Every optometry practice has grappled with the idea of doing away with their outside lab and establishing their own lab in-house. All the weeks waiting for glasses to arrive, the myriad of mistakes and broken glasses, and the extra costs for tints and custom lenses can be frustrating for the practice owner and patients. However, there are some important things to consider before investing in your own optical lab.
In this article we will review the pros and cons of having an in-house lab, overview of cost and space as well as the perspective from a real-life practice owner.
Pros of an in-house optical lab
Faster service
Most in-house labs only perform edging which means they receive stock lenses from an outside lab and cut them in-house to fit the patients’ frames. This allows for faster service since most lenses can be cut in a few days. If the prescription is simple, such as a single vision low-astigmatism lens, the lenses can often be cut the same day. We all have had those patients who want to keep their original frames and just replace the lenses. However, when using an outside lab, we have to send the frames to the lab and the patient is stuck a week without glasses if they do not have a back-up. This can cause many practices to lose patients to competitors that can cut the lenses in-house.
Reliable service
Having an in-house lab can help reduce Rx errors and prevent damaged lenses or frames that sometimes result from an outside lab. This can help increase patient satisfaction, especially when lenses can take a week or more to come in from an outside lab. Many patients like knowing that their lenses are made directly in-office.
More customized service
Nowadays, advanced pieces of equipment can be purchased that are faster, can cut more than one job at a time, and rely on very little oversight by the staff. Furthermore, newer models can customize the shape and tint of lenses. There are now edgers where the optician can adjust the angle of the bevel so wrap-frame and very high base lenses can be edged in-house. Advanced drilling systems input the drill coordinates into the machine’s memory allowing the optician to set up the job, press start and go back to patient care. Tinting equipment can now be purchased and incorporated into the optical which allows for any glasses to be turned into sunglasses.
Savings
This is probably one of the most important reasons that a practice would invest in an in-house optical. The equipment can cost around $35,000 dollars; however, if you do approximately 12-15 jobs a day you can potentially pay off that equipment in a year. You can also charge extra for one-hour services, such as $10-35. You can make $75 profit on average on each job doing it in-house versus using the lab (based on the calculation that the lab often charges you around $130 for a job and you can cut a single vision lens in-house for $55).
Cons of an in-house optical lab
Space Requirements
You will need the space for a finishing lab, usually on average around 100 square feet which includes an automatic lensometer, edger, tracer, automatic blocker, software and PC, hand stone and tint tank. It may be beneficial to have a separate room with a door to reduce noise and smell in the practice.
Labor/ Staff Training
You will often need to hire and train a lab technician/optician to cut the lenses if you are producing more than 15 jobs a day. This will require time and effort to train the staff and you are adding another salary to your practice unless you lose one of your opticians to cutting lenses most of the day, which may not be very cost effective. Most of the practice’s profit is made from frame and lens sales, so this is important to consider before pulling an optician off the floor.
Equipment Cost/Maintenance
An edger can range from $8,000 to $50,000. This does not include installation or maintenance costs. It is important to have a maintenance plan on equipment, as they often need repairs or upgrades on a yearly basis. Most vendors offer a service agreement that covers routine maintenance and helps with equipment repairs. This runs on average $1,000-1,500 per year.
Lens Limitations
Not all lenses can be cut in-house. Usually progressives, special tints like transitions, and prisms need to be sent out. It can be difficult to cut those lenses in-house without higher-end equipment (usually very expensive).
How do I know if an in-house optical lab is worth it?
There are several variables that go into this analysis:
- The cost of the equipment and additional installation cost
- The expected profit per job
- The number of jobs expected to be performed by the equipment
You can use a break-even analysis: how long will it be before you start seeing a profit after making an investment? For example, if the cost of equipment is around $30,000, when financed over three years at 6% the cost is around $900/month. Let’s say the profit per job is $75 per job. There would need to be approximately 12 jobs per month to break even in 3 years.
Other factors to consider include whether you want to provide more customized service to your patients or spend more time focusing on glasses sales and let an outside lab worry about producing the final product. You need to have the right patient population who will appreciate the extra attention and are willing to pay more for faster, quality service. Furthermore, you need the volume of glasses sales in order to turn a profit from your investment. This can be different for every practice depending on how much you invest into your lab.
In the end, if you can’t pay off your equipment, it does not matter how impressed the patients are—your business will suffer.
Interview with Nish Patel, OD, from NV Optometry LLC, Maryland
Why did you decide to start an in-house lab?
Dr. Patel: The three practices we acquired already had some older edging equipment in-house. We decided to upgrade them recently in March 2020 to newer models, two that ran around $40,000 each, and one that was around $54,000 for our busiest practice that can block and edge at the same time.
It was worth investing in this new equipment since we were spending approx. $10,000 a year on maintenance on the older models. The edging process is much more efficient with the newer models with very low training required. We view it more of a necessity than a profit-maker because of the volume of glasses and lenses sold each day. We complete around 20-30 jobs a day.
What are the top three factors that influenced your decision?
Dr. Patel:
- Turnaround time: We can often edge a lens same day (for single vision lenses) and cut progressives in usually 3-4 days. Patients LOVE being able to go home with their glasses! Furthermore, stock lenses from outside labs come in much quicker when they are not already cut. The faster and more volume we can produce the greater the profit margin.
- Offer unique service: Having an in-house lab provides us with a competitive advantage to other practices and corporate offices. Patients will come to us specifically because of this service, and we retain the patients we already have instead of them buying online or going elsewhere.
- Incentive for patients to buy a second pair: Patients who want to buy glasses through their insurance have to wait a week or two to get the lenses from the lab in order to cut in-house. However, we found that if you offer patients the opportunity to buy low-cost glasses as a back-up pair that they can go home with the same day they will often opt to get two pairs of glasses, one out-of-pocket and one through their vision insurance. It’s a great way to make some extra money and the patient is often excited to walk away with a pair of new glasses.
What are the costs/savings?
Dr. Patel: It is hard to know the exact savings, but you save about $10-20 bucks for edging glasses and up to $25 for rimless by not using an outside lab, who often charges fees for these services. Furthermore, stock lenses are much cheaper and can only be purchased from a lab if you have an edger in-house. Even though the equipment was expensive, making 20-30 jobs a day should allow us to break even in about a year, and therefore are worth the investment. The newer models also do not require a trained lab technician to run them and can complete more jobs in an hour since they already have the blocking built in.
Furthermore, you can often get the maintenance fee covered for the first couple years.
In hindsight, are you glad you kept the in-house lab and upgraded the equipment?
Dr. Patel: Yes, we are already seeing a huge improvement in the number of jobs that can be produced each day with the newer technology. The staff can also spend more time on the floor now selling glasses. We have cut a lot of unnecessary costs down using an outside edging lab and find that we can complete most jobs on-site, even bifocals and progressives. It has become an integral part of our practice that sets us apart from our neighboring eye doctors.
In-house optical labs: A good investment for the right practice
Considering all sides, it seems that an in-house lab could be helpful and even profitable for most practices who can complete around 10-12 jobs per day. Even if you just start by cutting simple refractive errors, patients seem to appreciate the quick turnaround. If you can cut some lenses the same day, even better
However, it is important to consider that the time and resources spent on an in-house optical could be used on selling more lenses and frames. If you are ready to build your own in-house lab, it is a good idea to start out small, buy a used or older model edger and then later expand and invest in new models and more equipment. Taking the plunge can help you set your practice apart!
