1-800 Contacts has been upending the healthcare industry for 25 years - CEO John Graham shares where he sees opportunities for further disruption

Sara Silverstein,Jacqui Frank

Jan 5, 2020, 21:11 IST

1-800 Contacts has been upending the healthcare industry for 25 years - CEO John Graham shares where he sees opportunities for further disruption

1-800 Contacts has been a pioneer of direct-to-consumer healthcare for 25 years.
CEO John Graham said eyecare companies were faster to adapt to a direct-to-consumer model because so many people pay for their contacts and glasses out of pocket as opposed to through insurance.
He said there are two ways to get attention in healthcare - accessibility or cost - and it is usually a compromise between the two. The areas ripest for disruption are the places where you can break that compromise and offer more accessibility while lowering the price. Telemedicine, which allows people to interact with a doctor through their phone or computer, is a perfect example of this.
1-800 Contacts recently acquired the healthcare platform 6over6, which has created software that could let people take their vision tests at home.

Following is a transcript of the video.

Sara Silverstein: 1-800 Contacts has been around for 25 years disrupting healthcare. What lessons have you learned in the process?

John Graham: I think the two things that we have found is, one, you have to focus on the customer, right? In direct-to-consumer healthcare, it's all about taking care of customers, because if you're always having to acquire new customers, you can't grow a business right? Really you have to focus on the customer.

And then secondarily, you have to focus on your employees, because especially in our business, we have to have such a strong relationship with our customers, and that only comes by taking care of employees. And so, you can continue to innovate, by focusing on those two things.

Silverstein: Direct-to-consumer and healthcare seem to be very unrelated because there are so many frictions in the way historically. What were the biggest stumbling blocks in making that happen?

Graham: We are a very unique part of healthcare in that so many people pay for what we, for their contacts or glasses things like that out-of-pocket, whereas most healthcare tends to be much more insurance-oriented. And so as a consequence, we sit in this area between healthcare and consumer. Where we have to take care of consumers, be very conscientious of the cost of the product that we selling, taking care of customers, be providing simple solutions, but also making sure that health is taken care of.

Silverstein: And when you look at the larger healthcare picture in the US, is there anything that you feel like are areas that are ripe for disruption?

Graham: I certainly think that ours has, and that's where we've made an acquisition in 6over6, particularly because, if you think about the healthcare in the US, there's generally two things that create attention in healthcare right? There's accessibility and cost. And what we have found is, through telemedicine we can break that compromise, we can create greater accessibility, and also drive down costs. And so I think the places that seem the most ripe for disruption, are places where you can break that compromise, I mean.

Silverstein: And what is telemedicine?

Graham: So telemedicine is where you can interact with a doctor, not face-to-face as you and I are, but through some sort of a visit, virtually through your phone or through a computer, or through different things. And so a lot of, there's a lot of that going on in the industry right now, from Teladoc, to Hims, to different kinds of products and, and it's certainly affecting what's happening in optical.

Silverstein: Who do you think is doing well in disrupting healthcare, and what areas do you think people are making mistakes?

Graham: I don't know about the mistakes that are being made, but this certainly the people that seem to be doing the best job, are those that are finding those places, where there's something that's overcomplicated, that they can simplify. At least that's the way that we have tried to focus on the things that we do is, where are the places that are too costly too complicated for really no good reason right? And you can simplify those things down, and just create a much simpler approach for consumers. And usually, when something's simpler, it's more affordable as well. And so I think that when I look out in the market, it seems like that's a common formula, that's working well for people.

Silverstein: And I've heard really good things about the customer service at 1-800 Contacts, and it sounds like, you value those relationships of people on the phone, I've heard specifically that it's easy to get someone on the phone, which is nice. So how important is that? Is that a part of the company's mission or culture?

Graham: It is absolutely part of who we are. Yeah, when I joined the company about 11 years ago, and at the time the founder was Jonathan Kuhn, who was, he was the CEO and the founder of the company, and he and I talked about, the importance of never outsourcing the call center, because that was so critical to who we are, so much a part of our culture. Because taking care of customers every day was so much a part of who he was.

And so, we actually, our call center, sits right in the same building as us, we don't outsource that, we don't use an IVR, you don't have to click two to find someone that speaks with you or anything like that. We just try to answer as many calls as we can by the second ring. Our average is answering on within six seconds, and just live answer and take care of people. Because realistically we feel like, if we really genuinely care about people, we're not gonna put them on hold, we're gonna take care of them.

Silverstein: And how do you do that? You measure how long it takes for people to answer the phone, and you keep track of that, and have goals around that?

Graham: Yes, and really what it means is that we have to overstaff a little bit. We have to respect our customers' time, more than we reflect our own. And so we tend to overstaff a little bit our call center so that if someone is waiting it's us, it's not them.

Silverstein: And regulation seems to play a big role in certain businesses, healthcare is definitely one of them. Where is regulation very important and helpful? And where do you feel like it is behind?

Graham: Yeah, and we are, we're regulating both of the federal and state level within optometry. And so I think that where regulations can help a lot is making sure that consumers are taken care of, and that there are no health and safety issues. Sometimes it tends to go too far, and require things that drive up the cost of healthcare without a corresponding benefit, for sure and that's what we have seen in our industry.

Silverstein: And with 6over6 people be able to do eye tests in their own home? And, a natural question I think for the way a lot of things are going, is do we need doctors anymore?

Graham: I think that we do, and we continue to work with doctors because there's certainly, 6over6 doesn't replace doctors, it replaces the equipment that doctors use right? So if you think about, the way that you normally go to the eye doctor, you go and you sit behind that piece of equipment that feels like you've entered the Apollo 13, it's 50-year-old technology, and you have that interaction face-to-face with a doctor. And all we're doing is taking that away and making it so you can just do that with a smartphone. There will still be an interaction with a doctor on the other end, because at the other day we want to want to make sure that you're wearing your contacts in a healthy manner.

Silverstein: What does the future for 1-800 Contacts look like, will you be making your own contacts, are there more sci-fi in-your-house doctors coming? What are you looking at?

Graham: So in our future, I think that telehealth is a big part of our future. First for selling because it really enables us. Our mission is to make vision care simple and affordable. And we focused on that mostly within the US, mostly within contact lenses. And this will just continue to help us do that. We also, it helps us do more with glasses, and be able to help people get glasses.

We're really excited about what 6over6 does for us also in that it'll open up and allow us to do things outside of the US. There is about two and a half billion people worldwide that don't have access to affordable vision care, and if, and most of those people have smartphones, or have access to smartphones. And so the idea that we can get out to billions of people and provide vision really is exciting for us.