of Independent ODs

As an independent OD with my own solo practice, I must say that I think the future for us is not as bleak as many paint it out to be. Very good article that you found. Here was the part of it that stuck out to me the most. (Sorry, I always write long posts. Thank my 7th grade typing teacher and 80 words a minute🙂

"For example, nearly 20% of contact lenses sales are now moving online, a fact that "Melanie" has discovered but that "Dr. Calderon" may not fully realize. Eye doctors also need to emphasize and further differentiate the quality of care and personal service they offer—service that is unlikely to be matched by their online competitors."

What I see happening now in optometry mimics exactly what has been seen in many other segments of the economy. In short, optometry is becoming polarized. There are indeed many cost-cutting measures that technology has offered, whether that be SpecSavers, 1-800 contacts, Wal-mart rates, and the like. Due to the overall trend of the economy of the last 15 years, in the reality that wages in nearly every field have stagnated or fell with cost of living skyrocketing, it is no surprise at all that these cost-cutting optometric models have seen growth. A larger number of people squeeze every penny than they used to, and we as an industry become part of that. Manufactures adapt to this, along with their retail stores in an attempt to create closed-system cash flow models. (I.E. To take on high numbers of low yield "customers", but to ensure they make money at every level of their care and material purchase)

But that to me is asking the wrong question. It's not, "Are independent OD's in trouble?" that is most valid to me, it is "Why haven't these cost-cutting models completely taken over?" In other words, why is it that my store closed down the Sears optical located a few blocks away when I started up here, and not the other way around? How is it that I had any chance at all?

In the examples that the article gives, such as Amazon, retail pharmacy, Home Depot, etc, there was NO soft landing. It did not take any of these entities long to completely roll over the entire industry. Ask anyone that owns an independent bookstore....the lights went out within a period of about 18 months after Amazon's ascendency. Home depot captured 70% market-share in many cities in a matter of 2 years. (There are entire classes about them in some MBA programs) In a more related field, pharmacy saw the same thing. When Walgreens became legitimized by other copycats in the mid-80's, its model (seen in CVS, RiteAid, others) took over the market within a period of about seven years, going from about 600 stores to 6000 stores in just over ten years.

Corporate optometry has been around for 40 years. Online retailers have been around since the mid-90 (1800 contacts since 1995). So, where is the steamroller? It never takes this long in any business. The same bogeymen were out there 20 years ago. The business hasn't changed, only the patient demographics.

All of this leads to the common fallacy that it's all the "old guard" of OD's that are making it, while anyone that has graduated in the last 10 years or so is locked in a CostCo closet doing exams for $3.75 plus coupons for 100lbs of foot powder. Let me tell you, in going to AOA and state meetings for the last 5 years, that just is not the case.

What I see is that many of the "old guard" have gotten side-swiped by a lot of the changes in the last ten years, and are losing market share or fleeing to corporate optometry. A large portion of new grads start in corporate, as I did, but I worked alongside 2 docs in their 50s that had been squeezed out of private. The younger docs understand this all a lot better, and many that are making it through that tiny crack in the window of independent docs are young, with a very different business model.

The same pattern has happened in IT, engineering, and other high education fields in the past ten years. The unemployment rate amongst those over 40 is outrageously high in many of these fields, even though they do not require higher pay for their extra experience. Managers want younger grads because they understand the new reality a lot more in business and engineering, in regards to computer-driven marketing and customer expectations. Optometry has seen its share of this too, even though a lot of the owners of the "old guard" (I.E. Were not associates but had profit-share) have remained in optometry, many of them with diminishing revenues.

What I guess I am saying is that the reason we haven't been steamrolled by these cost-cutting models is that there is, and will remain for a long time, a pretty large part of the population for whom anything medical is NOT something they cut every corner on. Most people feel this way, and are only going toward these models out of necessity, not choice. (The study done on store-fronts and customer choice by Pacific CoOpt several years ago made this abundantly clear) As the economy goes, so does independent ANYONE. In nearly any field, corporations are going to by definition have the most ability to cost-cut, so any decline in expendable income will held their models rather than more service oriented independents...but for those that still have the means, we will be the first choice.

I write this from my break room before a 10am Monday start. (Yay, Medicaid Monday!) On the island in front of my optical there is a sign that reads "Material for material, we match any price". It is not as hard as many think to sell $3 plastic frames, put CR-39 without any coats in it, and sell it for a "sale" of $40. That is called Sams' Club, and I welcome them to setup next door to me, so I can shut them down like I did Sears Optical. When that same patient comes to me, gets xmas cards, a number they can call anytime with a question, a consistent staff, etc, and pay the exact same for the materials, I know what their choice will be.

The economy at present greatly favors any large entity that cuts costs and has zero service, but that will change and there are always those doing well...So the plan is not to run from corporate optometry. The plan is to learn how to beat their brains out.

LikeABauce,

Hell yeah! That's what I am talking about. A motivated positive optometrist. Like a boss, like a hustla.

Sent from my Galaxy Nexus using Tapatalk

This is inspiring stuff and it sounds great in written form, but it doesn't change the reality of what's happening to the profession, although I wish it did. I'm sure, with some digging, you could go back 20 years and find a similar article on how pharmacy was facing a conversion from an independent profession to a corporate one. I don't think I need to mention how that turned out.

Optometry is going corporate, whether anyone likes it or not is irrelevant. It's happening and it's accelerating in pace every year. New grads need to be aware that they will not be entering a profession that will likely allow them to practice out their career as an independent entity. Rather, they will be employed, most likely by a corporation. If you're ok with that, and everything that goes along with corporate doctor employment, then have at it. If you're dreaming of being part of 5 doc group practice, making a good living seeing patients in a respectable setting, you're likely going to be disappointed because that side of the profession is going to fade away. You guys can kick and scream all you want, but it's like trying to punch the ocean. You can't change it. I'm not here trying to change it - I'm here trying to tell you to make sure you know what's ahead before you jump in. If you ignore the warnings, it's on you. I only wish someone had been a little more forceful in warning me about the truth of the profession's future. A few docs told me, but I dismissed their opinions for the same reasons most of you guys dismiss my warnings. That's fine with me. I'm doing my part.

Jason K said:

This is inspiring stuff and it sounds great in written form, but it doesn't change the reality of what's happening to the profession, although I wish it did. I'm sure, with some digging, you could go back 20 years and find a similar article on how pharmacy was facing a conversion from an independent profession to a corporate one. I don't think I need to mention how that turned out.

Optometry is going corporate, whether anyone likes it or not is irrelevant. It's happening and it's accelerating in pace every year. New grads need to be aware that they will not be entering a profession that will likely allow them to practice out their career as an independent entity. Rather, they will be employed, most likely by a corporation. If you're ok with that, and everything that goes along with corporate doctor employment, then have at it. If you're dreaming of being part of 5 doc group practice, making a good living seeing patients in a respectable setting, you're likely going to be disappointed because that side of the profession is going to fade away. You guys can kick and scream all you want, but it's like trying to punch the ocean. You can't change it. I'm not here trying to change it - I'm here trying to tell you to make sure you know what's ahead before you jump in. If you ignore the warnings, it's on you. I only wish someone had been a little more forceful in warning me about the truth of the profession's future. A few docs told me, but I dismissed their opinions for the same reasons most of you guys dismiss my warnings. That's fine with me. I'm doing my part.

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Much of health care is also headed that direction. Medical practices are being bought up by hospitals left and right. Ophthalmology is somewhat insulated, as we have little to offer the hospitals. Don't know how long that will last. With ACOs coming down the pipe, we may be bought up by the insurance companies! Unfortunately, many graduating docs are actually seeking out employment to up their income more rapidly and avoid the hassles of being a small business owner. Short-sighted, of course, but it's the reality. Times, they are a changin'!

Visionary said:

Unfortunately, many graduating docs are actually seeking out employment to up their income more rapidly and avoid the hassles of being a small business owner. Short-sighted, of course, but it's the reality. Times, they are a changin'!

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I agree. The post from the "optomistic OD" is needs to understand more about the trend of things. Yes, corporate has been here for a while, but it does not have to follow the same trend as the other corporate entities.

As more and more grads come out each year with increasing debt and lower private practice salaries, one can plot it out on a graph and see the steady rise of this profession going from "independent doctors" to "corporate doctors".

OATAcer said:

LikeABauce,

Hell yeah! That's what I am talking about. A motivated positive optometrist. Like a boss, like a hustla.

Sent from my Galaxy Nexus using Tapatalk

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Numbers don't lie; graph it out and then see what the reality is. I would love for the profession to have a positive outlook for the future, but unfortunately its just not the case.

The problem in any discussion like this is that ANY anecdotal evidence that it is not all gloom and doom is taken that the person believes that nothing is wrong. Seeing as I gave a speech at the state AOA a few months ago entitled "The Closing Window: How to Stay Independent in a Corporate Industry", I doubt anyone would accuse me of being an "optimistic OD" that needs to understand trends more...

http://www.ibisworld.com/industry/default.aspx?indid=1560
http://www.cibavisionacademy.ca/pdf/NewGraduateAcademy/Section_4/NGA_June_Raharja.pdf

Both of the links above are of non-OD sources, and I think they paint a much more accurate "big picture". One of them is purely to do with investors and a prospectus of the industry, while the other is a VERY pro-corporate take on things from Ciba. The part that really strikes me is on the 3rd page or so of the Ciba. In it, you will see that there has been about a 1% annual decrease in private optometry, with a 4% increase in corporate. Now, I don't know about you all, but this is not an impressive progression of a business model in the eyes of anyone. So, we private OD's are going away at a rate of ONE percent? Is the source (Ciba surveyed tax records) lying? To add to this, -1 and +4 equal +3, so the more accurate picture would be to say that there has been increased practices in optometry as a whole, and that corporate is seeing a VERY slightly larger percentage of this.

Even more so, and again this is coming from a very biased PRO-corporate source, there is a graph of projected growth of corporate. It has it approaching about 37% in the year 2020. Really? That is the steamroller? Even by Ciba's biased estimation, box-retailers make up about 33% of all practicing docs. This is right on par with my own graduating class, which I discuss further down.

With this all said, there is a very big difference between corporate backing of medical optometry, for instance at large-scale medical facilities like a competitor I have here, and a corporate "box-retailer". In some calculations these are counted as the same entity even though they are clearly not. The word "corporate", in other words, is not created equal.

The reality of course is that optometry will follow the model of every other business, in a trend that Visionary outlines. The entire country's economy is being consolidated, and optometry will not be exempt from that. With this clear trend though, just like in every other industry, there is a CEILING to any business model that grows this slowly and offers a very different business model than its competitors. So yes, corporate has grown, but it is not exempt from a business cycle. The grand Poo-Bas know this, which is why a lot of the financial prospectuses of many of the large optical companies are not all that positive. I know we private OD's are under pressure, but go and find a business prospectus for VisionWorks or LensCrafters et al. (A colleague passed them out at the Connecticut OA meeting) They have seen a lot of investors pull their money on account of the impact they see of healthcare legislation, and what they called a "public perception issue" regarding affluent patients not wanting to set foot in them. (In their "challenges" section, they had a few paragraphs about the dismal amount of affluent patients they draw in, citing focus groups showing that it is seen as inferior care) Being able to draw in low-income patients without other options is not a great business model if you have such a detriment amongst the affluent. Again, not my opinion, its their own.
If you'd like a more anecdotal piece of evidence, we have ten year data on my graduating class of about 100 docs. There were 77 of us that responded to the faculty member that puts it together, but it was this:

Corporate chain: 34% (Although it was 44% 2 years after graduation, myself included)
MD/OD joint: 16%
Private, solo or group: 42%
Military /VA: 3%
Other: 5%

I'm just saying that if this is the best corporate can do right now, I am not impressed. As the second link illustrates, this is in fact an extremely fragmented profession. ("No single entity owns more than 2% of industry revenue, with the top 50 operators owning only 6%…then "39% of practicing OD's work alone with no hired employees", which you could count me in for awhile as well)

If there is some evidence out there that independent OD's are getting wiped out in huge numbers, I have yet to see it. In my wide area, the few box-retailers that haven't already gone out of business have pathetic patient numbers, and employ a slew of 3-4 docs that moonlight there. The offices are cramped, sit in poor locations or are in department stores, and have an average dollars per customer of about $55. If that is what I am supposed to be afraid of, they really need to up their game. Making it in private is very hard to do, and requires a lot of anyone trying to do it that I have expounded on before. With that said, I do not see evidence that those that set out to do it with well-done planning are getting their clocks cleaned. I am not saying it is great conditions right now for us, or really for most anyone right now, but it is still possible and I know it because I did it after hearing the same refrain about how the corporate bogeyman would run me out of town. Well, that did not happen. I ran them out of town instead, which is preferclt logical to anyone that ever set foot in their pathetic depressing factory of an eye doctor's office. It was all perfectly expected, and I have seen many others duplicate it around here. I realize that New England is not like the rest of the country, and that there is much less reticence toward them in places where massive corporate entities run everything already, so what difference does a doctor make, but there are still large parts of the country where this is not the reality and won't be anytime soon.

It is hard to do, but it is possible. The constant "Eeyore mentality" that optometry has amongst some of its players is something that the corporations count on, just as they do in many other businesses. Lamenting that "They are gonna take over and there is nothing we can do" does not help anyone but them, so I am accustomed to being repulsed by it when I hear it anywhere in the profession. I have no plans on losing to them, and I know plenty of other independent docs that are not scared of them one bit. The numbers are there and they have indeed grown, but the idea that this push will continue ad-infinum is overly-pessimistic and not consistent with any past business models in other industries. I know I made the cardinal sin of trying to not be gloom and doom on an internet forum, but someone has to do it. Ok, rip away. It's much easier to explain negativity than positivity in anything to begin with….

LikeABauce said:

The problem in any discussion like this is that ANY anecdotal evidence that it is not all gloom and doom is taken that the person believes that nothing is wrong. Seeing as I gave a speech at the state AOA a few months ago entitled "The Closing Window: How to Stay Independent in a Corporate Industry", I doubt anyone would accuse me of being an "optimistic OD" that needs to understand trends more...

http://www.ibisworld.com/industry/default.aspx?indid=1560
http://www.cibavisionacademy.ca/pdf/NewGraduateAcademy/Section_4/NGA_June_Raharja.pdf

Both of the links above are of non-OD sources, and I think they paint a much more accurate "big picture". One of them is purely to do with investors and a prospectus of the industry, while the other is a VERY pro-corporate take on things from Ciba. The part that really strikes me is on the 3rd page or so of the Ciba. In it, you will see that there has been about a 1% annual decrease in private optometry, with a 4% increase in corporate. Now, I don't know about you all, but this is not an impressive progression of a business model in the eyes of anyone. So, we private OD's are going away at a rate of ONE percent? Is the source (Ciba surveyed tax records) lying? To add to this, -1 and +4 equal +3, so the more accurate picture would be to say that there has been increased practices in optometry as a whole, and that corporate is seeing a VERY slightly larger percentage of this.

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It is hard to do, but it is possible. The constant "Eeyore mentality" that optometry has amongst some of its players is something that the corporations count on, just as they do in many other businesses. Lamenting that "They are gonna take over and there is nothing we can do" does not help anyone but them, so I am accustomed to being repulsed by it when I hear it anywhere in the profession. I have no plans on losing to them, and I know plenty of other independent docs that are not scared of them one bit. The numbers are there and they have indeed grown, but the idea that this push will continue ad-infinum is overly-pessimistic and not consistent with any past business models in other industries. I know I made the cardinal sin of trying to not be gloom and doom on an internet forum, but someone has to do it. Ok, rip away. It's much easier to explain negativity than positivity in anything to begin with….

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Alright, I mean no offense at all, but I have to ask then. Are you an AOA official? I know I'm not the only one wondering.

Here's the problem I have with what you're saying. First, your talking about data coming down from none other than the "higher-ups" at one of the largest corporate bodies in optometry – Ciba…Alcon, whatever we're calling it now. In a slow moving battle, it's advantageous for the over-taking side to keep its opponent blissfully unaware of its slow loss of ground. Ciba is the last entity that will come out and say "Hey, corporate is taking all of you guys over and burying your profession slowly, but surely. " No it's more like "Hey, corporate is here, they're gonna take some stuff, but they're gonna leave the good stuff for you guys……trust us." Don't get me wrong, I like Ciba, for the most part. Their reps are less annoying than many others and they make a good product. But the last thing I'd do is take numbers about the state of optometry, published by Ciba and trust them for the same reason I'd never believe anything a Luxottica rep told me. Sorry, that's just me.

Secondly, your stats are fine, but they simply highlight what I'm saying. You're talking about grads from 10 years ago. Ten years is an eternity when you consider what the profession is doing to itself. I'm talking to new grads and prospective ODs, today. Most of these folks will not be out in the optometric "ocean" for another 5 -8 years. That's going to be 15-18 years after your class graduated. A lot will happen in that time, and it won't be good. What matters now is not what ODs who graduated 10 or 20 years ago are doing, it's what grads from this year and next year are doing and what they'll be doing 5 years from today. Too many students on here and ones I've dealt with in person have entered optometry based on what they've seen in older, established OD offices. The conditions which allowed for those practices to develop are gone. Students looking at that optometry and thinking they can have it for themselves are set up for disaster. That is, in large part, why I'm here. I heard day after day from 1st year students and pre-optometry students talking about how they "want to enter a private group practice" and "would never work at Walmart." When you hear that a few hundred times and you see those same students spit out into the nearest box retailer, it gets you a little concerned. I'm half way out of the profession and I'm not looking back. I'm hoping in the next 6 months, to be out completely.

I've been collecting my own data on outgoing 4th year students and my numbers are closer to 2/3 of students heading straight for the corporate onramp. It's difficult to even report accurate numbers since many grads take 3 or 4 PT jobs. If they take 1 day a week in a PP, does that make them count in the "entering PP" category? Does that mean much if they're being paid 36/hr as a contractor and they have 3 other jobs in Sam's Clubs and Walmarts? I know of a handful of students in the past three years, from three different programs, who have taken FT PP positions and nearly every one of them relocated far from home. Most students these days are heading into Lenscrafters, Pearls, Visionworks, Sam's, Walmarts, Costcos, America's Best, etc.

Numbers, charts, and bar graphs can be made to say whatever you or I want. A good mathematician can make his numbers say whatever he wants. Back in 1980s, someone could have gotten up and said, "Hey, all those people who say pharmacy is going totally corporate are just negative nellies! It's a slow progression and it'll never be totally corporate. " Where are we now? Pharmacy is just about completely corporate. The same forces are at work in optometry. We have too many ODs. We have corporations offering work to ODs with no other options so we continue to grow that side of the profession while the private side hangs on. We have insurance companies that are taking greater and greater liberties with practicing docs because they can and they will continue to be able to at our expense.

These students are buying a career for the next 30-40 years. Optometry is going to be a very poor investment for most students entering the profession these days. That's my opinion, but the realities of the situation and a look back at history certainly don't dispute my assertions. They're going to be the ones holding the bag when the floor drops out from underneath them. No amount of positivity will help at that point.

As I've said before, optometry is the equivalent of the sole, small life boat on a large cruise ship. There will be room for a few, but most passengers are doomed. They just don't know it yet. A few will make it, most won't, and those that don't will continue to sink the profession further.

Lastly, what would you say of the "Eyeores" that spoke of the pharmacy take-over by corporate interest? Were they right or wrong? You can deny or minimize the impact of what's happening to optometry, but keep in mind that the people who will pay the ultimate price are the students reading these forums and entering the field. Positivity is great, but when people hear only what they want to hear, they get burned. That's just how I feel.

Jason K said:

I'm half way out of the profession and I'm not looking back. I'm hoping in the next 6 months, to be out completely

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Can you shed some light about where you are heading?

Satstill said:

Can you shed some light about where you are heading?

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I doubt he knows.

Satstill said:

Can you shed some light about where you are heading?

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I'm taking over a business that has been in my family for some time. I know it well and although I never intended to do it as a means of making a living, the future of the company is a lot brighter than the outlook for optometry. My only regret is not leaving sooner. I have several classmates who have left optometry for the same reason I am and they have never looked back.

I'm not sure what our resident 1st year optometry student was referring to, but perhaps the air was tainted with some sort of mind-altering substance in the Holiday Inn Express he stayed in last night. Oh, wait, I forgot......he lives at home with mom and dad.

Jason K said:

Oh, wait, I forgot......he lives at home with mom and dad.

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Are you jelly that I won't have 200k of tuition loans? Ya, I bet 🙂

Shnurek said:

Are you jelly that I won't have 200k of tuition loans? Ya, I bet 🙂

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If you were a dental student leaving school with little debt, my answer might be "yes." Since you'll be entering optometry roughly 3.5 years from now, at a time when the profession will be sunken even further than it is today, the answer is ,decidedly - "no."

To allude to my wonderful lifeboat example. You're on the Titanic as its decks are passing below sea level. I'm on a nice, dry life boat heading toward safety. And you're yelling through a megaphone "Hey dude.....you jealous that I'm on the Titanic with a 3rd class ticket that I didn't have to borrow much money for? Oh yeah, baby - I'm rollin towards success!"

I heard CVS is going to add optical and docs..get your glasses while you wait for your prescription...sickening..

mclem222 said:

I heard CVS is going to add optical and docs..get your glasses while you wait for your prescription...sickening..

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Already making connections on the ocular disease floor at my school. Want good recs for good residencies to stay on top of the pile.

mclem222 said:

I heard CVS is going to add optical and docs..get your glasses while you wait for your prescription...sickening..

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that's only after you've seen the nurse or PA for your primary care exam

In the DC, MD area, when I think of the number of ODs who are under the age of 50 who have their own solo independant optometry practice if I exclude people who have an "independant" office inside a Costco, LensCrafters and exclude the people who didn't inherit something from their dad, the number is exceedingly low. Maybe 1 or 2. Hope that helps.

Ya its an urban area. Prob the ones that set up their own practices had little or no debt from opto school and are good business persons. What % of OMDs own their own practices inside that metro area?