VSP’s Journey to Visibility

Steve Player talks with Patricia Cochran, CFO of vision benefits provider Vision Service Plan, about the firm’s 50 years of growth and how deep insights from its activity-based costing program are transforming its planning, reporting, and performance management.

Steve Player: Tell me a little about what Vision Service Plan does ...
Patricia Cochran: We provide eye care as an employee benefit. We've been in business a long time -- since 1955. We are the largest provider of this service, covering over 55 million people throughout the United States, which means that about one out of every six people has our vision coverage. We primarily sell it through employers, as well as associations. We also have an individual plan so that people can buy it directly. We provide eye exams, eyeglasses, and contact lenses if patients need vision correction.

We have an eyewear frame company that sells frames on a global basis under brand names such as Calvin Klein, Fendi, Pucci, Nike, Disney, and Tommy Bahama. We also sell sunglasses and corrective eyewear for patients all over the world. VSP owns four optical labs that can grind blanks into prescription lenses. Additionally, we have a doctor practice solutions company that serves eye doctors.

SP: So you're providing consulting to help doctors set up their office, schedule billing, do back-office processing, and so forth?
Cochran: Right. It's an integrated solution to manage the practice -- everything from medical records to practice management, from electronic claims processing to the electronic ordering of materials.

SP: Is that a new service area for VSP?
Cochran: It's a service that we've been providing for some time, primarily in the United States, but what's new for us is that we have now expanded into Australia.

SP: Tell me about the company's move toward vertical integration. What's the strategy behind having an eyewear frame company and labs?
Cochran: The aim is really to have control over the quality of the product that we're delivering. Our mission is to provide very high quality vision care throughout the United States, certainly, and then we'd like to expand beyond U.S. borders. In order to do that, we feel that we need to have control over the complete set of services.

The vertical integration drive began some time ago. Back in the 1970s, we started with laboratories, and then about 15 years ago we started producing eyewear frames. About ten years ago, we added the doctor package solution.

SP: What kind of pressure does that put on the finance organization, when you move from a single-line business into multiple aspects of the value chain?
Cochran: It does add some pressure, because there are many more skill sets that we need. But it also provides an opportunity. The morale of our employees in the finance division is very, very high, primarily because they do have this variety of opportunities to grow and to have new experiences.

For example, I've been working here for 30 years. But it hasn't been the same job for 30 years. When I look back on my career here, I've always been challenged. I've always had new responsibilities forming. It's been very rewarding to be able to develop new skills and help the company grow.