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What is a premium IOL worth
Chapter excerpt: Cataract surgery is the most successful procedure in all of medicine and has the lowest complication rates. Cataract surgery, through its evolution and without the benefit of a formal announcement, became refractive surgery. Surgeons and patients expect a refractive outcome after successful cataract removal and a lens implant. The delivery of this wonderful procedure has produced billions of dollars in value for everyone associated (ie, patients, surgeons, insurers and industry). 
Most recently the bar has been raised again with the introduction of presbyopia-correcting IOLs. Now the patient expects successful cataract removal, elimination of any ametropia and treatment of presbyopia. The introduction of presbyopia-correcting IOLs, the IOLMaster (Carl Zeiss Meditec) and improved formulas to calculate lens power have led every surgeon participating in this new premium channel to try his or her best to achieve the refractive target.
I was very interested when asked to write about the value of cataract surgery. As a member of the ophthalmic industry for the past 29 years, I have observed the devaluation of cataract surgery. Here, I will examine how that happened.
How was value lost?
In the mid 1980s, Medicare willingly paid for the exciting new miracle operation. Cataract surgery was provided primarily to patients in their late 70s and 80s, and surgeons were satisfied with the economics around the new procedure. Surgical technique and technology flourished in this emerging market. Medicare now had a rapidly growing procedure that was extremely safe and effective, fueled by satisfied patients. It was a good time for both surgeons and patients. However, the cost accelerated with increased usage, and ophthalmology found itself tagged with the most expensive line item in Medicare Part B. In the early 1990s, budget pressure affected all of Medicare; the unavoidable response to the popularity of cataract surgery was to reduce remuneration for both surgeons and facilities. Thus began the commoditization of cataract surgery. Unfortunately, surgeons had become more dependent on Medicare over this period of time. When Medicare began to reduce payments, surgeons were forced to focus on cost reduction.
Modern cataract surgery was indeed a victim of its own success, and the value proposition was far removed from the person who enjoys the benefit the most, the patient. Why did the value decrease despite improved outcomes, improvements in safety and improvements in surgeons’ skill, as well as technological advancements? Over time the answer became painfully clear: There was only one buyer. One buyer has set the rules for both publicly and privately insured patients — Medicare. That buyer could no longer afford the value of modern cataract surgery.
What had to be done to regain value?
With all the advancements in modern cataract surgery, how did the value become so depressed? To answer that question, you must first ask, “Who derives the most value from cataract surgery?” The answer is obvious: the patient. The patient had to be reinserted into the value proposition. After 20 years of dependence on third parties to reimburse for cataract surgery, there is suddenly a new paradigm, the premium channel, in which the patient pays for the enhanced value he or she receives. This brings us to the premium channel. Ophthalmology is extremely fortunate to have new technologies that are elective in nature and outside the covered service plan of insurers. Thus the benefit of reduced spectacle dependence offered by presbyopia-correcting IOLs is a service that your patients may “choose” to enjoy. Premium channel patients will pay the majority of your procedure charges, and that requires some adjustments by you and your staff. No longer will the majority of your professional fee come from faceless insurers; your customer is sitting right in front of you and will now have a say in the market value of your service.
With the birth of the premium channel, cataract surgery has evolved to a medically mediated consumer decision. Baby boomers have made it quite clear that they will not go quietly into older age; they will choose procedures and technologies to help extend the youthful, active lifestyle that they enjoy. Ophthalmology is perfectly positioned to enjoy serving the baby boomers, but we must be prepared to compete with other lifestyle decisions being made by the boomers.
The premium channel is in its infancy. The cataract procedure is highly competitive with other lifestyle choices that baby boomers will make. It is up to the profession and industry to make sure that John Q. Public is well aware of how effective our offering is for patients.
Maintaining value in the future
The value lesson of the first 35 years of modern cataract surgery can be summed up simply: Ophthalmology and industry surrendered the surgeon-patient relationship to third-party insurers. It was economically satisfactory for a short period, and then a steady state of continuous fee reduction was slowly ground into the culture of everyone involved. The expectation became that the slow drumbeat of reduced value was unavoidable despite incredible improvements in outcomes and safety. Unfortunately for standard cataract surgery, the modern miracle that it is, the drum continues to pound due to pressure on the system. Luckily, ophthalmology has the premium channel, a method of differentiating services, which allows us the opportunity to reverse these troubling trends. The solution to maintaining future value is quite simple. We must learn to meet the needs of the individual patient/consumer. In modern ophthalmology, the demanding patient is our best friend. Learning to satisfy the needs of the patient who pays privately for the majority of his or her treatment will ensure that the value proposition is not handed off to third parties again. As a profession and industry we must resist the temptation to have insurers interject themselves into the premium channel. The value proposition belongs to the patient receiving the care. As long as it remains there, ophthalmology will enter into a new golden age in which the incredible advances in surgery and technology can continue to flourish and be enjoyed by all who participate.
Today’s premium IOL value
Premier Surgeon recently spoke with J. Andy Corley regarding how the value of cataract surgery, and more recently premium IOLs, has continued to change over the years.
PS: In general, what has changed since this chapter was published regarding the value of cataract and premium IOL surgery?
Mr. Corley: When I wrote the original article, we were in the early stages of developing the premium cataract surgery channel. We had already seen a dramatic decline in reimbursement as cataract surgery had become routine and underappreciated by payers.
The decline we feared continues to happen. The threat of continued Medicare cutbacks looms over ophthalmology. Surgeons and industry have continued to work during the last few years to re-establish the value of this procedure with continued improvements in the technology to combat these cutbacks. As a result, most of the IOL technologies are now on their third- or fourth-generation models. We are also starting to see new technologies emerge into this channel, such as femtosecond cataract technology, which did not exist in 2008.
PS: Has the continuous growth of the premium channel had any effect, positive or negative, on the value of the field? How so?
Mr. Corley: The continued growth of the premium channel has been a positive one for patients and surgeons. By providing patients with procedural choices, the patient has been reinserted into the value proposition of surgery. Patients now are a part of the process in selecting the right product for their needs and are now experiencing the best surgical visual outcomes available.
Now, because the value of the procedure is in the hands of the patient, innovation for a better premium experience and outcome is moving forward at a rapid pace. Surgeons and practices will continue to grow with an increased menu offering and an increased number of happy patients. Due to the growth, we are starting to see companies invest in direct advertising to patients who are candidates for premium IOLs. These investments will drive education and awareness among the baby boomer population and lead to continued growth.
PS: What are some of your recommendations for how surgeons can best meet the needs of patients who are considering the idea of a premium channel IOL?
Mr. Corley: Learning to satisfy the needs of patients who pay privately will ensure that the value proposition is not handed over to third parties again. It is more important than ever for surgeons to invest not just in technology but also in the time spent with patients. We know now that nothing will lead to a more unhappy patient than residual refractive error. Only by finishing the job and getting patients as close to plano as possible will surgeons grow their premium IOL practice. We need to all keep in mind that the demanding patient remains our best friend. Invest the time to provide patients the best possible outcomes, and take the time to set clear and realistic expectations to your patients. This investment in time will pay off in the future.
PS: What are your predictions for how things may change within the next 5 to 10 years, based on current statistics?
Mr. Corley: I believe that this is an exciting time to be a part of ophthalmology as we are going to see a paradigm shift in cataract surgery. Femtosecond cataract surgery will change the dynamic of the procedure. It will be the next link in the premium chain, and we will begin to see more procedures become patient pay. Cataract surgery is entering into the golden age in which advances in surgery and technology can continue to flourish and be enjoyed by all who participate.
J. Andy Corley can be reached at andy.corley@bausch.com.