Adding or upgrading in-office lab capabilities sounds like a winning ticket--but is it really? There are several angles to consider before deciding that taking this plunge will be beneficial for your practice. Here, industry experts offer their advice about what you need to factor in before signing on the dotted line, as well as what kind of payback you can expect. 

Savings on lab bills. "The first thing to look at when considering adding an in-office laboratory is the cost of your materials," says Nancy Safran, director of marketing at Briot. "If you're paying an outside lab $25 to edge a pair of single-vision plastic lenses, and those same lenses cost you between $3 and $5, there is a tremendous savings right there."

Don't forget the extras. According to Rick Noonkester, western regional manager at Santinelli International, overlooking small extra charges when you're evaluating your lab bills can be a large mistake. "You should be calculating the savings you will see not just on lenses, but for items such as overnight shipping, and metal-mounting charges," he cautions.

Calculate credits, too. "Once you have gathered several months' worth of lab bills for analysis, be sure that you factor in any returns, re-dos, and credit memos that were issued," suggests Bill Galindo, president of ODI/Topcon. Only by looking at the debits, too, will you be able to paint an accurate picture of your present lab costs.

Insurance payments. If your office works with VSP, make sure that you don't inadvertently include those payments in your calculations, warns Santinelli's Noonkester. "You don't see a bill from VSP--you get paid by them," he says. You don't want to place those figures in the wrong column.

Job volume. Michael Urban, product manager at Gerber Coburn, sets a ballpark figure of $3,000 in monthly outside lab bills as the threshold for determining whether a dispenser should invest in a lab setup.

"If you are doing a minimum of 20 to 25 jobs per day, you will make a profit with your own lab equipment and you will see a return within two years," explains Linda Little, executive vice president of WECO International. "If you are doing fewer jobs per day, that will extend the payback period."

The right mix. It's not just the number of jobs that should be considered, according to Kurt Atchison, North American sales manager for LOH Optical. "The mix that you're selling--as well as why you're dispensing those particular types of lenses--is more important than sheer numbers," he stresses. "If you're dispensing two pairs of polycarbonate, and you can get them finished by your lab for $30 each, then by doing them in-house for $10 a pair, you're saving $40 a day. That translates into $10,000 per year," he illustrates. "That would justify the cost of adding a lab. But if you're cutting 10 CR 39 jobs a day, the savings won't be enough to justify in-house equipment."

Atchison recommends looking deeper into the mix as well. "If you're doing a lot of CR 39 because you're not getting good lab service on your polycarbonate jobs, for example, and you would be able to process those better yourself in-house, it becomes a quality-control issue," he points out. "In this kind of situation, you might increase revenues a great deal by putting in a lab."

Add-ons. "When deciding about the bells and whistles, you're better off choosing in-house equipment that will allow you to do add-ons such as edge-polish, grooving, and drilling," states Gerber Coburn's Urban. "It may cost you an additional $1,000, say, to add polishing capability, but the lab might charge you up to $20 per job."

Those lab charges can add up quickly, rapidly canceling out the additional expense to the in-house equipment.

Beware of artificial paybacks. "You need to figure out the true cost savings you will realize with your own equipment," says Jay Little, vice president of worldwide sales at DAC Vision. "You can't pay back $30,000 of equipment in one year."

Most people don't do their homework before investing in lab equipment, Little says, and they can get into trouble that way. "Consider things such as whether you will have to hire an additional employee to run the lab equipment, or whether you might be able to shift an existing staff member to the lab for a portion of the day," he adds. "If you have to hire someone, then you're out the money for the salary."

Leasing vs. buying. There are tax considerations to be taken into account when making the decision to lease equipment or to buy it outright, says Mark Dehn, A.I.T. Industries sales manager. "If you're purchasing equipment, you can only depreciate it," he points out. "But if you lease, you can depreciate it or write it off as an operating expense."

Lease agreements offer options like end-of-term buyouts or ownership, or upgrades to newer equipment. Leasing also means a huge initial cash outlay is not involved.

Support and training. Don't forget to add in the cost or savings of non-tangible items before taking delivery on new lab equipment, says Susan Polson, director of sales and marketing at National Optronics. "Look at whether the company provides training and technical support. Are these things included in the equipment price?"

Service. Some benefits of in-house labs are difficult to quantify in payback, says WECO's Little. "Equipment gives a practice the ability to be competitive and offer a quick turnaround instead of losing patients to the 'McTician' down the street," she says. "How much is that worth to you?" EB

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