Company eyes expansion as vision plans catch on

Spectera reaping benefits of trend among employers

Health care

March 10, 2000|By M. William Salganik | M. William Salganik,SUN STAFF

With a tight labor market, more employers are turning to vision care plans as a way of attracting and holding workers - a trend that has fueled the steady growth of Spectera Inc., a regional health company with an increasing national reach.

Spectera saw its revenue climb from $60 million in fiscal 1997 to $80 million in fiscal 1999, which ended Oct. 31 -- despite selling a $20-million-a-year dental HMO. Already this year, the company has signed enough new contracts to add another $14 million in revenue, said David Hall, Spectera's chief executive officer.

With headquarters in Woodlawn and a new eyeglass lab in the Holabird Industrial Park, Spectera has added 50 employees in the past year, and now employs about 700. In addition to the vision plan, Spectera operates a "care management" division, which provides services such as authorizations for hospitalization for HMOs and other clients.

"For the next couple of years, we're looking to digest our recent acquisitions, and for top line growth of 15 to 20 percent a year," Hall said. The company acquired an eye plan in the Philadelphia area and one in California over the past two years, but Hall said three-quarters of the increase in revenue has come from internal growth.

"We've had our fill with acquisition unless something really exciting comes along," Hall said. "We want to put our resources behind West Coast growth."

Spectera, which has a national sales staff of about 20, but also makes sales through insurance brokers and consultants, is able to grow because of the spread of vision coverage as an employee benefit.

A survey of large employers by William M. Mercer Inc., a national benefits consulting firm, found the percentage of large (more than 500 workers) employers offering vision coverage climbing from 34 percent in 1996 to 46 percent last year.

"The main reason is the tightness of the labor market and the inexpensive nature of the vision care benefits," said Mike Bucci, a principal in Mercer's Baltimore office. "It's an attractive benefit to add on."

Typically, Bucci said, vision plans pay for eye exams and provide a percentage or dollar figure toward eyeglasses. Some cover contact lenses as well, and some have recently started offering discounts on laser vision correction surgery. Plans cost a few dollars a month for an individual, and $8 to $15 a month for family coverage, depending on the level of benefits, Bucci said.

A separate survey of 442 Mercer clients found that of those that offer vision benefits, 70 percent added them during the 1990s.

Even with 3.5 million members and 10,000 eye doctors in its network, Spectera is dwarfed by the Vision Service Plan, a national behemoth based in California. VSP has 29 million members and a network of 18,500 doctors.

The other major national player is Ohio-based Cole National Corp., which offers vision care and discount plans covering 50 million people and provides care through Pearle Vision retail outlets and through optical sections in Sears, J.C. Penney, Target and BJ's stores.

In addition to the national operations, Bucci said, "regional players have developed national capabilities," in some cases through acquiring smaller plans, but most often through opening networks in new markets.

Spectera, Hall said, combines the approaches of the two big national companies, maintaining both a network of optometrists and retail outlets. Retail outlets were how it began; Spectera grew out of the United Optical shops in Baltimore.

Dr. Oscar Camp, who ran United Optical, was also medical director for what is now the United Food and Commercial Workers union, and developed a prepaid plan for union members to receive eye exams and glasses. The company began to market the vision plan to other unions, to employers.

The company entered a new phase in 1993, when an employee stock ownership plan was broadened so that employees owned about three-quarters of the company. Camp became less active in management; Hall was named CEO in 1997.

The recent growth marks another stage for the company. It spent $3.5 million on the new lab, a one-story, 40,000-square-foot facility that replaced, in June, a seven-story, 14,000-square-foot downtown facility.

Production is about 1,150 pairs of glasses a day, up from 900 to 1,000 downtown.

Also in June, it opened eight United Optical stores in Cleveland and Akron, serving Kaiser Permanente HMO members in Ohio. There are about two dozen United Optical outlets in Maryland, with others in Virginia, the District of Columbia, Texas and Alabama.

Hall foresees continued "quiet, controlled growth," with expansion in care management as well as the vision plan. Spectera does not disclose its profits.

While some new business will come by winning clients away from other vision plans, he predicted, most will come as more employers continue to opt for vision coverage.

"It's becoming part of standard coverage," he said.

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