November 21, 2024 • 35 mins
Questions? Thoughts? Send a Text to The Optometry Money Podcast!
In this episode of The Optometry Money Podcast, host Evon Mendrin welcomes back Dr. Chad Fleming to dive into a strategy for private practice optometrists: private label products.
Dr. Fleming shares his insights into how practice owners can introduce private label lenses, frames, and other products to their offerings. They discuss the financial and operational benefits, including improved margins, reduced costs, and increased flexibility, while still delivering top-quality care to patients.
You'll learn:
- What private label products are and why they're gaining traction.
- How they compare to big-name brands in quality and performance.
- Practical steps for selecting and implementing a private label line in your practice.
- Common red flags and mistakes to avoid when exploring this option.
Whether you're curious about adding private label products to your practice or are looking for ways to maximize profitability in your optical, this episode is packed with actionable advice and real-world examples.
Have questions on anything discussed or want to have topics or questions featured on the show? Send Evon an email at podcast@optometrywealth.com.
Check out www.optometrywealth.com to get to know more about Evon, his financial planning firm Optometry Wealth Advisors, and how he helps optometrists nationwide. From there, you can schedule a short Intro call to share what's on your mind and learn how Evon helps ODs master their cash flow and debt, build their net worth, and plan purposefully around their money and their practices.
Resources mentioned on this episode:
- Email: chad@pipgpo.com
- Chad Fleming: Partners in Profit
- Review of Optometry: Can Private Label Save Private Practice? (2002)
- Schedule an Introductory Call with Optometry Wealth Advisors
The Optometry Money Podcast is dedicated to helping optometrists make better decisions around their money, careers, and practices. The show is hosted by Evon Mendrin, CFP®, CSLP®, owner of Optometry Wealth Advisors, a financial planning firm just for optometrists nationwide.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Evon (00:04):
Hey, everybody.
Welcome back to the OptometryMoney Podcast where we're
helping ODs all over the countrymake better and better decisions
around their money, theircareers, and their practices.
I am your host, Evon Mendrin,Certified Financial Planner(TM)
practitioner, and owner ofOptometry Wealth Advisors, an
independent financial planningfirm.
Just for optometristsnationwide.
(00:26):
And thank you so much forlistening.
Really appreciate it.
On today's episode.
I welcome back to the podcast,Dr.
Chad Fleming.
And we talk about the benefitsof adding private label products
financially to the practice.
For your patients.
We talked about how a practiceowner can select or create a
private label line.
(00:47):
And red flags to avoid whendoing so and so much more.
And if you have any questions,you can reach out to us here at
podcast@optometrywealth.Com.
I will throw all of Dr.
Fleming's contact informationand all the other links and
resources mentioned here in theshow notes, which you can find
at the education hub at mywebsite,
(01:07):
www.optometrywealth.Com.
And while you're there, checkout all of the other resources,
articles, podcasts, episodeswe've done.
And if you're curious about whatit's like to work with Optometry
Wealth Advisors, to help younavigate all of the most
important financial decisionsyou're thinking about from
cashflow and debt tax planningand investment planning, and so
(01:27):
much more.
Feel free to schedule a nocommitment introductory call.
And we can talk about what's onyour mind financially.
And how we help optometristnavigate that nationwide.
And without further ado here ismy conversation with Dr.
Chad And welcome back to theOptometry Money Podcast.
(01:47):
I am your host, Evon Mendrin,and I am excited to welcome back
onto the podcast, Dr.
Chad Fleming.
Dr.
Fleming, thank you so much forcoming back on.
Chad (01:56):
Evon, thank you for inviting me and, I look forward
to hanging out and chatting withyou today.
Evon (02:02):
Yeah, I'm excited to talk about something that you and I
had brought up in ourconversations, which is
implementing private labelproducts within the optometry
practice.
And as I thought about it, sortof preparing for this
conversation, The more I realizethat private label products are
everywhere.
(02:22):
You know, if we go to Costco,they've got Kirkland's brand.
If we go to Amazon, they've gotAmazon Basics.
If we go to Trader Joe's, we seeit in clothing.
I mean, we see these privatelabel brands sort of all over
the place in retail and, oftenat less expensive prices.
and and still often not veryhigh quality related, you know,
(02:45):
relative to other brands.
So we, we see this sort ofprivate label use of.
of products all over the placein our lives.
And, it, it would be interestingfor me to hear how that's best
implemented within optometry.
And as you think about privatelabel, like what, what does that
even mean in an optometrypractice?
Chad (03:07):
Well, Evon, I think when you think of private label,
different people think of it indifferent ways.
Some people will think it's lessquality.
Some people will think that it'ssubpar performance.
I think that private label, justlike you mentioned, Kirkland's,
for example, with Costco, Imean, their stuff is, their
(03:28):
stuff is good.
I think it's, you know, it'srepackaged with a private label,
name on it.
And sometimes it's themanufacturing of that by the
companies that makes it lessexpensive.
I know in the contact lensspace, for example, a lot of, my
colleagues may not understandthis, but if they go online, you
(03:48):
can look up, the different,distributors, say a Costco, say
a Sam's, and you can see thatsome of our name brand, big
contact lens, mainstream lensesare the exact lenses rebranded
under a Costco name or under aKirkland's name or something
like that.
And so what happens is, is that,I think a lot of times
(04:13):
manufacturers get a play on bothsides of the coin and name
brand.
There's a reason that peoplehave name brands.
So for instance, you think ofthe name brand, Lululemon, and
what do people notice withLululemon is they have a, a
little spot or a little insigniathat says, Oh, those are
(04:34):
lululemons.
So not only are they goodquality, but there's a status
symbol associated with it.
Well, when you deal with framesand ophthalmic lenses, the
status symbol, there's, thecommon person cannot tell, and a
lot of times even the trainedprofessional can look at a set
of lenses with the naked eye andthey can't tell who makes these
(04:58):
lenses.
You have to get under highmagnification, certain lighting,
to see the laser etchings in thelens, to then understand, Oh,
this lens is made by so and so.
And so, what you really look forin private label is performance,
and then, unfortunately, forevery action, there's a
reaction.
(05:19):
And so, Managed Care has beenthe action, they have been
calling the shots, calling theshots as far as our
reimbursements, as far as whatlenses we might be able to use,
may not be able to use, and sothe reaction is, is that we
still have to run a business anda company that's profitable, so
we have to look into whatoptions do we have, performance
(05:41):
wise, for the patient, becauseyou want to give the patient a
great product, but I need to beable to pay less for it.
And the, you know, it's aprivate label just across the
board is a less expensiveoption, even if it's the same
lens with a different, brandingor no branding on it.
Evon (06:03):
And why is that the case that for a practice to purchase
these?
private label products to thenprovide to the, to the patients.
Why is it at a less expensivecost?
I would imagine part of that isbecause there's no marketing
costs for the manufacturer topromote the brand.
so it, it, it, avoids the costof having to market and package
(06:24):
those products, from yourperspective why, why is it the
case that those are lessexpensive for, for the practice
owner?
Chad (06:31):
Well, for the practice owner, they're less expensive
because you don't have frontend, whether it's sales reps or
whether it's marketing orwhether it's there's cost of
there's overhead costs of namebrand.
Okay.
Stuff.
And when you take those overheadcosts away, you're removing a
(06:52):
10, 20%, level of cost that thencan be passed on to the, to
someone like myself, an owner,and I can get like performing
lenses, coatings, and, andadditional things to the lenses
for at a fraction of the cost.
Evon (07:10):
Gotcha.
Okay.
Which then you can, you canimprove the margins on the
products while still maintainingall that same quality that
you're expecting in the productsyou're providing the patients.
Chad (07:20):
Yeah, so for instance, if I'm paying a, I'm paying 60, my
cost for an anti glare coating,a top end anti glare coating,
and I pay another one 25 or 30and performance wise, they both
(07:40):
have a one year warranty onthem.
They both perform at the samelevel under usual and customary
wearing and tearing.
yeah, and patients see out ofthem the same.
It's hard for me as a consumerwho does buy private label
stuff.
You know, it's hard for me tojustify at times, unless there's
(08:03):
performance issues, and you canshow me performance issues, why
do I need to go with the namebrand?
Especially if I don't have abig, huge, round Mercedes
insignia on the front of my car.
And you can't, and, and youcouldn't identify it.
We're caught up in the Americanway that there's a status
(08:24):
symbol.
And so when you're dealing witha product that does not have a
status symbol on it, think ofall of your shoes that you wore
were all plain and you couldn'ttell one Nike from, Adidas from
Puma, whatever.
They were all exactly the samebecause there was no
identification of the brand.
(08:44):
What would you buy?
Evon (08:46):
Whatever was the less expensive for the same highest
quality that you can get.
Chad (08:50):
Yeah, well, if you tried all
Evon (08:51):
for the biggest bank for the buck.
Yeah.
Chad (08:54):
if you tried all three of them on, they all had similar
warranties and comfort level.
Which one are you going to buy?
You're going to buy the onethat's like, Oh, well, I'll buy
this one at 20, instead of theone at a hundred dollars,
because nobody is going to evenknow which ones they are.
And if we all, if you look, ifyou're self aware and truly
understand what goes on in themarketing world, the, American
(09:17):
economy would not be driven ifwe were not so status oriented,
because there's a lot ofproducts that we're marketed to,
and so we pay for that extradollars because it's got
something stamped on it.
So if you can't see that stampor understand that, then that
(09:38):
value, that separation in valueis lost.
Because then it's like, well,nobody's going to know, so why
am I going to pay the higherprice?
If it's equal, if there'squality equivalence,
Evon (09:50):
All things being equal.
Right, right, right.
Or roughly equal, I guess.
have you seen within your ownexperience that certain
percentage of patients are sortof really brand sensitive,
versus certain percentages arenot like as is there a subset of
patients that really do careabout, you know, a larger brand,
(10:11):
even if the quality is the same.
Chad (10:14):
the only brand that I have seen people come in in the last
10 years asking for from anophthalmic lens space is
Transitions.
Evon (10:28):
Yeah.
Chad (10:28):
Other than that, and that's the photochromics that
change when you go outside, theyget darker, go inside, they get
lighter.
Other than that, frame brands, Iwill say people come in and they
request an Oakley or theyrequest a Ray Ban.
this generation, the millennialgeneration, Gen Y, Not so much.
(10:49):
Gen X and older, they're morebrand specific with some of
that, but the youngergeneration, what we're seeing is
they're more interested in the,social aspect of the brand than
they are about the, You know,does it have to have Nike on it?
Does it have to have a certaininsignia on it?
That's less important.
(11:10):
And we've, we've proven that inour practice.
And I know hundreds of practicesthroughout the U.
S.
that have proven that thatbrand, the look and feel of that
brand, is much more importantthan the brand is for what I
would say a higher percentage ofpeople.
Now, a lot of colleagues likemyself, I think, this is my
(11:32):
opinion, are more caught upthemselves in what they are
doing.
are selling or have in theirretail than what is actually
selling.
Cause there's too manysuccessful practices that are
taking a route of, we don't haveto have the most recognized
(11:53):
brands.
I mean, look at like a WarbyParker that came in and have
done very good at creating theirown brand.
They're not Oakley, they're notRay Ban, they're not, you know,
anything else.
They created their own brand.
People like it because of theway it looks and it's Warby.
So, I think a lot of it has todo with, I mean, I can't take
(12:16):
away from that.
There's obviously statisticsthat will say that branding is
extremely important.
I just think that you can bevery successful a less branded
space.
And there's more margins tobattle the managed vision care
(12:38):
plans.
Evon (12:40):
Gotcha.
Gotcha.
And to contrast, for practicesthat have historically not used
private label and are using thelarger brands, what has
traditionally, at least fromyour perspective, gone into the
buying decision of which framesand lenses to have in the
practice and to, and to buildthe inventory?
Chad (13:04):
Traditionally, or the old model of doing it is, you have,
Willie Lomac, the door to doorsalesman that comes in with,
frame allotments, and they setthem down, and you have one of
your opticians that you pay to,You know, look at 15 different
reps that come in that week,spend an hour with each rep,
(13:26):
looking at the frames, pickingwhat they think's going to sell.
So it's very subjective inwhat's picked.
and they basically get a shopwith the owner's money, put the
frames out on the board.
what sells, sells.
They take them off the board,send them in, and then they wait
for the next rep to come in andthey order their next pile of
(13:48):
frames.
And so you get this ebb and flowbased on your optician getting
to shop, whichever rep comes innext or whichever rep that
they've been working with.
you get to do that.
That has been the old model ofdoing things, which is an
expensive model.
And so that's been true.
(14:09):
And some of those sales repswill have statistics of hey,
what's selling, what's notselling in your practice
regionally.
and so they'll pick and choose.
What's interesting is the largercorporations, and now private
equity, they have it down to ascience and they are much more
well versed in retail andunderstand what sells, how to
(14:33):
stock it and how to do it in away that doesn't require so much
heavy lifting by your staffmembers.
And so, We pay too much asprivate practice owners.
We pay too much of our stafftime to sit and do it the old
model.
That's, that's what I've seen.
(14:53):
progressing from being a buyerat an optical place prior to
optometry school to watching mywife who was, worked for a frame
company for 10 years to thendoing what we're doing today in
just making things moreefficient.
Evon (15:08):
are there certain practices or are there practices
with certain patientdemographics that should, that
are a better fit for a privatelabel product frame or lens than
others?
You know, are there certainpractices where they really
should be evaluating this?
more quickly than others.
Chad (15:27):
All practices should have a private label unless you are a
boutique and people are comingin, then you could still
consider it because evenboutique places have a private
label.
But if you are a, you know,you're a high end watch seller,
most likely you're going to haveRolex, Omega, you're going to
(15:49):
have those high end and that'swhat you're going to have.
Anybody else in the ophthalmicspace, private label should
compliment what they're doing.
Where the mistake is made ispeople have failed at private
label because they've gone toChina, or they've gone and gate,
they've gone and got cheaplabel.
I'm not talking cheap label.
(16:11):
I'm talking private label,meaning the performance is still
on par with other products thatyou have.
And there's no, I wouldn'trecommend to anybody that they
just have private label.
And none of your, none of theexamples that we have out there
that are successful just haveprivate label.
It's a mixture, it's anoffering, it's a way to balance
(16:34):
out profits, be able to becompetitive with the Warby
Parkers, the Costco, the Sams,So, so it's a part of the
strategy of being successful inthe optical, because I hear too
many times, colleagues who havepractices with opticals are
saying, you know, you just can'tmake money anymore in the
optical.
(16:54):
We just do it as a service.
And I respectfully andwholeheartedly disagree.
Evon (17:00):
Interesting.
That's, it, the optical seems tobe a huge driving or a huge
revenue driver in most practicesI come across.
So that's a fascinating, way tolook at that.
Chad (17:11):
it's a revenue driver, Evon, it's a revenue driver, but
is it a high, highly profitable,high margin place?
Evon (17:20):
Yes.
Good.
Good distinction.
Yes.
That's, that's a good point.
it's driving revenue, but is itdriving.
Profitability is the rightquestion.
Chad (17:30):
Profitability, correct?
Evon (17:32):
Yeah.
And with cost, I mean, cost ofgoods sold, inventory being one
of the major line items in anypractices, profit and loss that
has an optical, So it's a majorpart of a profit and loss from
an expense or an investmentstandpoint.
So anything you can do toimprove the margins on the
inventory you're purchasing, thebetter off it will be.
(17:54):
So that goes to the nextquestion though, and how does a
practice select or create aprivate label?
And I'm going to quickly show myignorance here of not knowing
how this world operates.
Like how, How does a practice goabout doing that?
Chad (18:11):
Well, there's a couple different ways.
What's interesting is thisprivate label has been around
for quite some time.
It used to be that you had to bea part of the buying group and
everybody that has been part ofdifferent buying groups knows
what has happened in the past inregards to the buying group will
have their own private labelthat they've arranged with a
(18:33):
particular manufacturer who willcome out and create something
specifically for that buyinggroup that is, you know, at a
reduced fee because it doesn'thave that name on it.
So the, it's been availablewithin buying groups.
If you ask the right questions,and that's a lot of times what I
(18:54):
run into is that my colleaguesdon't ask the right questions
and they listen to the sales repsays, Oh, you don't want that.
Yeah, we do have that.
But, that's probably not goingto be the best option for you.
Well, I would say there's aconflict of interest there
because why then are the largegroups needing to have the
(19:16):
private label because they knowthat the conflict of interest
is, is yes, we understand thatthe name brand stuff has, has
margins built in and performancethat can pay for the marketing
and for the sales reps and foreverybody on the front end.
(19:36):
So you don't get, you reallyhave to dig for the private
label.
So most of the times you canfind it in a buying group.
You can also find it amongstyour lens manufacturers and
There's various labs that havedone a good job of making a
private label available.
The biggest thing is gettingyour hands on it, testing it
(19:58):
out, seeing performance, seeingquality, and making sure that
you are getting something thatyou want to represent in your
practice and not just a lowbudget option that just doesn't
have a brand name performancenext to it.
Does that make sense?
Did that make
Evon (20:17):
that makes, makes sense.
And I was looking through anarticle from 2002, in Review of
Optometry titled, Can PrivateLabel Save Private Practice?
So certainly this has been a, atopic that's been discussed.
It's been around for at least 20years.
And, and are there any redflags, things to avoid if, if a
(20:40):
practice is going to amanufacturer or, or even within
the buying groups of, figuringout whether or which of these
private label products to use?
Chad (20:50):
I think you avoid taking it at face value of what is
equivalent product because themanufacturers will tell you,
well, there's not a privatelabel that can match up to our
particular lenses.
And with the private label,others will say it's the same
(21:10):
performance.
There's no differences with it.
you need to test the theory.
I think what's fair in testingis it comes down to performance.
You test it out on variousdifferent prescriptions.
You test it out on people whohave more, maybe high cylinder,
maybe, engineer, high myope,high hyperope, high plus.
(21:34):
just various things like that.
You test that out on patientsand see how it does perform, and
you'll find that there's, youknow, performance is really the,
the bottom line.
And then on the, on the scratchcoatings, figuring that out, you
just, you have to, Look at them,look at the, how the,
(21:54):
Cosmetically, what do they looklike?
Because there's some, there'ssome high end stuff that
cosmetically the coatings look,don't look that good.
And there's private label stuffthat actually the coatings do
look better, in regards tocolor, in regards to reflection,
in regards to just overallperformance.
so yeah, you've got to test itout.
I think that's where it'simportant to have an open mind
(22:19):
to, and be always be curiouswhen you're in business and
you're running your business isdon't assume that what you're
currently doing is the bestoption.
It might be the best option, butI see a lot of people also like,
Hey, we're good.
You know, we, ours is the best.
and I've found many times, evenamongst myself and amongst, good
(22:42):
friends of mine who have saidthey've got the best, got the
best deal, got the best privatelabel or got the best, no, we do
the brand name and we just gotreally good pricing on it.
And then later they testsomething out and feel like, oh,
wow.
Why didn't I, why didn't I knowabout this?
And most people stopped beingcurious.
(23:03):
So even though I'm sitting hereon this podcast telling you,
Hey, I, I think I've got thisfigured out.
I'm always testing myhypothesis.
I'm always testing to see, isthis the best?
And that goes back to, you know,yearly reviews, quarterly
reviews is what we're doing thebest for the patient.
Are they still getting topperforming product?
And the prices that we'repaying, is it still something
(23:25):
that, is helping us to beprofitable?
Evon (23:28):
Yeah.
And in, in terms of, you know,the, the importance of testing
the product, but then there'sthe commitment.
And I would imagine there mightbe some hesitation to purchase
for the first time in largequantities, or maybe is, is
there a requirement if, if youare, were operating outside of a
buying group purchase, you know,a certain amount of, of quantity
(23:53):
of volume, how, how does thatwork?
Chad (23:57):
No, not at all.
I could flip tomorrow from whatI'm currently using to something
else.
It's how you set your systems upwithin your organization.
So, for the longest time, we setour level of lenses.
that patients could pick out.
Basic, Premium, Elite.
We set them by branding.
(24:18):
So when we were using a vendor,we would have our basic was
branded this name, our premiumwas branded this name, our elite
was branded this name.
All of our staff then had tolearn all these different brands
and it was a major lift.
And I said, this is ridiculous,because this gives way too much
power to whichever manufacturerI'm currently using and makes it
(24:39):
hard to switch.
Today, we don't.
We don't sell a name brand.
We sell a level, just likeyou'll see in, Managed Vision
Care.
They're set up based on codes.
So we set up Basic, Premium,Elite.
The doctors will come out, theywill recommend a level of
(25:00):
progressive lens or singlevision lens based on the
patient's prescription, based onthe patient's needs, based on
the patient's need forperformance.
And they'll either fit the Basiccategory, the premium category
or the elite category.
Once that happens, there is nota The education between the
optician and the patient is doneabout what separates the
(25:23):
different levels.
So at an elite level, you getindividualized and customized.
So those are two key features ofa higher level, higher
performing lens.
So they get educated on this.
That's what they're paying for.
So it's basically, you're goingto the car lot and you are
deciding that I'm going to havea Mercedes, a BMW, or a Porsche.
(25:48):
And they're not going to pick itbased on the brand names because
patients don't know theophthalmic lenses by the brand
name.
So then what we're going to doon the back end is we've
centralized the ordering.
The person that does all of ourordering will come in there and
say, hey, it's an elite lens.
We need to just give them eliteproduct that falls in categories
(26:10):
that's elite.
And Managed Vision Care, VSP,IMED, whatever it is, you have
different categories based onperformance.
So we will sell an elitecategory.
No, we have no issues.
There's nothing because that's,they are getting what we are
selling them.
But do you see the, do you seewhy that is critical to giving
(26:31):
me the freedom and flexibilityto pivot?
When I need to, because whatI've seen is manufacturers of
these lenses will have priceincreases and it's so hard for
us to pivot when we're heavilyinvested in a particular brand
or even private label that wecan't pivot.
(26:52):
And so when you can't pivot, youcan lose profitability
overnight.
Evon (26:57):
Yeah.
That's an interesting framing,no pun intended, of the, of the
way you, you structure that.
Cause you're, you're structuringyour offerings to patients based
on, you know, good, better,best, or, or base, you know,
better elite, however you'd wantto describe that.
(27:18):
but you're not attaching it tolike, You know, good, better,
best brand.
It's good, better, best qualityor features.
And you are deciding whichframes, lenses, whatever it may
be, fits within those tiers.
You're the one deciding thatyou're not sort of beholden to a
particular brand to fill thatcategory, or you're not
(27:38):
attaching the qualities to aparticular brand.
Chad (27:42):
no, don't, don't necessarily need to.
if somebody comes in requestinga brand.
Which I don't know in 20 years,30 years, because I was in the
optical before I was inoptometry school.
I don't, maybe a handful oftimes somebody's actually got,
(28:04):
picked a brand of ophthalmiclens, like, I gotta have this
brand.
It's just not a, that, that'swhy to me, I, I, you got to sell
a good product.
I, and, and here's the danger inthis is that you could take
advantage of patients thismanner, so you have to have
(28:24):
integrity in the sense that youare selling them what you say
you're selling them because youcould swap them out something
different, but that's, I wouldconsider that as being dishonest
and wouldn't do that.
Evon (28:40):
right.
Right.
Yeah.
And, so all that being said, Imean, ultimately this is a
podcast about money to, to anextent.
And, all of this business stuffrelates pretty directly to, to
the, the optometrist money interms of the revenue and profit.
The, the optometrist is earningthe ability to pay associate
(29:01):
doctors.
If you have associate doctors.
And the ability to do all thethings that you want to do in
life, because your business isprospering.
So, thank you.
How have you seen that privatelabel products have positively
impacted the practices you'reworking with?
And we've talked a lot aboutthat already in terms of the
(29:21):
cost to purchase and the qualityand the margins, but, let, let's
just focus more in on itdirectly.
How have you seen the, the,what, what benefits.
Have you seen with using privatelabel products?
Chad (29:33):
Happy Patients.
So I've not seen a difference inpatients and happy doctors
because I know that what we paypercentage of production is in
the top 90th percentile, basedon percentages, because we
still, have a category over 20%.
(29:57):
of revenue.
And if you look into that moreof the averages of what doctors
are paid, paid on a productionbasis is 15 to 18%.
I would say that's right in theaverage rain.
I've heard as low as 9 percenton the West Coast.
but when, when we're able topay, in fact, we looked at one
time, we looked at privateequity and I'm always intrigued
(30:19):
with what's going on.
So I went down that rabbit holeto just see what was out there.
And our EBITDA was not as goodas it could be because, and they
told us, you pay your doctorstoo much.
We would have to come in and wewould have to ratchet down what
you pay the doctors in order forit to get, in the area that, you
(30:40):
know, for it to be the multiplethat would make sense.
And I knew at the time, cause wewere paying all of our, we were
paying doctors, over 20%, all ofthem, of revenue.
Since then we've, we've adjustedsome, but my point being is our
cost of goods runs right around20%, at times less than that.
(31:01):
That is about six to 7 percentlower than what is considered
Good.
And so when you run cost ofgoods at that range, you have a
bottom line that, yeah, youcould take it all home as the
owner, but I would rather havegood people and attract the best
with the money that we're ableto pay.
(31:24):
because number one, I hateturnover at doctors.
The number one person I don'twant to turn over is doctors.
Number two is managers andhigher level people within my
organization.
Okay.
So if I can keep them, and weall know that inflation is going
through the roof, we all knowpaying people is more and more
difficult, you gotta find waysto generate more bottom line
(31:46):
income.
And that's how we've, that'sbeen part of our, strategy.
Evon (31:52):
I mean, even if you look at like a, just sort of randomly
choosing a 1 million gross,gross revenue practice, even if
you are letting 3 percent ofthat drop down to the profit,
that's 30, 000.
to the practice owner, right?
You're, if you're able to makelarge improvements in cost of
(32:12):
goods and just keep portions ofthose improvements, percentages
of those improvements, that canadd up to quite a bit over time.
so that's pretty fascinating.
I, I appreciate you goingthrough all of this with me as
I'm, I'm learning, in real timehere and I'm always fascinated
about this, this constant effortto.
(32:33):
to make private practices moreand more independent and to put
more of decision making in thehands of the practice owner.
this is a fascinating topic forme to, to hear about and to
learn about, and hopefully forthe listener to learn more about
as well.
any final thoughts, Dr.
Fleming, as we, as we wrap uphere.
Chad (32:55):
I think I'm going back to my main point that as I talk
through all of this, the onething I want a listener to take
home is be curious and keepasking and keep looking for what
options are out there because Ithink too many times a sales rep
(33:16):
or a vendor or somebody comes inand gives you the company line
and we trust that, but we needto trust, but verify.
It's an old Reagan thing wayback when you trust, but verify.
And I think that there's notenough questions being asked.
We get part, we get a part of,say a buying group, and we
(33:36):
assume that that buying group isgetting, getting us all the best
options that are out there.
And.
I just, I say, just keep beingcurious.
Meaning you ask the questions,you make connections, you find
people you can trust who arerunning practices and don't have
(33:58):
their wagons hitched tosomebody.
I think that's the biggest thingin my first question is where's
your wagon hitched?
So are you a part of some, someorganization, some buying group
and you're paying more in costof goods to be a part of that
group?
than what you could be doingoutside of that group.
(34:19):
And to me, that's like thecountry club down the street.
I'm paying way more for golfthan I should be paying for.
So I can say I'm a member ofthat country club.
Evon (34:28):
Gotcha.
Well, I, I appreciate that.
speaking of practice owners thatyou can trust, Dr.
Fleming, where can people findand follow and learn more about
what you're doing?
Chad (34:39):
Well, that's a good assumption that they can trust
me on this, this short thing,but I would be more than happy
to, discuss, you can find me at,Chad.
at pipgpo.
com.
just send me an email.
I would love to, talk to you.
I get involved in a good amountof, coaching and consulting to
(35:00):
help my colleagues out.
so yeah,
Evon (35:04):
Sounds great.
I will put all of that contactinformation and any of the
things and links and resourceswe talked about.
In the show notes, and Chad, Ireally appreciate your time or
as always, it's been great totalk with you again, for the
listener, appreciate your timeand listening today, we will
catch you all on the nextepisode in the meantime.
Take care.
Hey, everybody.
Welcome back to the OptometryMoney Podcast where we're
helping ODs all over the countrymake better and better decisions
around their money, theircareers, and their practices.
I am your host, Evon Mendrin,Certified Financial Planner(TM)
practitioner, and owner ofOptometry Wealth Advisors, an
independent financial planningfirm.
Just for optometristsnationwide.
(00:26):
And thank you so much forlistening.
Really appreciate it.
On today's episode.
I welcome back to the podcast,Dr.
Chad Fleming.
And we talk about the benefitsof adding private label products
financially to the practice.
For your patients.
We talked about how a practiceowner can select or create a
private label line.
(00:47):
And red flags to avoid whendoing so and so much more.
And if you have any questions,you can reach out to us here at
podcast@optometrywealth.Com.
I will throw all of Dr.
Fleming's contact informationand all the other links and
resources mentioned here in theshow notes, which you can find
at the education hub at mywebsite,
(01:07):
www.optometrywealth.Com.
And while you're there, checkout all of the other resources,
articles, podcasts, episodeswe've done.
And if you're curious about whatit's like to work with Optometry
Wealth Advisors, to help younavigate all of the most
important financial decisionsyou're thinking about from
cashflow and debt tax planningand investment planning, and so
(01:27):
much more.
Feel free to schedule a nocommitment introductory call.
And we can talk about what's onyour mind financially.
And how we help optometristnavigate that nationwide.
And without further ado here ismy conversation with Dr.
Chad And welcome back to theOptometry Money Podcast.
(01:47):
I am your host, Evon Mendrin,and I am excited to welcome back
onto the podcast, Dr.
Chad Fleming.
Dr.
Fleming, thank you so much forcoming back on.
Chad (01:56):
Evon, thank you for inviting me and, I look forward
to hanging out and chatting withyou today.
Evon (02:02):
Yeah, I'm excited to talk about something that you and I
had brought up in ourconversations, which is
implementing private labelproducts within the optometry
practice.
And as I thought about it, sortof preparing for this
conversation, The more I realizethat private label products are
everywhere.
(02:22):
You know, if we go to Costco,they've got Kirkland's brand.
If we go to Amazon, they've gotAmazon Basics.
If we go to Trader Joe's, we seeit in clothing.
I mean, we see these privatelabel brands sort of all over
the place in retail and, oftenat less expensive prices.
and and still often not veryhigh quality related, you know,
(02:45):
relative to other brands.
So we, we see this sort ofprivate label use of.
of products all over the placein our lives.
And, it, it would be interestingfor me to hear how that's best
implemented within optometry.
And as you think about privatelabel, like what, what does that
even mean in an optometrypractice?
Chad (03:07):
Well, Evon, I think when you think of private label,
different people think of it indifferent ways.
Some people will think it's lessquality.
Some people will think that it'ssubpar performance.
I think that private label, justlike you mentioned, Kirkland's,
for example, with Costco, Imean, their stuff is, their
(03:28):
stuff is good.
I think it's, you know, it'srepackaged with a private label,
name on it.
And sometimes it's themanufacturing of that by the
companies that makes it lessexpensive.
I know in the contact lensspace, for example, a lot of, my
colleagues may not understandthis, but if they go online, you
(03:48):
can look up, the different,distributors, say a Costco, say
a Sam's, and you can see thatsome of our name brand, big
contact lens, mainstream lensesare the exact lenses rebranded
under a Costco name or under aKirkland's name or something
like that.
And so what happens is, is that,I think a lot of times
(04:13):
manufacturers get a play on bothsides of the coin and name
brand.
There's a reason that peoplehave name brands.
So for instance, you think ofthe name brand, Lululemon, and
what do people notice withLululemon is they have a, a
little spot or a little insigniathat says, Oh, those are
(04:34):
lululemons.
So not only are they goodquality, but there's a status
symbol associated with it.
Well, when you deal with framesand ophthalmic lenses, the
status symbol, there's, thecommon person cannot tell, and a
lot of times even the trainedprofessional can look at a set
of lenses with the naked eye andthey can't tell who makes these
(04:58):
lenses.
You have to get under highmagnification, certain lighting,
to see the laser etchings in thelens, to then understand, Oh,
this lens is made by so and so.
And so, what you really look forin private label is performance,
and then, unfortunately, forevery action, there's a
reaction.
(05:19):
And so, Managed Care has beenthe action, they have been
calling the shots, calling theshots as far as our
reimbursements, as far as whatlenses we might be able to use,
may not be able to use, and sothe reaction is, is that we
still have to run a business anda company that's profitable, so
we have to look into whatoptions do we have, performance
(05:41):
wise, for the patient, becauseyou want to give the patient a
great product, but I need to beable to pay less for it.
And the, you know, it's aprivate label just across the
board is a less expensiveoption, even if it's the same
lens with a different, brandingor no branding on it.
Evon (06:03):
And why is that the case that for a practice to purchase
these?
private label products to thenprovide to the, to the patients.
Why is it at a less expensivecost?
I would imagine part of that isbecause there's no marketing
costs for the manufacturer topromote the brand.
so it, it, it, avoids the costof having to market and package
(06:24):
those products, from yourperspective why, why is it the
case that those are lessexpensive for, for the practice
owner?
Chad (06:31):
Well, for the practice owner, they're less expensive
because you don't have frontend, whether it's sales reps or
whether it's marketing orwhether it's there's cost of
there's overhead costs of namebrand.
Okay.
Stuff.
And when you take those overheadcosts away, you're removing a
(06:52):
10, 20%, level of cost that thencan be passed on to the, to
someone like myself, an owner,and I can get like performing
lenses, coatings, and, andadditional things to the lenses
for at a fraction of the cost.
Evon (07:10):
Gotcha.
Okay.
Which then you can, you canimprove the margins on the
products while still maintainingall that same quality that
you're expecting in the productsyou're providing the patients.
Chad (07:20):
Yeah, so for instance, if I'm paying a, I'm paying 60, my
cost for an anti glare coating,a top end anti glare coating,
and I pay another one 25 or 30and performance wise, they both
(07:40):
have a one year warranty onthem.
They both perform at the samelevel under usual and customary
wearing and tearing.
yeah, and patients see out ofthem the same.
It's hard for me as a consumerwho does buy private label
stuff.
You know, it's hard for me tojustify at times, unless there's
(08:03):
performance issues, and you canshow me performance issues, why
do I need to go with the namebrand?
Especially if I don't have abig, huge, round Mercedes
insignia on the front of my car.
And you can't, and, and youcouldn't identify it.
We're caught up in the Americanway that there's a status
(08:24):
symbol.
And so when you're dealing witha product that does not have a
status symbol on it, think ofall of your shoes that you wore
were all plain and you couldn'ttell one Nike from, Adidas from
Puma, whatever.
They were all exactly the samebecause there was no
identification of the brand.
(08:44):
What would you buy?
Evon (08:46):
Whatever was the less expensive for the same highest
quality that you can get.
Chad (08:50):
Yeah, well, if you tried all
Evon (08:51):
for the biggest bank for the buck.
Yeah.
Chad (08:54):
if you tried all three of them on, they all had similar
warranties and comfort level.
Which one are you going to buy?
You're going to buy the onethat's like, Oh, well, I'll buy
this one at 20, instead of theone at a hundred dollars,
because nobody is going to evenknow which ones they are.
And if we all, if you look, ifyou're self aware and truly
understand what goes on in themarketing world, the, American
(09:17):
economy would not be driven ifwe were not so status oriented,
because there's a lot ofproducts that we're marketed to,
and so we pay for that extradollars because it's got
something stamped on it.
So if you can't see that stampor understand that, then that
(09:38):
value, that separation in valueis lost.
Because then it's like, well,nobody's going to know, so why
am I going to pay the higherprice?
If it's equal, if there'squality equivalence,
Evon (09:50):
All things being equal.
Right, right, right.
Or roughly equal, I guess.
have you seen within your ownexperience that certain
percentage of patients are sortof really brand sensitive,
versus certain percentages arenot like as is there a subset of
patients that really do careabout, you know, a larger brand,
(10:11):
even if the quality is the same.
Chad (10:14):
the only brand that I have seen people come in in the last
10 years asking for from anophthalmic lens space is
Transitions.
Evon (10:28):
Yeah.
Chad (10:28):
Other than that, and that's the photochromics that
change when you go outside, theyget darker, go inside, they get
lighter.
Other than that, frame brands, Iwill say people come in and they
request an Oakley or theyrequest a Ray Ban.
this generation, the millennialgeneration, Gen Y, Not so much.
(10:49):
Gen X and older, they're morebrand specific with some of
that, but the youngergeneration, what we're seeing is
they're more interested in the,social aspect of the brand than
they are about the, You know,does it have to have Nike on it?
Does it have to have a certaininsignia on it?
That's less important.
(11:10):
And we've, we've proven that inour practice.
And I know hundreds of practicesthroughout the U.
S.
that have proven that thatbrand, the look and feel of that
brand, is much more importantthan the brand is for what I
would say a higher percentage ofpeople.
Now, a lot of colleagues likemyself, I think, this is my
(11:32):
opinion, are more caught upthemselves in what they are
doing.
are selling or have in theirretail than what is actually
selling.
Cause there's too manysuccessful practices that are
taking a route of, we don't haveto have the most recognized
(11:53):
brands.
I mean, look at like a WarbyParker that came in and have
done very good at creating theirown brand.
They're not Oakley, they're notRay Ban, they're not, you know,
anything else.
They created their own brand.
People like it because of theway it looks and it's Warby.
So, I think a lot of it has todo with, I mean, I can't take
(12:16):
away from that.
There's obviously statisticsthat will say that branding is
extremely important.
I just think that you can bevery successful a less branded
space.
And there's more margins tobattle the managed vision care
(12:38):
plans.
Evon (12:40):
Gotcha.
Gotcha.
And to contrast, for practicesthat have historically not used
private label and are using thelarger brands, what has
traditionally, at least fromyour perspective, gone into the
buying decision of which framesand lenses to have in the
practice and to, and to buildthe inventory?
Chad (13:04):
Traditionally, or the old model of doing it is, you have,
Willie Lomac, the door to doorsalesman that comes in with,
frame allotments, and they setthem down, and you have one of
your opticians that you pay to,You know, look at 15 different
reps that come in that week,spend an hour with each rep,
(13:26):
looking at the frames, pickingwhat they think's going to sell.
So it's very subjective inwhat's picked.
and they basically get a shopwith the owner's money, put the
frames out on the board.
what sells, sells.
They take them off the board,send them in, and then they wait
for the next rep to come in andthey order their next pile of
(13:48):
frames.
And so you get this ebb and flowbased on your optician getting
to shop, whichever rep comes innext or whichever rep that
they've been working with.
you get to do that.
That has been the old model ofdoing things, which is an
expensive model.
And so that's been true.
(14:09):
And some of those sales repswill have statistics of hey,
what's selling, what's notselling in your practice
regionally.
and so they'll pick and choose.
What's interesting is the largercorporations, and now private
equity, they have it down to ascience and they are much more
well versed in retail andunderstand what sells, how to
(14:33):
stock it and how to do it in away that doesn't require so much
heavy lifting by your staffmembers.
And so, We pay too much asprivate practice owners.
We pay too much of our stafftime to sit and do it the old
model.
That's, that's what I've seen.
(14:53):
progressing from being a buyerat an optical place prior to
optometry school to watching mywife who was, worked for a frame
company for 10 years to thendoing what we're doing today in
just making things moreefficient.
Evon (15:08):
are there certain practices or are there practices
with certain patientdemographics that should, that
are a better fit for a privatelabel product frame or lens than
others?
You know, are there certainpractices where they really
should be evaluating this?
more quickly than others.
Chad (15:27):
All practices should have a private label unless you are a
boutique and people are comingin, then you could still
consider it because evenboutique places have a private
label.
But if you are a, you know,you're a high end watch seller,
most likely you're going to haveRolex, Omega, you're going to
(15:49):
have those high end and that'swhat you're going to have.
Anybody else in the ophthalmicspace, private label should
compliment what they're doing.
Where the mistake is made ispeople have failed at private
label because they've gone toChina, or they've gone and gate,
they've gone and got cheaplabel.
I'm not talking cheap label.
(16:11):
I'm talking private label,meaning the performance is still
on par with other products thatyou have.
And there's no, I wouldn'trecommend to anybody that they
just have private label.
And none of your, none of theexamples that we have out there
that are successful just haveprivate label.
It's a mixture, it's anoffering, it's a way to balance
(16:34):
out profits, be able to becompetitive with the Warby
Parkers, the Costco, the Sams,So, so it's a part of the
strategy of being successful inthe optical, because I hear too
many times, colleagues who havepractices with opticals are
saying, you know, you just can'tmake money anymore in the
optical.
(16:54):
We just do it as a service.
And I respectfully andwholeheartedly disagree.
Evon (17:00):
Interesting.
That's, it, the optical seems tobe a huge driving or a huge
revenue driver in most practicesI come across.
So that's a fascinating, way tolook at that.
Chad (17:11):
it's a revenue driver, Evon, it's a revenue driver, but
is it a high, highly profitable,high margin place?
Evon (17:20):
Yes.
Good.
Good distinction.
Yes.
That's, that's a good point.
it's driving revenue, but is itdriving.
Profitability is the rightquestion.
Chad (17:30):
Profitability, correct?
Evon (17:32):
Yeah.
And with cost, I mean, cost ofgoods sold, inventory being one
of the major line items in anypractices, profit and loss that
has an optical, So it's a majorpart of a profit and loss from
an expense or an investmentstandpoint.
So anything you can do toimprove the margins on the
inventory you're purchasing, thebetter off it will be.
(17:54):
So that goes to the nextquestion though, and how does a
practice select or create aprivate label?
And I'm going to quickly show myignorance here of not knowing
how this world operates.
Like how, How does a practice goabout doing that?
Chad (18:11):
Well, there's a couple different ways.
What's interesting is thisprivate label has been around
for quite some time.
It used to be that you had to bea part of the buying group and
everybody that has been part ofdifferent buying groups knows
what has happened in the past inregards to the buying group will
have their own private labelthat they've arranged with a
(18:33):
particular manufacturer who willcome out and create something
specifically for that buyinggroup that is, you know, at a
reduced fee because it doesn'thave that name on it.
So the, it's been availablewithin buying groups.
If you ask the right questions,and that's a lot of times what I
(18:54):
run into is that my colleaguesdon't ask the right questions
and they listen to the sales repsays, Oh, you don't want that.
Yeah, we do have that.
But, that's probably not goingto be the best option for you.
Well, I would say there's aconflict of interest there
because why then are the largegroups needing to have the
(19:16):
private label because they knowthat the conflict of interest
is, is yes, we understand thatthe name brand stuff has, has
margins built in and performancethat can pay for the marketing
and for the sales reps and foreverybody on the front end.
(19:36):
So you don't get, you reallyhave to dig for the private
label.
So most of the times you canfind it in a buying group.
You can also find it amongstyour lens manufacturers and
There's various labs that havedone a good job of making a
private label available.
The biggest thing is gettingyour hands on it, testing it
(19:58):
out, seeing performance, seeingquality, and making sure that
you are getting something thatyou want to represent in your
practice and not just a lowbudget option that just doesn't
have a brand name performancenext to it.
Does that make sense?
Did that make
Evon (20:17):
that makes, makes sense.
And I was looking through anarticle from 2002, in Review of
Optometry titled, Can PrivateLabel Save Private Practice?
So certainly this has been a, atopic that's been discussed.
It's been around for at least 20years.
And, and are there any redflags, things to avoid if, if a
(20:40):
practice is going to amanufacturer or, or even within
the buying groups of, figuringout whether or which of these
private label products to use?
Chad (20:50):
I think you avoid taking it at face value of what is
equivalent product because themanufacturers will tell you,
well, there's not a privatelabel that can match up to our
particular lenses.
And with the private label,others will say it's the same
(21:10):
performance.
There's no differences with it.
you need to test the theory.
I think what's fair in testingis it comes down to performance.
You test it out on variousdifferent prescriptions.
You test it out on people whohave more, maybe high cylinder,
maybe, engineer, high myope,high hyperope, high plus.
(21:34):
just various things like that.
You test that out on patientsand see how it does perform, and
you'll find that there's, youknow, performance is really the,
the bottom line.
And then on the, on the scratchcoatings, figuring that out, you
just, you have to, Look at them,look at the, how the,
(21:54):
Cosmetically, what do they looklike?
Because there's some, there'ssome high end stuff that
cosmetically the coatings look,don't look that good.
And there's private label stuffthat actually the coatings do
look better, in regards tocolor, in regards to reflection,
in regards to just overallperformance.
so yeah, you've got to test itout.
I think that's where it'simportant to have an open mind
(22:19):
to, and be always be curiouswhen you're in business and
you're running your business isdon't assume that what you're
currently doing is the bestoption.
It might be the best option, butI see a lot of people also like,
Hey, we're good.
You know, we, ours is the best.
and I've found many times, evenamongst myself and amongst, good
(22:42):
friends of mine who have saidthey've got the best, got the
best deal, got the best privatelabel or got the best, no, we do
the brand name and we just gotreally good pricing on it.
And then later they testsomething out and feel like, oh,
wow.
Why didn't I, why didn't I knowabout this?
And most people stopped beingcurious.
(23:03):
So even though I'm sitting hereon this podcast telling you,
Hey, I, I think I've got thisfigured out.
I'm always testing myhypothesis.
I'm always testing to see, isthis the best?
And that goes back to, you know,yearly reviews, quarterly
reviews is what we're doing thebest for the patient.
Are they still getting topperforming product?
And the prices that we'repaying, is it still something
(23:25):
that, is helping us to beprofitable?
Evon (23:28):
Yeah.
And in, in terms of, you know,the, the importance of testing
the product, but then there'sthe commitment.
And I would imagine there mightbe some hesitation to purchase
for the first time in largequantities, or maybe is, is
there a requirement if, if youare, were operating outside of a
buying group purchase, you know,a certain amount of, of quantity
(23:53):
of volume, how, how does thatwork?
Chad (23:57):
No, not at all.
I could flip tomorrow from whatI'm currently using to something
else.
It's how you set your systems upwithin your organization.
So, for the longest time, we setour level of lenses.
that patients could pick out.
Basic, Premium, Elite.
We set them by branding.
(24:18):
So when we were using a vendor,we would have our basic was
branded this name, our premiumwas branded this name, our elite
was branded this name.
All of our staff then had tolearn all these different brands
and it was a major lift.
And I said, this is ridiculous,because this gives way too much
power to whichever manufacturerI'm currently using and makes it
(24:39):
hard to switch.
Today, we don't.
We don't sell a name brand.
We sell a level, just likeyou'll see in, Managed Vision
Care.
They're set up based on codes.
So we set up Basic, Premium,Elite.
The doctors will come out, theywill recommend a level of
(25:00):
progressive lens or singlevision lens based on the
patient's prescription, based onthe patient's needs, based on
the patient's need forperformance.
And they'll either fit the Basiccategory, the premium category
or the elite category.
Once that happens, there is nota The education between the
optician and the patient is doneabout what separates the
(25:23):
different levels.
So at an elite level, you getindividualized and customized.
So those are two key features ofa higher level, higher
performing lens.
So they get educated on this.
That's what they're paying for.
So it's basically, you're goingto the car lot and you are
deciding that I'm going to havea Mercedes, a BMW, or a Porsche.
(25:48):
And they're not going to pick itbased on the brand names because
patients don't know theophthalmic lenses by the brand
name.
So then what we're going to doon the back end is we've
centralized the ordering.
The person that does all of ourordering will come in there and
say, hey, it's an elite lens.
We need to just give them eliteproduct that falls in categories
(26:10):
that's elite.
And Managed Vision Care, VSP,IMED, whatever it is, you have
different categories based onperformance.
So we will sell an elitecategory.
No, we have no issues.
There's nothing because that's,they are getting what we are
selling them.
But do you see the, do you seewhy that is critical to giving
(26:31):
me the freedom and flexibilityto pivot?
When I need to, because whatI've seen is manufacturers of
these lenses will have priceincreases and it's so hard for
us to pivot when we're heavilyinvested in a particular brand
or even private label that wecan't pivot.
(26:52):
And so when you can't pivot, youcan lose profitability
overnight.
Evon (26:57):
Yeah.
That's an interesting framing,no pun intended, of the, of the
way you, you structure that.
Cause you're, you're structuringyour offerings to patients based
on, you know, good, better,best, or, or base, you know,
better elite, however you'd wantto describe that.
(27:18):
but you're not attaching it tolike, You know, good, better,
best brand.
It's good, better, best qualityor features.
And you are deciding whichframes, lenses, whatever it may
be, fits within those tiers.
You're the one deciding thatyou're not sort of beholden to a
particular brand to fill thatcategory, or you're not
(27:38):
attaching the qualities to aparticular brand.
Chad (27:42):
no, don't, don't necessarily need to.
if somebody comes in requestinga brand.
Which I don't know in 20 years,30 years, because I was in the
optical before I was inoptometry school.
I don't, maybe a handful oftimes somebody's actually got,
(28:04):
picked a brand of ophthalmiclens, like, I gotta have this
brand.
It's just not a, that, that'swhy to me, I, I, you got to sell
a good product.
I, and, and here's the danger inthis is that you could take
advantage of patients thismanner, so you have to have
(28:24):
integrity in the sense that youare selling them what you say
you're selling them because youcould swap them out something
different, but that's, I wouldconsider that as being dishonest
and wouldn't do that.
Evon (28:40):
right.
Right.
Yeah.
And, so all that being said, Imean, ultimately this is a
podcast about money to, to anextent.
And, all of this business stuffrelates pretty directly to, to
the, the optometrist money interms of the revenue and profit.
The, the optometrist is earningthe ability to pay associate
(29:01):
doctors.
If you have associate doctors.
And the ability to do all thethings that you want to do in
life, because your business isprospering.
So, thank you.
How have you seen that privatelabel products have positively
impacted the practices you'reworking with?
And we've talked a lot aboutthat already in terms of the
(29:21):
cost to purchase and the qualityand the margins, but, let, let's
just focus more in on itdirectly.
How have you seen the, the,what, what benefits.
Have you seen with using privatelabel products?
Chad (29:33):
Happy Patients.
So I've not seen a difference inpatients and happy doctors
because I know that what we paypercentage of production is in
the top 90th percentile, basedon percentages, because we
still, have a category over 20%.
(29:57):
of revenue.
And if you look into that moreof the averages of what doctors
are paid, paid on a productionbasis is 15 to 18%.
I would say that's right in theaverage rain.
I've heard as low as 9 percenton the West Coast.
but when, when we're able topay, in fact, we looked at one
time, we looked at privateequity and I'm always intrigued
(30:19):
with what's going on.
So I went down that rabbit holeto just see what was out there.
And our EBITDA was not as goodas it could be because, and they
told us, you pay your doctorstoo much.
We would have to come in and wewould have to ratchet down what
you pay the doctors in order forit to get, in the area that, you
(30:40):
know, for it to be the multiplethat would make sense.
And I knew at the time, cause wewere paying all of our, we were
paying doctors, over 20%, all ofthem, of revenue.
Since then we've, we've adjustedsome, but my point being is our
cost of goods runs right around20%, at times less than that.
(31:01):
That is about six to 7 percentlower than what is considered
Good.
And so when you run cost ofgoods at that range, you have a
bottom line that, yeah, youcould take it all home as the
owner, but I would rather havegood people and attract the best
with the money that we're ableto pay.
(31:24):
because number one, I hateturnover at doctors.
The number one person I don'twant to turn over is doctors.
Number two is managers andhigher level people within my
organization.
Okay.
So if I can keep them, and weall know that inflation is going
through the roof, we all knowpaying people is more and more
difficult, you gotta find waysto generate more bottom line
(31:46):
income.
And that's how we've, that'sbeen part of our, strategy.
Evon (31:52):
I mean, even if you look at like a, just sort of randomly
choosing a 1 million gross,gross revenue practice, even if
you are letting 3 percent ofthat drop down to the profit,
that's 30, 000.
to the practice owner, right?
You're, if you're able to makelarge improvements in cost of
(32:12):
goods and just keep portions ofthose improvements, percentages
of those improvements, that canadd up to quite a bit over time.
so that's pretty fascinating.
I, I appreciate you goingthrough all of this with me as
I'm, I'm learning, in real timehere and I'm always fascinated
about this, this constant effortto.
(32:33):
to make private practices moreand more independent and to put
more of decision making in thehands of the practice owner.
this is a fascinating topic forme to, to hear about and to
learn about, and hopefully forthe listener to learn more about
as well.
any final thoughts, Dr.
Fleming, as we, as we wrap uphere.
Chad (32:55):
I think I'm going back to my main point that as I talk
through all of this, the onething I want a listener to take
home is be curious and keepasking and keep looking for what
options are out there because Ithink too many times a sales rep
(33:16):
or a vendor or somebody comes inand gives you the company line
and we trust that, but we needto trust, but verify.
It's an old Reagan thing wayback when you trust, but verify.
And I think that there's notenough questions being asked.
We get part, we get a part of,say a buying group, and we
(33:36):
assume that that buying group isgetting, getting us all the best
options that are out there.
And.
I just, I say, just keep beingcurious.
Meaning you ask the questions,you make connections, you find
people you can trust who arerunning practices and don't have
(33:58):
their wagons hitched tosomebody.
I think that's the biggest thingin my first question is where's
your wagon hitched?
So are you a part of some, someorganization, some buying group
and you're paying more in costof goods to be a part of that
group?
than what you could be doingoutside of that group.
(34:19):
And to me, that's like thecountry club down the street.
I'm paying way more for golfthan I should be paying for.
So I can say I'm a member ofthat country club.
Evon (34:28):
Gotcha.
Well, I, I appreciate that.
speaking of practice owners thatyou can trust, Dr.
Fleming, where can people findand follow and learn more about
what you're doing?
Chad (34:39):
Well, that's a good assumption that they can trust
me on this, this short thing,but I would be more than happy
to, discuss, you can find me at,Chad.
at pipgpo.
com.
just send me an email.
I would love to, talk to you.
I get involved in a good amountof, coaching and consulting to
(35:00):
help my colleagues out.
so yeah,
Evon (35:04):
Sounds great.
I will put all of that contactinformation and any of the
things and links and resourceswe talked about.
In the show notes, and Chad, Ireally appreciate your time or
as always, it's been great totalk with you again, for the
listener, appreciate your timeand listening today, we will
catch you all on the nextepisode in the meantime.
Take care.
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