In a recent press release, VSP announced the results of a study that indicates that annual eye exams save companies nearly $3 billion each year. That's great and very logical. And I trust that VSP will be making the study available to all it's Providers for use in their individual marketing efforts.
These results certainly appear to be very compelling and I applaud the study. Great job VSP (I really mean it)!
Reading the Study from a different direction, the results are also reason why VSP should be able to convince employers to increase their investment in vision care for their employees and, as a result, bring Provider reimbursements to a realistic level.
But one doesn't really have to look to VSP's customers (employers) for rationale for improvement in reimbursements. While VSP's 2008 Audited Financials (reflecting the impact of the Marchon acquisition) don't yet appear to be available through my source, here's a copy of their 2007 Auditor's Report for your viewing pleasure (Download VSP 2007 Financials). As this report shows, for 2006 and 2007,VSP had net income (after reserves for taxes) of over $100 million each year! That's after paying their employees what can only be viewed as ludicrous benefits and outlandish salaries.
So let's assume for a moment that 50% of that income is reasonably available for distribution to the Providers whom VSP purportedly serves. After all, reserving $50million in capital each year (VSP has a net worth in excess of $1billion and cash/securities as of 12/31/07 of almost $800 million) should be adequate to fund capital investments and their required statutory reserves of about $15million.
The result would be a distribution of about $2,000 per Provider each year. Not great, but it helps.
But now, since VSP has proven that employers save about $3billion a year through annual eye exams, it seems safe to say that employers would be thrilled to save, say, only $2.5 billion. After all, that's a huge return on their premium investment and a compelling bottom line improvement. That would give VSP the ability to improve reimbursements by, let's say, about $20,000 per Provider per year. Now that's real money and would finally bring Provider reimbursements in line with increasing costs.
I know that VSP would say "that's ridiculous, it's a cold, cruel world out there and we have to compete." That's logical, after all, VSP is the "high cost producer" in the "managed vision" world. VSP premiums are higher than most other plans. Unfortunately, what none of the plans seem to get is that Providers require margins to continue to invest in people, facilities and technology to deliver the very health benefits that the VSP Study proves are of such value. And that, without quality Providers, all these managed care businesses are worthless..can't operate…nada…vaporized…or…as my grandfather would say…"kaput."
Hmmm, I wonder when Providers will finally say "we're sick and tired of being treated like dog dirt and we're not going to take this anymore?" What would the result be of a unilateral "strike" during which all optometrists simply refused to accept any vision care plans? What would happen if optometrists simply told plan participants, "I'm sorry, Mrs. Jones, your insurance is not reimbursing us at a level at which we can continue to provide the quality care that you expect from us. So, we've decided to participate in a national boycott for the next week to send a message to these plans and to your employer that we can't deliver what you expect us to deliver without adequate reimbursements. I'm sure that you can understand this…our plight is the same as if your employer reduced your hourly wage by 50%."
Perhaps, only then, will the likes of VSP, EyeMed, Spectera and Davis and the employer groups whom they represent (they sure as heck don't represent Providers) stand up and take notice?