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Upward trajectory: Eyecare sector charts recovery path

Following the COVID-19 peak, Insight issued a sentiment survey to understand the eyecare sector’s views on topics ranging from the government’s crisis response to industry confidence. Here, we reveal the findings and talk to business owners about their experiences.

With a small team of three optometrists and three optical dispensers, the E Eye Place isn’t necessarily the largest or most coveted optometry practice in Western Australia.

However, like hundreds of other independent practices around Australia, it has a dedicated team that toil hard to differentiate the business and offer the full scope of services, including orthokeratology and an in-office fitting laboratory.

Established only four years ago in Port Coogee, 28km south of Perth, the E Eye Place would appear, on paper, to be one of many small businesses left exposed by the COVID-19 crisis. It did close for a short period. But in the face adversity, its owner optometrist Ms Stephanie Yeo is optimistic about the future and has no intention of taking the conservative route.

“In terms of investment plans, the pandemic did not really lead to cutbacks. We increased our headcount and also invested in some small equipment. Strategically we are still hoping to invest in even more equipment once we get more normalcy in the cashflow,” she says.

“We still hope to increase staff headcount even further and are looking for good quality candidates.”

While Yeo’s confidence may come as a surprise amid the economic climate, she is not alone, according to an Eyecare Sector Sentiment Survey commissioned by Insight’s publisher Prime Creative  Media from 21 May to 5 June.

The 11-question survey, which garnered 154 responses from ophthalmic businesses ranging from fewer than 10 staff to more than 500, was designed to gauge the pandemic’s impact on the sector and quantify industry confidence. It also sought views on the government’s response to the crisis and information about factors that influence purchasing decisions.

The results paint a relatively positive picture of an industrial landscape experiencing its first recession in almost three decades. For example, more than a third of survey respondents (36% or 55 people) are still planning to explore new technologies and services in the next 12-18 months to improve their businesses.

Further, 40% said they would continue with current projects, but not make any new investments, while 24% indicated they would cut or reduce their services.

For staff recruitment, 15% said they would hope to rehire employees laid off or stood down during the lockdown period and 31% revealed they would operate with a reduced number of staff. Approximately 43% said they don’t expect to create new positions.

Overall, in terms of the pandemic’s impact on businesses, 50% of respondents felt it had a ‘very negative’ effect, while 41% stated it was ‘somewhat negative’.

The industry was split on how long it would take for their businesses to return to normal levels of service; 21% said 1-3 months, 28% answered 3-6 months; 26% 6-12 months and 19% more than 12 months.

Although she’s mindful of the challenges the sector faces, Yeo has adopted a long-term view for her practice. She says having the right mindset is critical to ensure her business and staff continue moving forward, despite the turbulent market conditions.

To back this assertion, she has purchased a Zeiss iTerminal 2 centration device, IOL Master biometer and a paediatric vision screener, some of which pre-date COVID-19. She now plans to follow through on plans to upgrade another iTerminal when it’s released, and purchase a combined ultrawide and OCT.

“We run a tight ship, however it is important to invest in ourselves as well as invest in technology in order to differentiate ourselves and find our place and remain relevant in the very competitive market,” Yeo explains.

“As many have said, we saw 10 years of change in one week – so to speak – when the pandemic struck. Optometry is in an interesting position where many have a hybrid identity of retail and medical domains. The retail domain is undeniably affected to a certain extent although demand for occupational specific eyewear to improve work performance (working from home, near induced eye strain) has increased.

“The pandemic highlighted our essential role in the medical domain. It has brought to light how this domain of our profession will need to morph towards the post-COVID ‘new norm’, and have a larger role in primary eyecare and public eye health.”

Government response

In a crisis of this magnitude, businesses look to the government for certainty. In this instance, Australian leaders have had to activate mechanisms that act as a shock absorber for the economic blow, while simultaneously formulating a clear roadmap to recovery.

While it’s an unenviable task, the sentiment survey asked respondents to rate the government’s support of the eyecare sector during the crisis.

Most respondents (50%) said the government’s support was ‘acceptable’, with 33% rating it as ‘very strong’. Just 16% said it was ‘not enough’.

Anecdotally, many businesses within the ophthalmic sector – both small and large – have labelled the JobKeeper wage subsidy as the single most important measure that ensured their survival, while many individuals have used the JobSeeker scheme to bridge the gap.

Melbourne ophthalmologist Dr Laurence Sullivan capitalised on one of the government’s other stimulus packages: the instant asset write-off threshold which increased to $150,000 from $30,000 for each asset. The measure has now been extended until the end of the year as the government looks to spur further investment.

Sullivan is corneal, cataract and refractive surgeon and a founding director of Bayside Eye Specialists, a multi-disciplinary private ophthalmology practice in East Brighton. He also established Laser Sight, a refractive surgery practice in East Melbourne and is the secretary and treasurer of the Australian Society of Ophthalmologists.

Melbourne ophthalmologist Dr Laurence Sullivan.

The tax write-off scheme was a motivating factor to upgrade their existing instruments with the latest IOLMaster 700 biometry device and Humphrey Field Analyzer 3 perimeter.

“The finance industry has also given us an interest holiday and allowed us to defer payments for 12 months, so basically we can get the equipment without having to pay for it straight away,” he explains.

“It will eventually cost us but at least we have been able to upgrade the equipment without taking a big hit to our cashflow, which has obviously decreased at the moment.”

Overall Sullivan thought the government had done a good job to support small and medium-sized businesses. While his workload dropped off when all non-urgent elective surgery was suspended, he has returned to work, albeit with reduced throughput due to strict hygiene protocols.

Looking ahead, he predicts there will be further issues to work through for both public and private ophthalmology.

“With the coming recession we are expecting a downturn in throughput; a lot of patients will give up their private health insurance and not be able to afford private care, so we will see a downturn in numbers overall,” he says.

“We have renegotiated with our staff during the COVID-19 outbreak and pretty much got everyone back to fulltime work, but I really don’t know what the future is going to hold. If there is a downturn in private ophthalmology, then we are certainly going to see the waiting lists for the public hospitals blow out, and I don’t know what the public hospital system is going to do about that.”

Bouncing back

With a 97% drop in sales, VS Eyewear was a company that was hit harder than most within the eyecare sector.

The second-generation Victorian-based firm was established in 2002 by brothers Mark and John Van Staveren to manufacture and supply frames to independent Australian practices.

Mr John Van Staveren of VS Eyewear in Carrum Downs, Victoria.

Mr John Van Staveren says he takes his hat off to both federal and state governments for the support during the crisis. Their optometry practice clients predominantly shut down their operations or reduced services to provide only urgent and essential care at the pandemic’s peak, creating a significant knock on effect for his business.

“If we didn’t have the JobKeeper we would have been laying off staff, I would have gone back on the road myself. Having JobKeeper has maintained positions and jobs for us. I’m sure this country is going to pay for it through higher taxes one day but at this point in time it’s kept people employed.”

To highlight the magnitude of the impact, Van Staveren says March sales were down 70%, April 97% and May 70%.

“But surprisingly for June we are sitting at 10% above June 2019 – and that’s with no reps on the road. So that’s been driven mainly by phone orders, people needing stock and topping back up. The reps haven’t really been welcomed back into the practices yet, but come the middle of July the appointments will start up,” he says.

Van Staveren says there will be no major marketing investments for his company in the coming months, but it will continue to manufacture new models and stock as required. It also has to factor in increased cargo costs to get frames shipments to Australia.

But in the next 12-18 months he will consider increasing the salesforce with one new position.

“To put that into perspective, that would increase our staffing by 15-20%,” he says.

“I think we have kicked the bottom of the hockey stick and it’s now heading back up, that’s my anticipation. July probably won’t be as good as last year, but I think there are signs of positivity – and if we have been a good supplier to people through tough times, we are hoping that will come back to us when the times are a little better.”

Other findings 

Insight’s sentiment survey also quizzed respondents about their purchasing habits and trustworthiness of information sources in light of the COVID-19 crisis.

To fully appreciate this, first it is important to understand who responded to the survey and the size of the companies they worked for.

Of the 151 respondents who detailed their role within their workplace, 46% (69) stated they were in an executive position, followed by 28% (43) in operations roles. In total, 13% (19) said they were a mid-level manager and the same number said they worked in sales and marketing.

The majority (65% or 100 respondents) worked in a company of 1-10 people, with a further 21% (33) stating their workplace has 11-50 people. Nine respondents worked in a firm with 101-500 people, seven in a business with more than 500 employees and four in 51-100.

One of the key questions asked respondents to rate on a scale of 1-5 how various information sources influenced their purchasing decisions.

The answers were fairly evenly divided, however information directly from suppliers was considered the most influential factor, with a weighted average rating of 3.38 out of a possible 5.

This was closely followed by information from trade events, which generated a weighted average of 3.03. ‘Case studies about companies similar to mine’ came in third at 2.94, information from third-party sources such as trade magazines and industry reports 2.79 and direct advertising from social media platforms such as Google and Facebook 2.10.

Survey participants were also asked to rate their level of trust in the several types of industry media on a scale of 1 (not trustworthy) to five (very trustworthy).

Trade magazine and periodic journals were trusted most with an average weighting of 3.66 out of 5. Social media was the lowest, with a score of 1.97, while emailed newsletters generated a strong 3.0 rating and media websites 2.73.

The eyecare sector was also optimistic about the prospect of attending trade events when the government deems it safe. In total, 44% they would likely attend, 32% were very likely, and 23% not very likely.

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