With Vision Service Plan (VSP), the bottom line of the eye chart won't read U-O-W-E-B-I-G. The firm is a top managed eye care benefits provider that serves 57 million members in the US, Canada, and the UK. VSP operates a network of about 28,000 preferred doctors; its programs offer coverage ranging from general plans (eye exams and eyewear) to laser vision correction procedures. Behind the managed care business is VSP's vertically-integrated eye care and eye wear business including optical labs, frame manufacturing, and optical practice management services. Founded in 1955 by a group of optometrists, VSP lost its tax-exempt status in 2003 but continues to operate as a not-for-profit.
The company contracts with businesses, the federal government, and managed-care health plans to offer employee benefits, and it also markets eye care plans to individuals. VSP sells its vision plans through a network of about 16,000 national brokers as well as independent agents and its own direct sales force. Outside its California headquarters and Eastern Operations Center in Ohio, it has about 25 regional offices throughout the US.
To further its vertical integration, VSP acquired eyeglass maker Marchon Eyewear in 2008. The purchase cost VSP $735 million and brought in such eyewear brands as Calvin Klein, Nautica, and Nike. Its existing eyewear manufacturing operations, Altair Eyewear, became a division of Marchon. Another Marchon division provides custom interiors and merchandising systems for optical offices. Other VSP businesses provide doctors with practice management software, ophthalmic products, and access to a growing network of regional optical laboratories.
To grow its network of private-practices doctors, VSP entices optometrists to join by offering them loans, through its partner Vision One Credit Union, to help them open their own practices.
The company's tax-exempt status was revoked after an IRS audit said it failed to meet the criteria, although about 41% of the company's business is serving the poor through government programs. VSP paid its tax bill but sued the government to regain the funds and the not-for-profit status it held for 40 years.
The US District Court in Sacramento ruled against VSP (and in 2009 refused to even hear the case on appeal), but the company has not given up and plans to apply for tax-exempt status with the IRS "as soon as possible." VSP claims it should have tax-exempt status because it spends 85% of its income on reimbursement payments and because it has provided more than $140 million in free eye wear and eye care services through its community outreach programs and relations with the American Red Cross and others. Its Sight for Students charity program provides low-income and uninsured children with vision exams and glasses, and its VSP Mobile Eyes program provides outreach eye care services to low-income and uninsured people throughout the US. – less