IBM to EyeMed

By Daniel L. Mannen, OD, FAAO October 07, 2011

When you go fishing, the number of fish in the pond is very important in predicting your chance of catching one. Adding fish to the pond increases your chances; removing fish from the pond decreases your chances.

The fishing analogy is an appropriate one in managed vision care. Historically, when VSP wins a contract, 94% of covered members stay in network and seek eyecare services from private-practice doctors. Again, looking at the historical record, when retail-biased competitors like EyeMed win a contract, only 56% of patients accrue to private practice. The reason for this disparity is very clear. Luxottica owns EyeMed and also owns retail stores. It is far more profitable for EyeMed to direct patients to their retail stores and away from private practice.

Effective January 1, 2012, the vision care contract for IBM will switch from VSP to EyeMed. For the private-practice doctor, this means a lot less fish in the pond. IBM has approximately 300,000 members (employees and their families). If we do the math, 94% of 300,000 meant 282,000 potential patients “in the pond” for private practice when VSP held the contract. We anticipate only 56% of 300,000 or 168,000 potential patients for private practice with EyeMed holding the contract. And that is in year one…the percentage of patients going to private practice is expected to go down in subsequent years as advertising, coupons, and recall take their toll. Make no mistake, it matters who wins and who controls the contracts.

It is easy to consider all managed vision care companies to be similar. However, this one-size-fits-all assessment fails to recognize the vast difference in motivation. Luxottica is a public, for-profit corporation with stockholders to satisfy. Their motivation is to maximize profits and business activity in their retail stores. VSP is a private, not-for-profit corporation whose mission is to connect patients with private practice doctors. Therefore, the outcome is predictable depending on who controls the contract.

As I see it, we must understand that it does matter who wins in the managed vision care market. When retail-biased plans win, patients are directed to retail stores and away from private practice. When VSP wins, private practice wins and so do the patients they serve. Despite the IBM change, VSP continues to be very successful in the marketplace with 2012 projections ahead of the past few years.

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