Eyecare demand has two components: demand for corrective products and services, as well as for medical diagnosis and treatment, including surgery. The first category has been the traditional stronghold of optometry, and the latter has been the main focus of ophthalmology.

Eyecare is a huge business. More than three-quarters of the adult population wears vision correction devices. An estimated $33.5 billion is spent annually by American adults for refractive eye exams, eyewear and contact lenses. Another $28.6 billion is spent for medical and surgical eyecare. Total eyecare demand per capita is nearly $200 annually.

Demand for eyecare is higher among older people, both because a higher proportion of people over 40 need vision correction and because the prevalence of most ocular diseases is much higher among older people.

Growth in demand for eyecare has been steady and predictable, driven by population growth, the aging of the population, rising incomes and new technology.

Eyecare is an attractive market for investors because it weathers economic downturns better than most businesses. This is because the foundation of eyecare demand is grounded in functional vision needs, not discretionary desires. Technical innovation is continuous and transformative in the eyecare market and is a significant contributor to demand growth, as it has been in most other health care sectors.

ECPs play a major role in channeling eyecare demand through their recommendations and education of patients—an influence on demand that is much greater than that of many other retailers of consumer goods. This market dynamic has not yet been meaningfully altered by the digital revolution. But change is blowing in the wind, and ECPs will likely need to work harder to retain their central role in guiding consumer choice.

As in all health care, insurers and government exert increasing influence on eyecare demand as the proportion of the population covered with vision insurance, Medicare and Medicaid expands.

Demand for corrective products and services—the largest segment of the eyecare market—has grown at a compounded annual rate of about 4 percent in current dollars over the past 10 years. While not spectacular growth, this rate of increase is nearly twice that of GDP growth and is one percentage point higher than compound annual growth of total consumer expenditures for all goods and services. The two most important eyecare demand drivers have been price/fee inflation and upgrade of the product mix with new technology.

Contact lens demand growth is outpacing eyewear growth.
A long-term trend that has gradually changed the composition of demand for corrective products has been the increasing penetration of contact lenses. Since the early 1970s when soft lenses were introduced, there has been a steady rise in contact lens use. Over the past 10 years, the contact lens wearer population has grown twice as fast as the vision correction population. Currently, there are 41.2 million adult contact lens wearers, representing 22 percent of the vision correction population. By 2025, 24 percent of the vision correction population are likely to wear contacts.

Eyewear consumer purchase patterns limit demand growth.
Most eyewear buyers are in the market infrequently; they visit an ECP only every other year or less frequently, even as most ECPs recommend annual visits. Independents have tremendous revenue upside by reducing the interval between office visits.

There has been a proliferation of ophthalmic lenses and frame products designed for specialized uses or wearing occasions, yet the average eyeglass wearer uses just 1.5 pairs, and 63 percent use but a single pair. These ratios have not changed appreciably in recent years, despite the rising affluence of the population. The eyecare industry has been relatively unsuccessful in encouraging multiple pair usage.

Among the fastest growing components of eye-care demand through 2025 will be medical eyecare services. Medical eyecare services are expected to increase nearly three times as fast as comprehensive eye exams through 2025. The growth rates shown here do not reflect any fee increases, but only the number of exams performed, so the annual revenue impact of medical eyecare growth will be greater than these numbers suggest. The rapid growth in demand for medical eyecare services relates to the aging of the population, as well as to the growing diagnoses and treatment of prevalent ocular conditions such as dry eye and ocular allergies and expanded use of diagnostic tests such as retinal scans and OCT.

A major driver of demand for medical eyecare services is the increasing prevalence of ocular disorders in the population, related to the aging of Baby Boomers. For cataracts, glaucoma, macular degeneration and low vision, the number of Americans suffering from these conditions will increase 2.3 percent t0 2.9 percent annually through 2030, according to the National Eye Institute. Similarly, the number of diabetics is expected to grow rapidly, as is the number of people exhibiting symptoms of diabetic retinopathy. Monitoring diabetics will become a major service provided by ODs who, with their large patient bases, are well positioned to assist insurers to monitor this population annually.

Managed care is the increasingly dominant ECP revenue source.
Over many decades, managed vision care plans have become by far the largest revenue source for ECPs, now accounting for over 70 percent of total revenue in most practices, including independent ODs. This has happened as the Medicare and Medicaid populations have expanded and an increasing share of the population is covered by some form of vision insurance.

One upside of the growth of managed care has been increased access to eyecare services for patients. But a downside, as consolidation proceeds in the insurance industry, is that it is likely that some ECPs will not gain accreditation on provider panels and will lose access to a segment of their patient bases. Consolidation also increases the leverage of the surviving insurance giants in dictating reimbursements, establishing administrative requirements and reporting standards.

As a result of these factors, the uncompensated administrative workload of providers will grow. With their enormous leverage over providers, managed care payers are able to offer deflationary reimbursements that do not compensate for rising staff, overhead and occupancy costs of doing business. This situation is unlikely to change in the years ahead. As a result, it will be increasingly necessary for independents to increase office efficiency to maintain profitability.

‘The Future of Optometry’ Presented at Vision Expo West
“The Future of Optometry,” was presented at Vision Expo West in September 2017. The presentation was based on a comprehensive study conducted by Jobson Medical Information designed to appraise the current and future state of the optometry profession in the United States. The presentation provided insights for independent optometrists about the likely changes in practice operations, as well as practical action points to adapt to evolving business dynamics through the year 2025. Pictured at the event are (l to r) Marc Ferrara, Jobson; Holly Gillentine, Essilor; panelist Michael Kling, OD; presenter Mark Wright, OD; panelist Gina Wesley, OD; presenter Richard Edlow, OD; and Howard Purcell, OD, Essilor.

Sources Cited
Data sources cited in “The Future of Optometry” include Jobson Optical Group, AOA Workforce Study, U.S. Census Bureau, Bureau of Labor Statistics, National Eye Institute, The Vision Council surveys, Think About Your Eyes, Centers for Medicare and Medicaid, and other sources.