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Look ahead with hope to 2004 and beyond
An improving economy may bode well for ophthalmology practices that have struggled through the last 2 years.
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One of the real blessings of growing older is that we all react much less passionately to life’s little disappointments. But it still takes a lot of living to stop reacting emotionally to the tidal ups and downs in the business cycle, even in the health care professions and ophthalmology in particular, as shielded as we all are from swings in the economy. That said, the latest 2-year downturn has been especially difficult for the ophthalmologists I know, for at least two important reasons.
First, America’s baby boom effect is echoed in the distribution curve of American ophthalmologists, so an ever-larger percentage of this country’s eye surgeons are now entering their fifth and sixth decades. And it’s been a couple of tough years to top up the retirement kitty. Ophthalmologists who sailed through the last downturn in their 40’s are now more than a decade older and thinking about succession planning. I’ve talked to scores of surgeons who have said they’re going to work longer than they has ever planned.
Second, ophthalmology in the past decade has positioned itself somewhat more strongly in primary eye care, optical dispensing and elective refractive surgery services, and a little less so in geriatric disease management. With this positioning comes increased cash flow volatility: more money in the good times and less in the bad. It helps to think of cataracts (and geriatric care in general) as the “bonds” of eye care, optical as the “blue chip stocks” and LASIK as the “tech stocks” or worse in volatility terms.
Tide is turning
But the economic tide is indeed turning, both under its own steam and — at least for several quarters ahead — with the helpful boost of the next presidential electoral cycle. U.S. economic growth in the third quarter, as measured by the total output of goods and services, rose at the fastest pace in two decades.
Bellwether consumer confidence figures, generated monthly by the Conference Board, leaped 10 points in November alone to 91.7, the highest since fall 2002. Because LASIK procedure volume rises and falls in lockstep with this core index, we can probably expect an equivalent or better uptick in refractive surgery volumes in the next year. I’m already beginning to see this macro prediction roll out in client offices in vanguard western markets; LASIK lead traffic and conversion rates are inching up, and the normally high first quarter of the new year should be much better than the numbers were in 2003.
Indicators for ophthalmology
I think it will be impossible to separate the contribution of the nascent economic turnaround from the hoped-for contribution made by the marketing of custom ablations. Going only on the privately expressed thoughts of higher-volume clients, the availability of custom ablations have been motivating to something like 20% or more of candidate patients, but have been of material clinical benefit in outcome terms to no more than about 10% of patients.
Optical sales, like LASIK, are a so-called leading economic indicator. A new pair of glasses is one of the first purchases consumers can forego when times get rough, and one of the first things they buy when times get good again. So I’d predict that optical goods sales will be nicely up as well.
Congress has just passed the new Medicare Drug Bill, and despite strong support from ophthalmology’s professional societies and the happy switch from a 4.5% fee cut to a small increase, I have real concerns about the adverse intermediate and long-term impact of this legislation. The well of dollars available for beneficiary health care is only so deep, and it can be expected that new drug entitlements and financial incentives to corporate managed care entities will place a real strain on Part B dollars, not in the resurgent economy immediately ahead of us, but within the next 10 years. By 2013 or sooner, I’d predict a harsh actuarial storm to arrive.
Hope for 2004
But for now, clear skies and balmy weather are in the economic forecast.
Optical, LASIK and cataract surgery volumes are far more susceptible to the actions you take in your own practice each day than they are to national policy changes or even swings in the business cycle. All the economic blooming in the world can’t make up for surgeons who allow patient services to erode, or whose care pathways are so hyperconservative that patients clearly needing care are sent elsewhere.
I still routinely find practices where patients hear nothing about the physician’s optical down the hall, but are instead only told, “You can fill this prescription anywhere in town.” In some practices, we still observe LASIK patients who have to plow through 4-hour evaluations before being allowed to commit to surgery. And based on my field observations, there are thousands upon thousands of patients still struggling with ripening cataracts and 20/60 vision under the care of otherwise conscientious surgeons who lack the confidence to proceed to surgery.
So let’s break out the party hats for an auspicious start to the New Year and the next 24 to 36 happy months that lie ahead. The season is upon us to work hard to optimize raw volumes today. But please, work equally hard to boost real efficiencies, contain costs and spur patient satisfaction in your practice at the same time, for the happy party driven by the rebounding general economy will once again draw to a close. And then we’re going to have one big hangover to cure.