5/30/2019

Financial Disclosures – Joe DeLoach, OD, FAAO

I Have Received Honoraria From or Served as a Consultant for: Chaos in a (Partial Listing)

Changing • • OfficeMate • Essilor of America Over half the state • Alcon Laboratories • Marco • / SNAPP optometric Healthcare World • Carl Zeiss Meditec • TSO • Vision West associations • Optos • NVision • Subtitled: How will you • Diopsys • Kowa • Cleinman Partners • UHCO, RSO, UAB, There are no conflicts or disclosures related to any of celebrate 2020? • PCS • Vision Trends Berkley, and other these groups • AllDocs optometry schools • Konan Joe W. DeLoach, OD, FAAO Practice Compliance Solutions, LLC – President and CEO (no financial interest) Clinical Professor – University of Houston College of Optometry (opinions do not necessarily reflect the views of the Practice Compliance Solutions University)

Let’s start with some Can you join me in a feeling? TRUTH! (rare commodity these days – check out social media!) Isn’t just great to If ODs don’t stop thinking like doctors and start thinking like be an patients and businesspeople, the optometrist? CAN I GET AN next decade is going to be very AMEN! rough on their pocketbook!

HIPAA OBAMACARE, IS MY TRUMPED-UP OSHA HEALTH CARE PRACTICE CARE OR NEXT? ACO CDC REFORM SAFE? MIPS / MAPS

HEALTH CARE 1800 HEALTH CARE EXCHANGES Fear TECHNO CARE TOO MANY, NOT Or ENOUGH ODs? ON LINE EXAMS

VISION PLANS OPHTHALMOLOGY Opportunity INTRUSION MEDICAL PLAN PARITY You get to choose – will you choose SOCIAL WILL MY EHI KIOSK CARE DISPENSARY GROW AUDITS wisely? MEDIA COBWEBS?

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What Challenges Face Optometry in the Next Decade? • A totally new reimbursement system • A new kind of patient A New World of Health • Increased competition Care Reimbursement • Optometry (really?) • Tele / Techno Care

Primary Care as a “loss leader” Encounter Based Payment System

Marketing is marketing. Loss leader Typical glaucoma suspect encounter payment 2018 marketing has always worked – The Initial office visit ($129), follow up visits ($79 x 2), scanning public doesn’t go to particular grocery laser ($45 x 2), visual fields ($83 x 2), gonioscopy ($30), store because bread sale for a buck? pachymetry ($15), ERG ($85) TAKE HOME: Approaching $700 Who is driving the primary care loss leader concept? Glaucoma suspect diagnosis payment circa 2020 • Wellness plans in major medical Fee for managing a glaucoma suspect for one year time frame • The vision plan “race to the bottom” TAKE HOME: $283 • Some companies like ones who think they are “Best”

PQRS, MACRA, MIPS – What it is THIS IS A PROBLEM WHY? REALLY about and where will it go? Who says it is? Not the public • Is the concept of QUALITY measurement rational? Not the health care system • How the Public Will Use This It is CHANGE – plain and simple • Access the “Quality Scores” • 2016 - 17K business information searches PER MINUTE – and what are they finding? YOU DO WHAT ABOUT IT? • How the Payers Will Use This 1. Play the game • Panel inclusion based on WHAT? Let’s look at a totally 2. Be a maverick IRRATIONAL idea that is our future. 3. Advocacy in DC and your state capital – but advocate for WHAT?

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WHO IS YOUR NEW CUSTOMER - excuse me I meant patient E-Patient A New Patient “An individual who is equipped, enabled, empowered and engaged in their health care and their health care decisions” Tom Ferguson, MD

E-patient characteristics that likely apply to us - and you may or may not like! America’s “Climate of Distrust”*  Believes in augmented nutrition  Believes in natural / alternative medicine This is the challenge facing all business due to:  Willing to research to achieve an over-qualified patient status (“care-hacking”)  Proliferation of fake news  Unmet service/product promises Future success will depend on:  Accepts “non-MDiety” interfaces (woo-hoo!)   Corporate / business misdeeds An uncompromising business ethic  Accepts virtual medicine and virtual counseling Attention to consumer desires  Global financial crisis  Desires control over their health care decisions Total transparency  Lack of privacy assurance Contribution to the general good  Desires alternative sources of health care information, services and products * NAVEX Global “Top Trends in 2019”  Values experience and “fun” – ASSUMES quality

THIS IS A PROBLEM WHY? Who says it is? Not the public Not the health care system It is just CHANGE – plain and simple Competition YOU DO WHAT ABOUT IT? Quit thinking like an optometrist Read the book

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COMPETITION Vision plans may be great, but… Vision Monday 2019 Is not a four letter word….it is spelled • There is massive intra-industry competition that will continually drive a VSP“race Global to the to bottom” Expand Retail Strategy, Open EyeConic Stores and Launch• Wellness VSP care Ventures as simply a loss leader? Some primary medical care  Vision Plans (“diabetic exams”) thrown in for good measure? EyeConic = Retail “store” wholly owned and operated by VSP  Ophthalmic products as a commodity • They will become major direct competitors – VSP Direct, VSP Vision VSPCenter Ventures = Acquisition model  Ophthalmology • Marchon and VSP? EyeMed and Luxillor? Remember – VERTICAL  Technology WHY?INTEGRATION! “because doctors asked VSP for these alternatives” • The REAL PROBLEM - they are all like heroin and many of our colleagues, LET”S LOOK AT THESE…. any maybe you, are hooked on them

Characteristics of Addiction

• Depression • Delusional actions What did total • dependency on one Avoidance of reality product line do for • Focus on maintaining the addiction some folks • And, of course, itching and constipation

Warbyparker.com Collinsbridge.comWhat MAJOR industry Product competition – old news, no Eyebuydirect.com Eyeglasslensdirect.com I easily found (quit looking) leader said – “ODs are news or news we just like to ignore? Glassesusa.com Statscrop.com Zennioptical.com Izito.com either unaware of or As far as non-health care provider invasion into ophthalmic 59 onlineFramesdirect.com opticals andOberlin.com 49 are inflating their products….a few quotes: Globaleyeglasses.com Lenscrafters.comoptical capture rate” contactGlassesshop.com lens order Replacelens.comsites “Change does not occur based on our ability to Eyeglasses.com Superfocus.com (including39dollarglasses.com several visionPaylesseyewear.com plan They’re ignoring all stomach it” Flannery O’Conner Glasses.comsites) Jemoptical.com this why? Justeyewear.com Optical4less.com QUOTE - “We cannot change anything until we accept that Coastal.com Cheapglasses123.com Eyeglassguide.com Lensesrx.com “they aren’t sick it has changed” Carl Jung AndClearlyglasses.com is it really 8%?Eyefly.com enough yet”

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CNBC 11/18/13: For the first time in history, online shopping overtakes “brick and mortar” as the preferred choice for US shopper (63% online vs 37% traditional) – 2016 $175 MILLION PER HOUR It has little to do with the doc, how many frames they have, one day service, exceptional staff, or whether or not they stock Maui Jims….. IT IS ABOUT CONTROL, CONVENIENCE AND THE “EXPERIENCE” – THE STORY OF ROSIE Per Ernst & Young 2017 report – “72% of Millennials prefer to Until optometry starts to believe the spend money on experiences rather than goods” public thinks these are ALL the same WHAT DID YOU BUY ONLINE THIS MONTH? thing, the future is not so bright! OR LAST NIGHT?

Worried about ? How about patients THIS IS A PROBLEM WHY? just making their own glasses? Who says it is? How to 3-D print Not the public Not the health care system Published on Apr 13, 2016 It is CHANGE…plain and simple I had a pair of broken glasses that have been sitting on my desk for the past few months. After a few trial and error attempts I managed to design a pair of glasses that worked well. Hard cost - $6.33. Published on May 6, 2015 I DO WHAT ABOUT IT? In this video I show you how to design and 3D print your own pair of sunglasses! You can find my design files below: http://www.thingiverse.com/thing:813228 1. Don’t put all your eggs in one basket – OPTOMETRY IS MUCH MORE THAN JUST SELLING China just built EVERYTHING in a 6-story GLASSES AND CONTACT LENSES building using 3-D printing!

Do you feel you are swimming upstream? And our own worse enemy is who? Or are you asking the wrong question???

Let’s look how some are answering this “challenge”?

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What does this tell your patients? Public perception of optometry should be WHAT’S ON YOUR FRONT blamed on DOOR, WINDOW, WEBSITE, WHO? BUSINESS CARD?

Or…. Private equity POSSIBLY Two PE Players attractive but UNLIKELY option because: • Us (really?) 1. Proper practice exit strategy • Major interest is mega practices takes minimum of five years • More medical than optical • More hands off 2. PE (practice acquisition) is • Are they really bad for optometry? often not all it’s cracked up • The Giants to be • Major interest is acquisition Let’s look at 3. Who are the PE players and • Almost total focus on optical these folks!!! what do they want? • VERY hands on

JUN 9, 2017 @ 12:14 AM 5,217 12 Stocks to Buy Now RETAIL COMPANY 2017 PERCENT China's Largest Eye Doctor Chain Is Looking To Expand To The U.S GROWTH It’s not , Warby Parker 140% LensCrafters, Pearle - add in Ellen Sheng , CONTRIBUTOR Main mode of “expansion”? Opinions expressed by Forbes Contributors are their own. EyeCare Partners (Clarkson) 85% all the familiar names Vision Precision (Stanton) 41% Sheng: Aier now has one location in the U.S. ACQUISITION- formerly Wang Eye MOST ARE ACQUISTION Institute. What’s next? Capital Vision (MyEyeDr) 35% Wang: We are first looking at rural areas in Tennessee. We are National Vision (Americas Best+) 21% COMPANIES looking for rural areas with unmet needs. In the second stage, we’ll Rosen Optical 21% WHAT GROWTH ARE YOU be looking at the rest of the country and taking a similar approach. Specs 14% LOOKING FOR? Partners in Vision 13% Aier Eye Hospital Group Co., Ltd. Reports Earnings Results for the First Quarter of 2017 Apr 25 17 Walmart -11% AND THAT WAS 2017 – Aier Eye Hospital Group Co., Ltd. reported earnings results for the first quarter of 2017. For the METRIC VALUE THEY’VE EXPLODED SINCE quarter, the company reported revenue of CNY 1.197 billion, rising 30.86% from a year earlier. Total US Locations 14,048 Net profit hiked 31% to CNY 156 million – and they are dedicating a chunk to expansion. THEN Total Revenue $12.1 BILLION

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Two Issues – Only One Choice Issue One – “Disruptive” Technology May win a few battles but will lose the war. Interesting we label it MORE EXPLOSIONS: “disruptive” when it potentially costs us money and “innovative” THE WORLD OF when it makes us money? TECHNOLOGY Issue Two – “Disruptive” METHODS Here’s where you have a choice – own it or lose it. Change is uncomfortable but inevitable for survival. To understand what TO DO, lets look at what we are NOT doing!

So, Who Is Taking Care of Eyes? WHY IS OPTOMETRY STILL NOT ADOPTING A WTF? COMPREHENSIVE CARE MODE OF PRACTICE ? 82% of physicians writing prescriptions for ophthalmic My colleagues get mad at me for this one… drugs were NON-EYE CARE PRACTITIONERS!!!!! ? Non-eye doctors write more glaucoma scripts than • Glasses and contact lens care is too damn easy and VERY profitable (for now) optometrists • The major changes, the “gorillas in the room”, haven’t totally ramped up ? Non-eye doctors write more ocular allergy medications (yet) than optometrists • VACCINATIONS: • Second class physician-ship ? Optometrists see 70% of the eye patients and in • Fear of being wrong general provide only 10-15% of all medical eye • Liability fantasies (How many optometric malpractice cases in 2015?) care (Alcon/Allergan data)

REALLY??? Here’s my NUMBER ONE slide on how you can make more money next week… Is this all optometry is capable of doing? STOP REFERRING PATIENTS TO By PCS audits, at least OPHTHALMOLOGY FOR THINGS 60% of all OD referrals YOU SHOULD BE HANDLING! to ophthalmology are totally unnecessary!

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HowHow is Have ophthalmology THEY Adaptedadapting to change?to JUSTChange? PLAIN WRONG OR BRILLIANT MARKETING? What we don’t know or Cataracts in 1996 Cataracts in 2018 CHARGES CHARGES believe in can’t hurt us? Pre-operative evaluation $ 980.00 Pre-operative evaluation $ 205.00 Surgical fee $2136.00 Surgical fee $ 618.00 39% ASC Fee $1692.00 ASC Fee $ 911.00 EXPENSES Multifocal IOL Fee $3500.00 The new world Disposables $ 432.00 Laser Fee $1100.00 IOL $ 0.00 Astigmatism correction fee $ 500.00 EXPENSES of tele & Disposables $ 314.00 NET PROFITS $4376.00 IOL $ 795.00 techno-health NET PROFIT $5725.00

Kai Fu Lee, pioneer in AI states “40% of world’s workforce will Coming soon to a pharmacy near you be replaced by artificial intelligence by 2035” Oh…and people won’t use kiosk care because Interview with Fox News – Jan 2019 it is inaccurate, dangerous and developed by shysters – right? HOW FAR APART The top kiosk “self care center” in ARE OPTOMETRY’S development has 19 stations including color CONCERNS FROM vision, pupil assessment, refraction, Moore’s Law: THE FTC AND REST tonometry and cognitive analysis of external AI capability / processing and internal photographs. OF THE CIVILIZED speed doubling every And those “shysters” are a joint venture two years WORLD? between IBM and the Mayo Clinic and the brain behind it all is called Watson – already shown to be statistically as accurate for most disease detection and management as the Moore, Gordon E. (1965-04-19). "Cramming more components onto integrated circuits". Electronics. Retrieved 2018-12-12. averageContact medical lenses doctor from a vending machine? Surely not!

MEET PEPPER! What can Pepper do? Oh, you want Pepper to look  “Read” to patients from any book contained in the Library of Congress more human? Meet Sophia!  Detect and analyze AND RESPOND TO human emotions NOT THE FUTURE - IN USE NOW! Here is Pepper at a Bejing Hospital with EHR  Formulate INDIVIDUALIZED medication prescriptions based on disease tablet ready to greet your patient, help them fill out all registration data, severity, BMI, age, cost and insurance coverage (that Pepper determined!) signing forms and scan their insurance cards. Then Pepper will take them  INDEPENDENTLY manage a non-life threatening ER patient from admission to back and complete their case history. Finally, Pepper will upload all that discharge, including all clerical work information in to the patient’s electronic medical record – PERFECTLY!

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Know what else? What do all these people have in common? Pepper works 22/7 (2 hours for charging), doesn’t THEY ALL DO NOT EXIST! require health insurance, doesn’t feel entitled to any They are all fake faces praise or raises, doesn’t take off for jury duty or created by: vacation, doesn’t need breaks, doesn’t complain, ThisPersonDoesNotExist.com never makes a mistake and DOESN’T BECOME A WHISTLEBLOWER Want to HEAR Too expensive? Nah….2190340 Yen ($20,000) initial and the future? 21903 Yen ($200) a month – about $25K a year. Current obstacle???

And we think the AMA, AOA or anyone else THE FUTURE OF PRIMARY HEALTH CARE Don’t underestimate WHO the army is and the SIZE of can stop this? the army you are going up against – just a few of them Three major reasons we are dreaming! 1. We don’t know our market 2. We are WAY underestimating the power of technology

3. We don’t understand WHO we are REALLY up “Our goal is to be the largest provider of health care against in the United States by 2025” Walmart VP Consumer Affairs

Here’s a great look at the REALLY? future of primary health care Microsoft Intelligent Network for Eyecare (MINE)  Partners? Bascom Palmer Eye Institute, Prasad Eye Institute, Brein Holden Vision Institute (more shysters) - a “consortium of international commercial, research and academic institutions dedicated to using artificial intelligence to improve eye care services.”  Goal? “MINE, a global collaboration, reinforces Microsoft’s belief in the combined power of data, cloud and advanced analytics to drive public good,” said Anil Bhansali, Managing Director, Microsoft India (R&D). “In our shared vision to eradicate preventable blindness, JUST IN – AN ECG MINE will help redefine eye care by bringing together the power of ON YOUR WRIST! technology and knowledge of global experts.”

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The new “Throne” of Diagnostics Technology NOW!

Heart rate • 2017 – Watson as diagnostically accurate as a radiologist and Electrocardiography BETTER at developing treatment options Pulse oximetry Photoplethysmography (blood oxygenation) • 2018 – dermatology apps with 90% accuracyHere it turn is… dermatology Ballistocardiography (cardiac cycle stress) on its ears And of course, weight • 2018 – 1/3rd of all tennis shoes 3-D printedTODAY All sent via Bluetooth to your PCP • 2018 – automated fast food, dinner reservations, you name it All while reading the daily comics…. • 2019 – cognitive AI “paralegals” invade the legal profession Made this up? Don’t think so! • 2020 – “moodie” and “truth” apps on your smart phone In-Home Cardiovascular Monitoring System for Heart Failure: Comparative Study •Nicholas J Conn1, PhD ; Karl Q Schwarz2, MD ; David A Borkholder1, PhD JMIR Health Published on 18.01.19 in Vol 7, No 1 (2019): January • 2022 – autonomous cars put car industry in chaos

Better yet…eye care NOW • ONLINE diagnostic acuity testing, pupil testing, color vision “When it comes to AI and testing, PD / seg height measurement, EOM analysis diabetic retinopathy, ophthalmologists were very • ONLINE cognitive analysis of retinal photo (IDx 87% farsighted” sensitivity for DR – three others waiting FDA approval, one Dr. R. Kim with 95% sensitivity for ALL retinal disease) Aravind Eye Hospital and collaborator with Google Brain • ONLINE optic nerve analysis (Pegasus – sensitivity of TWO glaucoma experts) HOW ABOUT US? • ONLINE threshold visual field test – 85% HFV accuracy • ONLINE retinal cardiovascular risk assessment (Google Brain – 70% accuracy, humans are 72%) But no one is smart enough to develop an AND…OCTs just around the corner from ability to go online! ACCURATE online refraction?

One other “small” point… And just a few words about telehealth Within the next two decades it is predicted we will  It’s theNOW future ….and it’s NOT your choice eliminate 75% of all CURRENT human health  One of three things will happen: maladies 1. Optometry will wake up, stop thinking telehealth means online refractions and OWN this care delivery system 2. Ophthalmology will own it and have ophthalmic technicians INCLUDING MYOPIA AND sitting in front of computers all day PRESBYOPIA 3. The insurance companies will own it with folks behind computers in China and India The optometric practice for the non-adapters looks like what then? WILL WE CHOOSE WISELY! So far….NO

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Did I just make No..not all patients will do online eye examinations you sad about and 3-D print their own Maui Jims! the future of eye BUT A % WILL – the only debate among and health care? realists is what the % is! THEN YOU ARE YOU WILL REPLACE THAT LOST INCOME STILL THINKING HOW??? LIKE AN OPTOMETRIST! And all the patients aren’t going away – they will multiply. But what will they want?

OPTOMETRY’S OPPORTUNITIES OPTOMETRY’S OPPORTUNITIES ThereBUT THEY Are MoreWONT Wellness BE LOOKINGCare FOR Patients A TRADITIONAL Than You EYE Can AND - There Is More MEDICAL Care Than You Can EXAM EXPERIENCE THATShake LASTS a Stick HALF At! AN HOUR OR MORE Even Imagine!

• PopulationFLIPPING growth DIALS is THENstaggering DISCUSSING LITTLE JIMMY’S • 70 million Boomers by 2030 – BUT…. • 31% ofMIRACULOUS children 6-16y/o SOCCER haven’t GOAL had an LAST eye exam SATURDAY in the last 24 • 2014 – 16% of US population diabetic (Obesity sits at 33% - expected to hit 50% months (Pediatrics) -OR- by 2020) •ANPrevalence OPTICIAN of vision SITTING disorders THEM up IN 150% A CHAIR over the AND past SHOWING 10 years – • 21% increase in glaucoma only a percentage of folks will go online or 3-D print their own! THEM TWO FRAMES AT A TIME TRYING TO CONVINCE • 70% increase in legal blindness by 2020 • HUGE rural OD manpower shortage • Prevalence of AMD through the roof THEM THEIR PROGRESSIVES ARE BETTER THAN EVERYONE • I have URBAN OD friends booked out 2-3 months! • Bottom line – bad lifestyles combined with the toxification of our ELSES AND THEIR FRAMES HOLD UP BETTER AND MAKE world will dramatically increase demand for care of chronic disease THEM LOOK YOUNGER THAN EVERYONE ELSES

And we combat thisI SAY how WE DON’T!? Profile of those likely to lose

• Past the baby boomers, patients will be looking for an “experience” – NOT A “TRADITIONAL” EYE EXAMINATION. That will likely include” • Online testing and extensive use of technology • Fight wars they cannot win • Telehealth • Resist inevitable change • Efficiency (“I’m busy!”) • Fail to understand their market • Something other than your traditional dispensary experience • • Quit thinking like optometrists – NO ONE thinks all this stuff is Do business they way THEY want to, not the a bad idea except US!! way their customers want them to • Consider not talking against it – just reinforce the ultimate need for • Gripe and moan…. professional care – maybe figure out a way to USE it in their practice

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Profile of those likely to win

• EMBRACE and USE change to their benefit Don’t be • Understand their market skeered… • Understand their customer’s needs and DESIRES • Incorporate new technology into their business Succeed! • EXPAND their product offering

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