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Is private billing worth it in optometry?

Many optometry practice owners worry that introducing private billing will turn patients away and impact their bottom line. But Insight spoke to four independents who have found the opposite to be true.

Changes to the optometric Medicare Benefits Schedule (MBS) introduced seven years ago, in January 2015, allowed practice owners to reconsider their billing structure.

With the fee cap on optometric services lifted and a 5% reduction in the patient rebate, practice owners suddenly had greater flexibility and autonomy with their billing structure. But some feared that charging a fee above the Medicare rebate would result in lost clientele.

Seven years on, that fear is still real for many – even when practice owners who have taken the leap insist that the worry of losing patients never materialised.

Insight talks with four independent optometrists with varying levels of experience who discuss their decision to introduce private billing, what it has meant for their business, and how to address awkward conversation with patients.

Place value on your time

With experience on his side, regional NSW optometrist and practice owner Mr Andrew Greer is a long-time convert to private billing. He purchased the Tamworth Vision Centre from the original owners in 2000, and joined Eyecare Plus in 2010, renaming the practice Eyecare Plus Tamworth.

Andrew Greer.

He introduced private billing in 2015, and charges $75 for a comprehensive initial consultation – a fee he hasn’t altered. He has a full appointment book and profits have grown year on year.

“I have complete autonomy to set pricing – but it’s all at my own risk,” he says.

A veteran of 35 years, Greer recalls the “double whammy” changes to the MBS in 2015 and says this was the impetus for him to change how he billed patients.

“I had discussed it with [Sydney optometrist] Jim Kokkinakis about 10 years earlier – he was one of the few practitioners who was private billing,” Greer, the sole owner and optometrist in his practice, says.

“But the reason I did it in 2015 was because I saw an opportunity to explain to patients that introducing private billing was a direct result of the government changes to the MBS. It seemed the perfect time for a change.

“Changing from bulk-billing to private billing is a leap of faith. You may lose a little, in terms of patients, but I was fine from the get-go.”

Greer says his success may partly be down to the mindset of the people of Tamworth, who are accustomed to paying for healthcare.

“Virtually no one gets bulk-billed at the GP in Tamworth, even seniors. About 60% of my patients are over 60 years of age, on pensions, and they’re happy to pay for my eyecare expertise,” he explains.

Greer lists his fees and the corresponding Medicare rebate, if applicable, on his practice website, so existing and potential patients can determine how much a visit will likely cost, which he says saves staff needing to explain pricing.

Even so, his staff are well-versed on the subject.

“It’s imperative for them to understand why you’re changing your billing structure. They need to be on board, and they need to be consistent with delivering the message to patients.”

Greer firmly believes bulk-billing simply “doesn’t work” if you’re trying to run a viable modern optometry practice but concedes it’s challenging to convince optometrists to believe in themselves.

“Generally speaking, I think optometrists are embarrassed to ask patients to pay for their services. I’ve been in the profession for 35 years and my peers and I started our careers in the bulk-billing era, when it was the norm. But times have changed. Now I question why anyone would bulk-bill. If patients perceive your services are free, do they really value what you’re doing?,” Greer says.

This is where educating the patient and explaining what you’re doing comes to the fore.

“That’s where they buy in. You can explain to them what you’re doing, in terms of clinical assessment, why you’re doing it, and you can demonstrate the results. That’s a really important part. They see you as a professional, not a free professional – there’s a big difference,” he explains.

“But if you’re bulk-billing, that’s essentially perceived as a free eye test. That’s a loss leader. It opens up the potential to over-prescribe to meet conversion rates in KPIs. That’s not fair on the patient.”

Greer has used his profits to invest back into the business. That includes an OCT machine, two visual field analysers, video slit lamp and “everything that opens and shuts; you need it in modern optometry”.

“But it’s not covered by bulk-billing $59.05 for a comprehensive initial consultation (MBS item 10910). Patients accept that entirely. This is seven years down the track from when changes were introduced to Medicare, and most, if not all, of my patients have experienced being charged for eyecare,” Greer says.

Improvements to the Medicare rebate process have also helped with the transition to private billing, Greer says.

“The joy of the Medicare system is the immediate reimbursement/rebate. Patients get their money back in their account before they’ve left the practice. It does make a difference.”

By his own admission, Greer is astonished that private billing is not yet the norm in optometry.

“If my practice didn’t privately bill patients, we’d be far less profitable. Every time this subject bobs up, I get frustrated we’re discussing it again. The question isn’t how to introduce private billing or why – it’s why not,” Greer says.

“The important message is you don’t lose patients if you introduce private billing. That’s always a fear but it’s unfounded. It’s a real fear – it stops

practice owners from doing it. Optometrists need to believe what they’re doing is worth paying money for. If you provide a comprehensive initial consultation for $59.05 (10910) – or $29.60 in the case of MBS item 10907 – you don’t value your own time.”

‘Our optometrists are spending more time with patients’

For practice manager Ms Sandy Lambert, introducing private billing into an established independent optometry practice has been surprisingly smooth sailing.

Lambert co-owns Eyecare Plus Dural in NSW with optometrist Ms Rosemary Peate. They employ two additional optometrists, both long-term employees, an optical dispenser and a receptionist.

Sandy Lambert.

Lambert has been working in the practice, which was established more than 30 years ago, for 18 years and purchased a 50% share in the business in March 2018 when the previous part-owner retired.

As recently as November last year, Lambert and Peate introduced private billing.

“We’d been talking about it for a while but had been too scared to make the leap,” Lambert says.

“But our optometrists are spending more time with patients, between 30-45 minutes for a standard consultation, and they should be remunerated accordingly. It’s about our optometrists being paid for their work and their skills being valued.

“In addition, prior to introducing private billing, patients were often surprised that they didn’t have to pay for a standard consultation. So, based on that sentiment, we thought private billing would be well-received.”

That notion proved correct, and Lambert says there has been barely any pushback. Perhaps unconventionally, the practice opted against making any formal announcement of the change to their billing structure.

Instead, they inform patients individually when making a booking.

“When we book in a patient, we send details of the appointment in an SMS and explain how much an initial consultation will cost, how much the Medicare rebate is, and how much additional photography or scans will be. So, our patients are pre-warned via SMS, or we explain over the phone. We don’t make too much of it,” Lambert says.

At Eyecare Plus Dural, an initial comprehensive consultation for an adult is $89 (and patients may receive a Medicare rebate of $59.05 [10910] or $29.60 [10907]), while children are charged $65 (for an initial consultation). The Medicare item number and hence rebate depends on what both the patient and the consultation qualify for under Medicare billing requirements. The practice bulk-bills some patients at the treating optometrists discretion. For ultra-widefield imaging, the practice charges $80 for adults ($40 for children/ students) or $50 for traditional retinal imaging ($25 for children/students).

Present changes in a ‘palatable’ way for patients 

Optometrist and sole business owner Ms Rowena Beckenham established Beckenham Optometrist in Avalon Beach, NSW, 22 years ago as a greenfield practice. The business moved seven years ago to a site three times the size, and is located in a high socio-economic area on the Northern Beaches, with a mix of professional, double-income, and retiree populations.

Rowena Beckenham.

“Over the years I’ve invested in staff and technology. We now provide a far higher level of service and support, all while facing increased competition in the dispensing market. To expect we could cross-subsidise our clinical services with spectacle sales is just not sustainable in the longer term,” Beckenham says, adding that the practice continues to bulk-bill select patients, including students and pensioners.

“When the practice re-located in 2015, it was a bit of a no-brainer to introduce private billing at that point in time.”

Beckenham, who is the NSW director of ProVision, believes the key to successfully implementing private billing is having staff understand it’s the right move for patients and the business. Effectively, Beckenham Optometrist couldn’t provide its staffing and the level of service without the funding model.

Beckenham Optometrist has continued to invest in technology and upgrade equipment since introducing private billing, including a Rodenstock DNEye Scanner last year.

For Beckenham Optometrist in Sydney’s Northern Beaches, cross-subsidising its clinical services with spectacle sales was not a sustainable business model.

To establish her pricing structure, Beckenham took into account Optometry Australia’s (OA) recommended fees, which she says are as relevant now as they were then (OA regularly updates them).

She also focused on communicating her practice’s new fee-paying structure, including training staff and notifying patients.

“It’s about changing mindsets. I presented it to patients in a way that was palatable. GPs in the area are not bulk-billing. Patients are used to the concept of paying and getting a rebate back – and with interactive claiming, it is automatically back in people’s bank account.”

She urges any practice considering private billing to use discretion: “I believe it’s our professional responsibility to ensure equitable access to eyecare.

“But as optometry evolves and we add more to our scope-of-practice, and the gap with Medicare rebates grows wider and wider, we have to find a way to fund our clinical skillset.

“My advice to others is – why wouldn’t you introduce private billing? It hasn’t impacted my bottom line. On the contrary, we can now do more.”

Grappling with the details 

Optometrist Dr Jonathan Ucinek opened his independent practice in the inner north-east Adelaide suburb of Northgate in December last year, marking his first venture as a self-employed small business owner. He’s in the midst of a conundrum about setting his private fee structure.

Ucinek completed a Doctor of Optometry at The University of Melbourne and joined OPSM North Park upon graduation. After nine months, he began locuming at the end of 2018 for 12 months. He then joined Eyes & Vision, a practice with six locations in South Australia, shortly before COVID hit in 2020.

Dr Jonathan Ucinek.

The early career optometrist always wanted to open his own practice. That plan transpired last year when he opened a practice at an existing practice location that closed several months prior. He inherited the store fit-out and patient base and renamed it Northgate Eye Care.

While the previous practice owner wasn’t a ProVision member, Ucinek has joined the nearly 450-strong network. One of the challenges of opening a “partially greenfield” practice has been establishing practice fees.

Under the previous owner, the practice offered a combination of bulk-billing and private billing. Ucinek is bulk-billing patients whilst he deliberates over how to structure practice fees and implement private billing.

“There is a lot to take into consideration, including varying models of eyecare. To run a bulk-billing practice you need patient volume – and need to see 15 to 20 patients a day as well as cross-subsidise eyecare and running costs with sales,” he says.

In addition to industry advice from ProVision, Ucinek has also sought guidance from OA.

“I looked at Optometry Australia’s recommended fee list, which advises charging $128 for a 30-minute comprehensive initial consultation, with a Medicare rebate of $59,” Ucinek says, but believes this is too high for his patient demographic.

Since starting Northgate Eye Care last December, Dr Jonathan Ucinek has thought hard about the fee structure.

“It’s challenging. Using OA’s fee calculator, which can factor in my business loan, for a 45-minute consultation, the suggested fee is $140 a patient to cover operating costs. If I was bulk-billing, it would only be $59 of the $140 required to cover the true cost of providing quality eyecare services.”

He adds: “I don’t want to subsidise, or cross-subsidise. I’ve got modern equipment, including an OCT, corneal topography and optical biometry, and I’ve invested in a digital slit lamp, so I can educate patients about their eye health. I’m trying to find that balance, as on one hand I’ve made a significant investment in equipment, and on the other hand, I want to place value on the professional service delivered.”

Ucinek is also looking at what other optometry practices in his area are charging. He doesn’t wish to compete on price, but also knows patients are price-conscious during COVID times.

“There is another independent practice 1.8km from my practice, and The Optical Superstore is 2.5km away. There is also OPSM, Specsavers and Costco Optical near me,” he explains.

“I want to start off on the right foot. I don’t want patients or potential patients to have a misconception that eyecare is free. At the previous practice I worked (Eyes & Vision), we charged for our services – and patients appreciated the service they received.

“In terms of fees, I’m considering a minimum $20 out-of-pocket for a comprehensive initial consultation; above the 85% Medicare rebate of $59.05 (10910). I think that’s the most people will be willing to pay at the beginning.”

Ucinek intends to use his discretion to waive fees if patients can’t afford it and will continue to bulk-bill children under 16.

But setting fees for imaging is the “really tough part”.

“I’m informing patients there’ll be a flat fee; $94 for non-concession, and $78 for concession. But it makes it hard to maximise value. For example, a full fee-paying patient who requires an initial consult, OCT and biometry and retinal photography, will be charged $94. But on their second visit, they may only be charged $78 for OCT.”

He is also planning to place point-of-sale materials in the practice to help patients assimilate when he introduces private billing but is confident in discussing it with patients.

“At my previous employee (Eyes & Vision), I supported a $20 out-of-pocket fee, explaining to patients that unfortunately Medicare doesn’t cover the cost of providing a consultation. I’m experienced and well-versed in having that conversation.”

More reading

Sticking to the script on succession planning

Against the odds: opening a greenfield practice in Sydney’s east

Independent optometry ownership: a sound investment

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