SPECTACLE LENSES
How do you choose a lab?
An exclusive EB report on how you and your peers select--and why you sometimes switch--wholesale labs
By Steph DeLong

How do you select a lab? What makes you switch labs? And how do you see your relationship with those labs changing? These are questions we at Eyecare Business set out to answer more than a year ago. Since then, we have conducted interviews with several hundred of you. And to make sure our findings were statistically valid, we also contracted with a market research firm, Mark One Group, to conduct phone interviews with 200 of you who had indicated you were either the owner of your business or the person charged with selecting and working with wholesale labs.

Within our survey group, which included optometrists and opticians, we found some definite differences in how these two professions view their labs. Opticians, by in large, seemed somewhat passive about their relationships with labs. Optometrists, on the other hand, were much more tied to the relationship with their lab owner or manager. And, in terms of size, the larger the business, the more likely it was to change labs frequently.

STRENGTHENING LAB RELATIONSHIPS

Most of you, however, tell us more than 70 percent of your jobs are done with just one lab. Though you use an average of 2.4 labs in your business, you tell us that's the same number as a year ago. Many of you agree that's a big change from just a few years ago when more than one lab owner complained that customers were literally changing labs over a dime, and playing one lab off of another to get a better price.

You're also more likely to be working with the same labs than you were several years ago. In fact, 84 percent of you indicated that when you have a choice--meaning when the lab you use is not dictated by a plan--you are using most of the same labs as a year ago. Of the 16 percent who have changed labs, nearly half of you say that's because of new alliances your labs have made in terms of joining networks or selling to a larger entity. In other words, the reason you give for changing isn't price; it's lab alliances.

Two years ago, only 20 percent of you told us in response to an in-magazine survey that you didn't care who owned the labs you used. The important fact was your relationship with the manager of that facility. Early this year, however, nearly half of you--47 percent--said it does, indeed, matter who's at the helm of a lab and that, if you lose that sense of strong relationship, you may, indeed, look to another location.

THE SELECTION PROCESS

How is it that you actually select a lab? Three years ago, the top three answers might well have been price, price, and price. For the past year-and-a-half, how-ever, the number one reason for picking a lab has been, according to 77 percent of you, the quality of the jobs it produces. As the chart on this page shows, price is the second most frequently cited reason, but it's cited by only 44 percent of those interviewed. To the larger businesses surveyed, a third factor--turnaround time--was just as critical as either quality or price. These same factors are also the reasons you tell us you change labs.

There were two surprises in your answers to both why you select and why you change labs. First, in private conversations, we hear from many of you that the value-added services that labs provide are increasingly important to you. Yet in these surveys, they're not on your list. Neither is service.

To find out why these were missing, we asked our researcher to go back and ask some of the eyecare professionals we'd already interviewed to explain what comprises the issue of quality that they considered so important. What we learned was that to many of you, service is imbedded in your definition of quality. So, said more than one third of you, are those added services like technical support and business consultation. In other words, though these items weren't listed separately by most of you as reasons for picking a lab, it turns out they do, in fact, weigh heavily in how you define the quality a given lab is providing. 

THE VALUE QUOTIENT

As a follow-up question, we also asked what labs could do to provide greater value and service to you. Again, customer service wasn't listed as a key consideration, though, once again, quality, lower prices, and faster service, came out on top. But the fourth item was a real surprise--more product. That's not what we'd expected to hear, especially at a time when there's never been so much product out there.

Once again, our researcher re-interviewed eyecare professionals to find out what they meant by "more product." What it turns out they really were asking for was information about new product categories that would help them survive managed care--areas like sports vision, sports eyewear, low vision, computer eyewear, and even Rx scuba gear that are outside the managed care domain.

As one optician told our researcher, "I've been working with the same lab for eight years. They help me train my staff on other new products, so why not step up to help us create new areas in our business? That way, I'll still be around to buy their products."

MANAGED CARE CRISIS

It's no surprise that managed care was on everyone's mind. In fact, more than eight out of 10 of the eyecare professionals surveyed voiced concern that they soon won't be able to use the labs they prefer. And, an equal number think plans should not be able to dictate what labs to use.

As the chart above indicates, concerns about managed care go even deeper than that when it comes to the spectacle lens area. When we asked what effect managed care was going to have on the dispensing of spectacle lenses, a whopping 84 percent of you said you'd be selling more low-end lenses--lenses that you described as of a quality that you did not consider acceptable. "I understand a plan not paying for a top-of-the-line progressive lens," explains an optometrist in solo practice. "But my real fear is that we'll be forced to sell old technologies and lenses that are actually of inferior quality so that plans can turn a profit. Plus, if I can't pick my lab, or if plans disallow applying dollars so patients can purchase a better product, then I'm concerned we'll lose control over quality--and eventually lose business."

When asked for a solution to this quandry, many of you said your labs should join more plans--plans you're signed on for, too, so that you can continue to use their services.

In fact, when we asked what labs could do to better meet your needs over the next few years, many of you said it was increasingly important for them to maintain strong, personal relationships with the smaller dispenser. Two, they should sign on to participate in more plans. And, three, they should help you develop those managed-care proof specialties and niches like sports vision and computer eyewear.

If there's one thing that these surveys have pointed to, it's the fear most of you have about how managed care can potentially affect your business. The good news, how-ever, is that most of you also say the ability to dispense premium lens product is a necessity. Without it, you say, you cannot compensate for the eroding margins caused by what you see as your "mandatory" participation in certain low-paying managed care plans.

And, you say, an ongoing relationship with your labs of choice is critical if you are to survive and grow your business into the next century. Relationships, you conclude, are key. EB