Managed care has tipped the eyewear scales in favor of niche marketing and high-end eyewear. But many dispensers don't have the luxury of ignoring managed care, and while many concede they aren't happy about it, they understand it's here to stay.

In most cases, eyewear professionals must balance high-end eyewear with managed care of value lines. This inventory situation may not be easy for many professionals, but it can be achieved successfully with the right attitude.

"This [balancing] is a dilemma for a lot of practitioners," says John Lahr, O.D., an optical consultant with Edmonds, Lahr, and Peters Consulting. "Most practices fall into a range where they do need a variety of frame product."

Furthermore, those who accept the premise of balancing value frames with mid-range and higher-end frames are one step closer to understanding that this can be a profitable balance.

"Choose third-party plans that work for you," advises Jack Kipp, optical manager of the Eye Center of North Florida, which has five locations. "If you find ones that work for your, you can make them profitable with add-ons. You just have to work harder."

Upgrading the Menu Choices

"I think you've got to balance both," says Bob Bieber, president of Successful Selling, Inc., an optical consulting firm.

Bieber points out that most third-party plans require eyecare professionals to display a minimum number of frames in the dispensary. In those cases, Bieber recommends following the rules, but emphasizing the higher-end frames with special lighting and merchandising techniques.

When third-party patients come in, show them what they can get according to their plan, but then be sure to show them the higher-end frames in case they do want top use their plan to trade up for better eyewear. In short, never assume how much a patient is or isn't going to pay for eyewear, regardless of an HMO.

Bieber also advises practitioners select their third party plans with care. "When choosing managed care plans, choose ones in which the patient can trade up. Don't even think of joining one where the patient can't do that.," he says.

Lahr also advocates caution when choosing plans. "If there are five plans on your desk, and only one is going meet your chair cost criteria and so on, then just choose that one. I see too many offices that take bad plans," he says.

Lahr also recommends dispensers consider package pricing some of their value eyewear, e.g., $99 for a finished pair of glasses. "Most people who are looking for package pricing are consummate shoppers." Lahr says these packages are valuable for when patients shop over the phone. However, when they come in, show them what they asked for, but then be sure to show them the better quality frames as well. "You'll find a group that will look, but will stay in their budget. But you'll find a lot that will look at the higher end frames. It's truly not bait and switch...you are not pushing them. When the patient chooses something else, it's because they've made an honest and fair comparison."

"Be honest," agrees Bieber. "The best salesperson is the one who tells patients, 'I want to give you all the options.' Don't say the plan frames are not good," Bieber says.

He recommends that a practice with a 50 percent HMO patient base should stock the minimum number of plan frames, but also have 700 to 800 "really good frames" for all patients to choose from.

"I think the best balance is the minimum number of frames that the plan carries should be the maximum number of those types of frames that you should carry. Then, I would put the quality frames in the spotlight," he says.

Take a Left, Down to the Cellar...

Some dispensers will grudgingly carry managed care frames or value frames, but then hide them away in a cellar or a dingy drawer. Showing managed care patients their choice of frames in these poor locations shows a lack of sensitivity and respect.

"If you are going to do third party, you ought to do it right," cautions Kipp.

At the same time, use common sense. Managed care frames shouldn't get the optimal real estate in a dispensary, but they should be visible for all patients. Kipp, who has a 25 percent managed care patient base, says his dispensaries have frames divided into sections for the different product lines. Medicaid frames are in one area, third party frames are in another, private label in yet another, and then the middle and high-end frames have their own sections as well. "They are not strictly divided," he notes. "you don't want people to feel stuck in a classification...but you also have to know where your frames are."

Gary Kaschak, a franchisee of a Sterling Optical in North Wales, Pa., says he keeps his value lines right up in the front of the store. "Keep them hidden? No way! I think that's embarrassing for the customer, and it's just not right," he says.

Kaschak's dispensary, located in a mall, also spotlights the higher-end frames in the front window, as well. "it's a little bit of both before they get into the store," he says.

To even everything out, Kaschak carries a wide range of merchandise. "If you don't have everything, then you will lose out on sales that you never thought you could have. There are some customers that just don't want to spend $300 on a pair of glasses. We have about 800 frames here, and over 100 styles are in the value line," he says.

Approximately one-fourth of Kaschak's sales are third-party sales, he says. "But, they don't necessarily have to go into a value frame," he points out. Kaschak says his average sale is still around $240, because of the add-ons available. Kaschak also says his value frames are all metal and offer a huge mark-up opportunity. "I just bought 100 frames from a value line for only $270. If I sell each completed pair for $79, that's a huge mark-up for us."

Jeffrey Kehr, owner of The Eye Store, with two locations in Collegeville and Dresher, Pa., agrees that "If you are going to participate in a plan, do it the right way, and show the product." Although Kehr says he doesn't go out of his way to attract managed care patients, about 40 percent of his business is third-party care.

Kehr says he successfully balances $200 frames next to $75 frames. "We just mix it in, and try to camouflage it as much as possible so that people will be attracted to other things, but we don't try to hide it. We are playing both ends of the rope."

Gary Nance, O.D., of The Optometry Group in Memphis, Tenn., says eyecare professionals ought to carry something for everybody, and that means balancing both high-end and value lines.

"We are in the business of eyecare and healthcare," he says. "You shouldn't judge people just because they might not have money. It would be nice to have a high-end patient base, but a lot of people can't afford certain options."

Nance says his group participates in some managed care plans, although it tries to limit the number of plans it accepts. He says less than 50 percent of his patient base is third party care.

Just the same, he keeps the value lines -- including a Davis Tower -- on clear display in his dispensary, where in some cases, they are mingled in with the higher-end frames.

"I don't think managed care will go away," he says. "It would be nice not to have to deal with it, but I don't think that will happen."

Dr. H. W. Bennett & Associates, an optometry group in Ann Arbor, Mich., and it's sister company Au Courant, an upscale chain of boutique optical shops in Michigan, Florida, and New Jersey, has found a way to solve the balance dilemma.

Nancy DiCosmo, president of Au Courant ad the frame buyer for Bennett's optometry practice, says when Bennett's main office started to get heavily involved in managed care, it was "difficult to have insurance frames next to our high-end frames." So they opened another Au Courant down the street so the higher-end frames could have a home. The Au Courant shops are strictly high-end, and so not participate in third party plans.

In Bennett's other two professional offices, DiCosmo notes managed care patients will frequently trade up and then get the managed care frames as a back-up pair.

"We treat our managed care patients exactly the same. We don't hide the tower in the closet," says Herman Bennett, O.D., senior partner.

"Normally, I says you can't be everything to all people," Bennett says. "But there comes a time when you have to go with the flow. When our biggest supplier -- the University of Michigan -- suddenly for into managed care, it left us no choice but to go with them. We had to incorporate it," he says.

DiCosmo says this strategy works well for the business. "You can let managed care downgrade your office, or you can make managed care contribute to your ambience," add Bennett.

Mark Feldscher, owner of West Coast Optical on Chestnut Street in Philadelphia, prefers to cater to the high-end crowd but, "That doesn't mean I'll throw managed care out the door."

Feldscher carries lines such as Cartier and Mont Blanc, and as a result, his average sale is approximately $300. He says he singled out the high end portion of the business because he wanted to be different. "I don't care what city you go into...only a couple of places will cater to the high end, and the rest cater to everyone else."

He carries some "limited product" for managed care candidates, but says that in half the cases, he's able to convince them to upgrade. "One thing that I've found, is that when you buy something good, a week later, you'll forget how much you paid for it."

Let Them Eat Cake

Some optical professionals have found they can be successful selling exclusively to the high-end market. Plenty of small boutique owners -- typically in affluent areas -- can attest to this.

"There's a large market out there that doesn't care about managed care plans," says Madeleine Kruhsberg, owner of Selden Optique in Norfolk, Va. Kruhsberg says she carries a few frames from value lines, but does not display them. She also doesn't participate in any third-party plans. "I've been lucky. A lot of people don't mind spending money on something that is unique," she says.

Kruhsberg, however, says that most eyecare professionals should probably strive to hit a balance between both worlds. "It depends on what you are going after. If you want to go after as many people as you can, then you need to cater to the managed care frames," she says.

Mitch Gross, the owner of Opticles, a high-end boutique in Freehold, N.J., has also been very successful sans managed care lines.

"In our area, we have all the chain opticals. I've conceded it [managed care business] to them. We are doing very well," he says.

Gross says trying to balance both isn't going to be easy. "You are not going to please everybody. If you try to wear too many hats, it will bury you. Very seldom will you see a Mercedes dealer selling Hyundais."

Shirley Platzer-Stocks, the owner of SPS Associates, an optical consulting firm, says many retailers need to be able to cater to the mass market, but that plenty can survive -- quite comfortably -- on just the high-end market. "If you are going to do that, you've got to make sure that geographically, you are in the right place, and that the demographics are correct. There's no point in specializing in just high-end, if you are not in a high-end area."

Regardless of whether eyecare professionals attempt this balancing act, or concentrate on one niche, the key, according to Platzer-Stocks, is identifying and sticking to a well-defined strategy, rather than "just playing darts with your business." EB