Eye Care International, Inc. (EYCI)
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Eye Care International - the largest discount vision network in the United States and the only discount vision network that combines both optometrists and ophthalmologists in a discount model
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In a significant number of the projects delineated
above Mr. Marcus was either the creator of the original concepts or founder for the
Compensation and Benefits Management, guest Columnist Presenteeism, A Clear View of a Growing Problem, Winter 2001
Human Capital, Presenteeism Outweighs Absenteeism, May/June 2001
Employee Benefit News, Vision Benefits Aid Attack On Presenteeism, December 2000
Ocular Surgery News, Practitioner Survey Targets Ocular Conditions of Baby Boomers, October 15, 2000
ESN Magazine, Out of Focus, September 2000
Benefits and Compensation Solutions, Beating Computer Vision Syndrome, March 1999
Human Resource Professional, How To Select A Vision Plan, January/February 1999
Benefits and Compensation Solutions, New Developments in Vision Care, November 1998
Managed Care Week, New Insight Into Vision Benefits: An Employers Tool To Reduce Costs In A High-Tech Society, August 17, 1998
Managing Employee Health Benefits, Evaluating a Vision Plan the Right Way, Summer
CEOCFOinterviews: Mr. Marcus, will you tell us about the vision for Eye Care when it began and where you are today?
Mr. Marcus: We
started around 1994; the concept was rather simple in that the population was getting
older and people were living longer. You have demographically 50% of the population over
40, which is the time presbyopia sets in. It was clear to us, that if we all live long
enough, we are all going to need cataract surgery at some point and health insurance was
not going to ultimately be the vehicle that would carry that load. We assumed, and
correctly so, that eyecare and eyewear would be a much-sought after discount model. At
that point in time in 1994, you had the emergence of some discount eye wear programs out
there, whereby you could get discounts on your eyewear, anything ranging from 20-50%. That
was from a retail price point; nobody was doing discount eye care with ophthalmologists.
At that time there were only about 17,500 board certified and board eligible
ophthalmologists servicing the entire U.S. population.
CEOCFOinterviews: Who is using your services?
Mr. Marcus: Part of our model is to be privately labeled although we have retail accounts. For example, Macys East, which has 101 stores, plus they have expanded into Burdines. We have all of Macys at a retail level. However, that is not the basic model for ECI; the basic model is to be wholesale and privately labeled within other peoples healthcare plans. For example, there is an entity called Motivano, it is a large-scale concierge service that includes a healthcare plan; if you were to get a Motivano healthcare plan, you would automatically have the ECI plan. We have contracts with the Pennsylvania State Chamber of Commerce Insurance Company; we are automatically included in their healthcare plan. These are the types of accounts we have, so you dont necessarily see the ECI name. Sometimes you may not even see our logo on our accounts health care card. In those cases, we simply might send out a letter to all of our providers nationwide and say this card is equivalent to an ECI brand.
CEOCFOinterviews: What is your revenue model?
Mr. Marcus: Every time you get an ECI program exam, from the retail level or the wholesale model, you get one free eye exam annually per family membership. If you look at the demographics, the significance of that is extraordinary. For workers comp claims, it is amazing because you make sure every employee has good vision. For children, you have 25-35% of all children in the United States that need corrective eyewear at the first grade level. You have states passing laws saying make sure your children get an eye exam before the first grade; Kentucky is one of them. We are working with states that see that that happens on a statewide level. The free eye exam is as significant as is the ability to get 20-25% discounts on elective surgeries, and we are paid by our accounts such as Protective Life Corporation (NYSE: PL), Motivano, etc., for the right to include our plan automatically in theirs as a core product.
CEOCFOinterviews: What is your relationship with the physicians?
Mr. Marcus: They get benefits as well. Managed care is difficult for physicians sometimes in that there could be a long waiting period between the time they perform service and the time they are paid. In some cases it could be as much as 180 days, depending upon the carrier. That means a physicians office can be extraordinarily busy and they can go out of business by not being able to pay their help. With the ECI program, they get paid at the time of service, so if you were to show up and want laser surgery, you would pay for that at the time of service, and if you had cataract surgery, you would also pay at the time of service. For example, cataract surgery might run $2,500.00 and Medicare might only allow the doctor a thousand dollars, so as a non-Medicare eligible ECI participant, you would only pay $800.00. If you also have a medical plan that covers cataract surgery, you would then take your receipt and send it into the carrier, and get reimbursed 80%. That results in a savings of roughly 73%. The doctor meanwhile, has been paid at the point of service, so the doctors like that situation because it helps them pay their bills. There are other benefits, such as being able to purchase, at large discounts, products they need to service their patients. As a provider of ECI, we have arrangements with certain manufacturers that allow small offices - be they MDs or optometrists - to purchase everything,such as lenses and sundry products, as if they were a large chain store. They will get the benefit of our effective buying power even though we dont buy for them but they buy through us and save a lot of money.
CEOCFOinterviews: There seems to be a steady stream of new contracts for Eye Care. As you build up this volume, does it get easier to attract new partners?
Mr. Marcus: People will call us; we have a number of large contracts that have been signed with huge groups with a million people at a clip. We wouldnt release their name without their permission, but yes it does get easier because more people that are the carriers are realizing that if their competition happens to have the ECI plan, that includes ophthalmology, then they had better get that as well, or they may be left out in the cold.
CEOCFOinterviews: Is normal ophthalmology covered by most medical insurance?
Mr. Marcus: It might be, if you had cataract surgery you would probably have a policy that would cover it, but it would probably on an 80/20 co-pay, where you are paying 20% of what the doctors charge. The doctors charge would invariably be higher than the fee you would pay if you were an ECI member. You still have the ability to take that receipt and mail it into your carrier and be reimbursed 80%. For example, with cataract surgery you may wind up paying only 20% of $800 rather than 20% of $1,500. It is a very serious savings."
CEOCFOinterviews: You recently had a round of financing; what are you going to do with the money?
Mr. Marcus: There is a need to expand the infrastructure. When the infrastructure is expanded, the lower our costs become. We are almost exclusively electronic at this point, except for two things; customer service and account executives that interface between us, and the larger accounts. The infrastructure is necessary to be enhanced so that the customer gets totally automated processing. It is the enlargement of the infrastructure of the customer service department that will allow us to better service the accounts.
CEOCFOinterviews: What are the barriers to entry for someone trying to duplicate your success?
Mr. Marcus: Other than the fact that it took an extremely long time to build the ophthalmology network and other companies have tried to build their own ophthalmology network, and spent millions of dollars and failed; the main reason why it doesnt make sense for a competitor to jump into our market space is that we are inexpensive enough so that it doesnt pay for them to spend millions of dollars to duplicate what we already have and will make available to them. Our contracts are exclusive with the ophthalmologists, but that is not the main inhibitor, which is the fact that we are there and we built it. If you were a major healthcare provider, you could gain the right to access and utilize that network, which is in place for essentially a very small dollar amount and enhance your program dramatically without running trial and error risks of putting millions of dollars behind the development of a program, and failing. It is in place, it exists, and it is inexpensive enough to access.
CEOCFOinterviews: What were you able to find out early on that enabled you to do this?
Mr. Marcus: I think it was a combination of people in our organization, people like ophthalmologists, optometrists and people who have a good sense of what it would take for the ophthalmologists to work in co-marriage situation with optometric providers and vice versa. We were able to contract and deal with some of the leaders in both disciplines, and both disciplines can interface and they do so happily the way we have structured it. I think that we were able to put the right people together that understood the marketplace and disciplines, and they were able to help.
CEOCFOinterviews: Are there any pieces that you would like to add to your services?
Mr. Marcus: There
was one that I am not at liberty to speak about. There are eleven states that have pending
laws in dealing with getting childrens eyes checked before the first grade. There is
some technology out there that we are very familiar with, that we would like to acquire
and make available at a wholesale basis to our provider locations, of which there are
14,000 throughout the United States. I think we are looking at acquiring some additional
technology in the technical field that would benefit not only our providers, and ECI, but
also the public at large because the technology is good, it can be made very affordable
and it would accomplish a lot of good on a national scope. There are other things we are
looking at and we now find ourselves in the position to accomplish that.
Employers generally take out healthcare for their employees because they believe the
employees want and need healthcare as a requirement for continued employment and it is a
very competitive market. We have built into the system, one free eye exam annually. We are
focusing on an aspect of the workplace where you want preventative medicines and you want
to develop a healthy workplace; if one just looks at one eye exam per year per employee,
what you find are a number of diseases that are found during an eye exam. For example, the
first sign of diabetes is discoverable through the eyes it is called the Brownian
Movement.. One out of twenty employees are known to be diabetic.
CEOCFOinterviews: What do you do to get them to understand that concept?
Mr. Marcus: We educate the sales people at our larger accounts and some healthcare programs, and we trust that they will get the message out to their corporate accounts. We do lectures and write articles, but I think it is more in the nature of the sales people from our larger accounts that sell healthcare plans, annually advising their accounts that it would be wise for every employer to make sure every employee gets one eye exam.
CEOCFOinterviews: I guess most employers have never thought of it that way!
Mr. Marcus: The reason is that they are so used to painfully paying out premiums for healthcare insurance, that they havent thought of the benefits themselves. Providing an employee with a vision benefit is nice for the employee, its great for the employer, it is also great for the employees family if you discover that mom or dad is turning diabetic and you pick it up early through an eye exam. That is great, but it is also terrific for the employer to realize what is happening in the workplace. Computer vision syndrome; no one is paying attention to how often someone pushes back from their computer screen because their eyes are getting dry and burning; there are things you can do to stop that. The employer is going to figure it out eventually because he is losing time and money. A salesperson that is on top of the situation will point it out; it isnt that we dont want to, it is just that we dont have an official way to do that."
CEOCFOinterviews: Your program seems to encourage preventative medicine?
Mr. Marcus: You can literally eradicate completely 50% of all adult blindness if you got every child to an eye care professional by age six. We encourage parents of young children that seem to be totally unaware of that; they can use the free eye exam for their children and then the following year for themselves. Further, that is one of the reasons we have built into the system, one free eye exam annually. It is our hope that maybe one of the publications directed towards parents with young children will run some articles on this issue, to enlighten parents about that. The free eye exam is not only good for the workplace but it is good all across America because you have kids out there that are about to go blind in at least one eye and that blindness would have been preventable up to age six. If we get any message out that is the message I would like to impart; it may not be good for business, but it may enlighten the people I am talking to, to get their children to an eye doctor. I was speaking before one large group of sales people on this subject and the president of the company was sitting in the back and from the back I heard I am one of those people. We were all stunned because it is not apparent when you look at somebody that they may be blind in one eye. This particular person is blind in one eye, and if this persons parents had gotten him to an eye doctor it probably could have been prevented. Parents just dont know.
CEOCFOinterviews: Why should potential investors be interested and what should they realize that perhaps they dont see when they first look at the company?
Mr. Marcus: In the risk situation, and there is a risk in everything we do as investors always, but I think we have minimized the risk in the sense that the network is built, distribution contracts are signed, and the technologies that we need is in place. I think it is a relatively lower risk that one would experience than if they were looking at a start-up company. It took a long time to amass the kind of provider panel that we did, put certain pieces in place such as a free eye exam and arrange for distribution of our product (the Plan). From an investor point of view, given that there is always a risk, I think in this instance, the demographics, the needs of the general population to be serviced, and the fact that Managed Care, I think will ultimately fail in its current model, is the driving force. Lower risk is the key. In this instance, that is how we do it; low risk, lower than normal, high reward and longevity. I dont think an ophthalmology network is likely to be duplicated in the near future, for all the reasons that we talked about.
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