Finding Strength in Numbers

By John Sailer: Senior Editor

View a pdf of Finding Strength in Numbers

In the face of growing competition and a challenging economy, independent eyecare professionals need every competitive edge. As a result, there has been a rise in the number of doctor alliance groups created by ECPs in the U.S. market. At the same time, the more traditional buying groups are adding services and benefits to maintain their position with ECPs as well.

Vision Monday
reached out to a select group of ECP alliances and buying groups to find out what’s behind their rise, how they are evolving and what the distinctions are among them. VM also spoke with ECPs to discuss the benefits of membership within these various groups.

Known by names such as Vision Source and OD Excellence and by acronyms such as IDOC, PEN, PERC, and PECAA, ECP alliances are managed by leaders in the optical field who provide their organizations’ members with a host of benefits. These services range from meetings and networking opportunities, practice management advice and benchmarking studies, education for both doctors and their staff available in-person and online, and, ideally, a camaraderie that instills an overall sense of working together toward the common goal of improving the business of their practices.

“The two major benefits of belonging are cutting expenses and being involved in an organization that promotes practice management. You can be a great doctor, but to be a great doctor and a good businessperson, that’s unique. Kimberly Frantz Boyer, OD, Sisson-Boyer Eyecare, LLC, Newport, Pa., member of Vision Source.

The proliferation of these groups can pose challenges for an ECP when it comes to determining which group best meets their practice’s needs. Adding to the confusion, is the fact that the lines that define the groups are blurring.

Some ECP alliances offer services and benefits that appear to be similar, while others offer far more business management tools, education, and other benefits than their competitors. At the same time, buying groups, another type of coalition within the optical field, are augmenting their traditional vendor discounts and consolidated billing procedures with meetings and education. (Of course, that’s not even mentioning practice consultancies, which offer business management techniques to ECPs on a one-to-one basis, and which are not included in the scope of this article.)

Block Buying Group exemplifies a buying group that is expanding its offerings. “After meeting with our frame suppliers over the last two Vision Expos, I came up with the idea for the Elite Vendor Program, which rewards doctors in a positive way for doing the right amount of volume,” said Michael Block, president. ECPs participating in the Elite Vendor Program earn rebates by reaching certain purchasing levels with a select group of suppliers in a program launched for 2012.

“Being a solo practitioner with a fairly large practice, it’s difficult for me because I don’t have anybody to talk to with the same size practice, so the personal benefit I’m looking for is meeting with a group of my peers.” Mary Lou French, OD, MEd, FAAO, Children’s Eyecare, PC, Orland Park, Ill., member of Prima Eye Group 

Another buying group that has recently added services is The Alliance, founded in 1996 and owned by a network of surgical centers. “As of Jan. 1, 2012, we added the new Alliance Advantage Program,” said Frank Soppa, VP of optical services. “We offer all the advantages of a traditional buying group (a wide range of vendors, consolidated billing, vendor partnerships, etc.) while offering new programs.”

California-based buying groups C & E Vision and Vision West, operating since the early ‘80s, have also transformed their scope. “As the market has evolved, C & E Vision and Vision West have continuously expanded and updated our service offerings to support our member practices in adapting to the changing market,” said Brad Shapiro, principal. “In this regard, we offer a number of services that are designed to reduce the stress of managing a practice, enhance practice profitability, and educate and train ECPs and their staffs.”

It could be argued that the roots of today’s ECP alliances were formed when the first buying groups were established. These were started in the 1980s when a proliferating stream of new products were funneled through a single conduit, the buying group, which connected buyers with direct-sell suppliers, providing ECPs with vendor discounts, and eliminating the headaches of credit and collections issues for product suppliers.

“We banded together independent eyecare professionals in the early ‘80s to get them better pricing,” said Block. “In a way, we were the original alliance.”

Eventually, in the 1990s, other independent ECPs saw that competitive market trends created a need to unite, not only to encourage discounts from their vendors but for more extensive practice management assistance, continuing education, networking opportunities and more, ultimately leading to the formation of today’s ECP alliances.

What is the cost for ECPs to join? It varies. While traditional buying groups charge ECPs no fees at all, the cost of membership in ECP alliances varies nearly as much as the number of organizations available. Some ECP alliances charge a percentage of a member practice’s annual revenue, while others charge a flat rate. In addition, some have certain requirements for membership, such as permitting only practices generating a million dollars or more annually to participate, while others are open to anyone, even welcoming practice employees in addition to owners.

“The biggest advantage is not just the ability to save money through partnerships with vendors. The focus is to help us run our business and be better business owners.” Cory Manley, OD, Pasco Vision Clinic in Pasco, Wash., member of PECAA.

So what are the reasons that ECP alliances have gained momentum, particularly in the last few years? Why are more and more of them being established, and why are thousands of independent practitioners joining them? Some of those involved point to the need for a united front in the face of growing competition from corporate entities and business pressures in the optical field.

“The force that is driving this growth is the realization that the eyecare market is becoming increasingly competitive, with major retailers trying to commoditize eyecare, vertical integration, the consolidation of vendors, and more groups forming to strictly profit from their peers,” said Chris Millet, executive director of Professional Eye Care Associates of America (PECAA), an ECP alliance incorporated in 2006 and based in Portland, Ore.

Glenn Ellisor, OD, president and CEO of Vision Source, one of the first and now largest ECP alliances, with more than 2,400 member practices, agreed, adding the impact of managed care as another reason for their growth. “The same need that Vision Source recognized in 1991, to enable the independent optometrist to not only survive but thrive in the face of competitive pressure from corporate chains and the complexity of managed care, is driving the development of ECP alliances.”

Others point to the difficult economy as a driving force. “The real development driver has been the realization that ODs need business education in order to survive in these tough economic times,” said Mark S. Feder, OD, president and CEO of Idependent Doctors of Optometric Care (IDOC), an ECP alliance founded in 1999 with over 1,200 members.

In some cases, the rise of ECP alliances is due simply to the need for practitioners to work together. “Optometry has always been a standalone profession, not coordinating with other medical professions, all standing out there in their own practices, and we don’t have a lot of camaraderie,” said David Golden, OD, co-founder of Professional Eyecare Resource Co-op (PERC), an ECP alliance that requires its members to generate revenue of at least $1 million annually. “This brings some sense of community and value to doctors’ offices.”

According to Neil Gailmard, OD, MBA, FAAO, co-founder, president and COO of Atlanta-based ECP alliance Prima Eye Group, “Independent optometric practice owners realize they have to compete with large corporate optical chains, franchise programs, online retailers and other providers with strong marketing skills, and they are at a disadvantage if they go it alone. The economy, lower fees from vision plans and many other factors have made it harder to increase profitability without professional management help.”

Some groups even offer students a leg up when starting out. “We’ll help them get loans, get equipment, and get started by giving them the business tools they need to become more successful,” said Jerry Lieblein, OD, co-founder and CEO of OD Excellence, an ECP alliance that has assembled 700 members since its founding in 2006.

“We’re always buying capital equipment, If you buy one piece of equipment a year, the membership is paid for by the discount.” Steve Silberberg, OD, An Eye to the Future of Matawan, N.J., member of IDOC. 

Ultimately, these alliances help ECPs who start their practices as medical professionals but soon realize they also need to be astute businesspeople. “It is no longer ‘enough’ to be a great doctor. You need to be a smart business owner,” said Feder.

One of the more unique benefits of an ECP alliance comes from Vision Source, which offers its members unified branding that allows them to remain independent while capitalizing on recognized collective marketing imagery. “We launched a new brand and new logo last year, and it’s been very well received, exceeding our expectations,” said Ellisor. “We expect 1,200 members to use the new branding externally in their signage. That’s going to allow us to develop what could be the most powerful brand in the industry, one that represents independent optometry.”