Panel evaluates impact of shifting market forces on ophthalmic industry

At the OSN Section Editors Summit, industry representatives said they are feeling bullish about the ophthalmic market.

A note from the editors:

Ocular Surgery News convened a panel of five industry leaders at the OSN Section Editors Summit earlier this year in Las Vegas. Moderated by OSN Chief Medical Editor Richard L. Lindstrom, MD, the panel consisted of Bill Barton, Alcon’s vice president/area president of U.S. and global marketing; Julian Gangolli, Allergan’s corporate vice president and president for North America; Mike Judy, Bausch & Lomb’s chief commercial officer; Ed Peterson, president and chief executive officer of AcuFocus and the Innovation Factory; and James L. Taylor, president and chief executive officer of Carl Zeiss Meditec. OSN Practice Management Section Editor John B. Pinto, Refractive Surgery Section Editor Daniel S. Durrie, MD, and Cataract Surgery Section Member Uday Devgan, MD, FACS, also joined the discussion.

Round Table Participants Richard L. Lindstrom Moderator Bill Barton Uday Devgan Daniel S. Durrie Julian Gangolli Mike Judy Ed Peterson John B. Pinto James L. Taylor

Richard L. Lindstrom, MD: This is what I call our SWOT analysis of the industry. In 2008, total spending on health care in America is estimated to be $2.1 trillion. And eye care, including glasses and contacts lenses, is estimated to be approximately 3% of this, or just more than $60 billion. The global market is at least two-and-a-half to three times that amount, bringing spending globally to around $150 billion to $200 billion annually in eye care. Clearly, there is quite a bit of money being spent in our sector, which I think creates a good amount of opportunity.

Total spending on health care in the United States is growing at 6% to 8% a year. So despite some ophthalmologists’ concerns of increasing government regulations, declining reimbursement per unit of care and malpractice, for our industry as a whole, there is clearly great opportunity.

Laser refractive surgery has been flat for several years, but growth in cataract and pharmaceutical and vision care has been significant, increasing around 8% to 10% a year. In addition, while the stock market is clearly under pressure in the United States, private equity firms such as Warburg Pincus have confirmed through the acquisition of Bausch & Lomb and now eyeonics that they see a strong future for ophthalmology.

To start out, do you agree that our industry is strong and that there is significant opportunity? Are you bullish on eye care over the next 5 years?

Julian Gangolli: Eye care represents a specialty that is extremely attractive. There are only 16,000 to 17,000 physicians who make up the core of this, so for a manufacturer to get to them, it represents a highly efficient specialty. The baby boomers are requiring increased surgical techniques. And big pharma has looked at eye care and is trying to work out whether it wants to play or not. We are very optimistic about the future of eye care.

Dr. Lindstrom: Jim, what is the view from Germany on America?

James L. Taylor: I think if you look at it relative to a lot of the other markets, it may be bad to say, but we are blessed by the fact that 100% of the population that gets to age 45 is going to require some sort of eye care. That is not true in many of the other medical cases, fortunately. So whether it is 40 or 50 years, at 60 or 80 years — my mother just had AMD therapy at 87 — it is both a wonderfully valued and a wonderfully necessary part of the health care continuum. So I think in that regard, all of the dynamics are heading in the right direction.

I think the challenge is the market segment size, particularly for our base business. The size and the scope of the markets individually remain reasonably small. So each technology of and by itself does not have a $1 billion market to go chase. The size of the markets relative to this, investments and technology that are required create some challenge. Therefore, you must make the investments appropriately.

Dr. Lindstrom: Bill, what do you think about the strength and opportunity in the eye care sector?

Bill Barton: I think we are at a very interesting time. Certainly we have seen some real change in the posterior segment on the pharmaceutical side.

To Julian’s point, I think that where we are going to see the growth is in the posterior segment, looking for additional treatments to take care of all of these back-of-the-eye diseases that we have not been able to touch in the past. We are already seeing major efforts in this area.

The bullish part of me is most excited about the dual aspect payment regulations that have allowed the cataract surgeon and refractive surgeon to meld their skills together and go outside of the reimbursement paradigm of Medicare. This is an unprecedented opportunity, but one I believe ophthalmology is struggling with.

While some ophthalmologists have been able to get it, understand it, move forward with it relatively quickly, the majority are still trying to figure it out. And I think they are going to have to learn to have a different interaction with their patients than they had in the past. Whether or not that is going to occur with the 50 and older ophthalmologists, or whether they are just going to move through the cycle and the new ophthalmologists who come up will drive this is still to be determined, but we have not gotten close yet to the tipping point.

I think this is almost like a “get out of jail free” card. With the downward Medicare spiral we have been experiencing for so many years, we have been almost brainwashed to the fact that cataract surgery is a “nothing” kind of procedure. We do not value it highly. And consequently, we are almost ashamed of pricing our services comparative to some of the other products. And it carries over to refractive surgery. I think that if we can learn to be a little bit more disciplined in our approach and value ourselves and our services more highly, then I am really bullish.

Dr. Lindstrom: So what I like to call “patient-shared responsibility” for the cost of their care is a bullish thing for our field, it would seem.

Mike Judy: Absolutely. It is easy to be bullish on ophthalmology when you look at the segment of the population that we deal with typically. Baby boomers are growing at three times the rate of any other segment in the U.S. population today. So it is easy to be bullish just because of the sheer volume. But you can really get excited about it because of some of the changes that have been made to the CMS rulings and because of this patient-shared responsibility that we have been talking about.

Baby boomers are the most affluent segment of the population, and their philosophy and their health outlook on life has really changed from the previous generation.

This generation today wants to maintain that active lifestyle that they have been accustomed to, and they are willing to spend the money to afford themselves that opportunity to maintain that active lifestyle. So it is a great opportunity for ophthalmology right now. And as Bill said, I think one of the exciting things about it is to bring back the value to what ophthalmologists do in removing that cataract, and in providing an opportunity for that patient to really enjoy an active lifestyle.

Mr. Taylor: Maybe just a comment on the patient-pay piece. I know you are talking more about the devices as opposed to the diagnostics, but I think on both the industry side and on the clinical side, it is a two-edged sword. Take all-body CT scans and the way they have sometimes been marketed. If we do not watch out, there are various sectors in our industry where you can see things being marketed for patient-pay dollars, but where the clinical benefit may be questionable at best.

Dr. Lindstrom: In the end, we need to bring value to the patient.

Investment opportunities

Dr. Lindstrom: Ed, you represent the sector of people willing to invest millions of dollars into the future, and they could invest as alternatives into cardiology or orthopedics. Some of them are investing in your ophthalmic company, AcuFocus, and you are part of the venture capital sector that invests. What do you think?

Ed Peterson: Here is some information that is pretty interesting. In ophthalmology medical device, there are only nine publicly traded companies. Alcon is both medical device and pharmaceutical, but it gets labeled as a medical device company. Its share price today is $142 a share on the New York Stock Exchange; that is the second highest stock price of any medical device company in the world.

Ophthalmic industry representatives James L. Taylor (left), Mike Judy and Ed Peterson discuss ophthalmic business prospects at the OSN 2008 Section Editors Summit in Las Vegas. Image: Stiglich JM, OSN

So we have one big company leader in ophthalmology. That is very good for us that we have a big, stable company. In our sector, it has also showed innovation for us over the last decade, because when you have one company that can control the flow and entry of technology, it impacts the investments that are coming into our market. With Warburg Pincus coming into our industry, it is going to be one of the best things that has happened to us in the last decade because they have brought the attention of other investors — big, private equity companies — that are looking at ophthalmology. Also because of all of the type of services we provide, it impacts the largest, wealthiest population in the world — the baby boomers. The boomers are important to an investor.

In cardiology, there are 35 medical device publicly traded companies, and all of those, for the most part, their stocks trade in the mid $20s. And Medtronic, even though a very large company, it is still at $42 and kind of stuck.

So the ophthalmic industry now is starting to get the spotlight on it. In 1999, and this is just medical device companies, early seed money was $13 million. In total, in the medical device business in 1999, there was $849 million invested. And that is first round, second round, later seed, etc. in total.

Uday Devgan, MD, FACS, (left) and Mike Judy exchange ideas at the OSN 2008 Section Editors Summit in Las Vegas. Image: Venetian Photographic Services

If you look into the later years, it was $1.3 billion in 2005, $1.8 billion in 2006 and $2.3 billion last year in medical device in total. However, early seed was still only $18 million.

Now you look at companies that have been started by the Innovation Factory, and they are not the only one. There are a couple of those other kinds of early, accelerator companies that now have developed. And over the last 5 years, Innovation Factory alone has invested $189 million in early seed medical device companies. This is an exciting new concept.

These are technologies that were not even a prototype.

So now we have a vehicle within the medical device business. That with very low amount of seed money, they have the ability to incubate a new technology. And then if it works, the next round is usually $10 million to $15 million, Series C is usually in the $25 million range. It is certainly an excellent way to bring new technology to the market.

So I think that with the entry of Warburg Pincus and the attention that it has brought with this huge acquisition of B&L, it is really going to change our life. The acceleration will happen from the bigger companies having to buy new technologies quicker in order to maintain their competitive place. And by doing that, it is really going to be good for our industry.

Pace of demand

Dr. Lindstrom: John, we have talked for years about creating an “Ophthalmologist Confidence Index,” kind of like the Consumer Confidence Index, and industry still seems pretty bullish. They were a year ago as well, when they looked ahead 5 years. One year out, personally working with many practices, how are ophthalmologists feeling? Is there a disconnect?

John B. Pinto: There is a very interesting kind of disconnect, because at the same time we have this blistering pace of demand, something like a 5% gain in demand in the U.S. per year for eye care services, we are only gaining ophthalmologists at about 1% per year. And that cohort of ophthalmologists that we are gaining are perhaps a little bit less workaholic than their colleagues from a generation earlier.

So the total work capacity of the provider base, those who are the distributors for these wonderful products, is not growing anywhere near as fast as the demand for the products themselves. So I think you are going to have a little bit of a problem. You are going to have difficulty in distributing some of these products because the doctors at various levels have been overwhelmed. They are going to be getting into a little bit of difficulty in just being able to see the number of patients they need to, much less have time to go to meetings to learn the new innovations.

I think 10 years from now, one of the major concerns that manufacturers are going to have, whether it is on the device side or the drug side, is that the provider base is so overwhelmed, perhaps some of the larger companies today could help at the level of medical education to assure that the provider base is ready for the growing demand.

Daniel S. Durrie, MD: I think that there are a couple of things happening. Bill Barton mentioned a problem that we are having of changing the practice pattern of the 50-year-old or older ophthalmologists. They are stuck in a mindset. This is the baby boomer ophthalmologist we are talking about. They do not really seem to want to adapt that much to new opportunities and change their practice style.

They can see the end of the line down in a few years, and they are just going to ride it out and take the cuts. Also, we have a younger group of ophthalmologists coming up, the 35- and 45-year-old ophthalmologist, and there are two problems with this group. First, maybe they do not have the same workaholic mindset that we saw with the baby boomer ophthalmologists, but they feel even if they work hard, the business may not come to them. It is hard to come into a town and become the top LASIK surgeon or the top cataract surgeon. Those positions are already taken.

“Why try so hard to get there because I can’t compete with the people who already have an ASC and already have their cataract and/or refractive machine running?”

Because of this, I think there is an opportunity here for industry and for OSN to do some education for this group of ophthalmologists on how to become the next generation of practice. And the key thing to rally around, I think, is presbyopia.

Uday Devgan and Jason Stahl, in my practice, are great examples of those people who are just jumping all over presbyopia because they can bring patients into their practice now and correct the congenital defects with lasers and phakic IOLs. Then they can take them through a transition in presbyopia, whether it is monovision or conductive keratoplasty (Refractec) or AcuFocus. And years later they can do their advanced IOL. They can do this because they have their whole careers ahead of them.

If you take a 55-year-old ophthalmologist, they might think, “I don’t want to deal with presbyopia. It is a progressive disease, and I will have to take care of those patients again down the road.”

We have to remember that the major breakthroughs in ophthalmology were not started by the 50-year-old ophthalmologists. They were started by the 30-year-old ophthalmologists. Look at IOLs and phaco: Mainstay ophthalmologists did not endorse them — they were pushed by younger doctors. When we all started with refractive surgery, we were in our 30s. We jumped in in 1978 and said, “Let’s look at refractive surgery.”

So I think sometimes companies target the wrong market. If you want to really see the growth, I would go a little bit younger and teach them how to do it. I am glad to see some of the younger ophthalmologists really getting into this because I think that is what is going to make our industry grow.

Reimbursement pressures

Dr. Lindstrom: Let’s talk a little bit about what makes you nervous, what keeps you awake at night. One of them clearly is the pressure on your customer, the ophthalmologist, as far as reimbursement per unit of care. Do you think that we are going to continue to see reduced reimbursement per unit of care from third-party payers? Or do you have any vision as to what the ultimate solution to that issue might be?

Richard L. Lindstrom, MD, moderates the industry panel discussion. Image: Stiglich JM, OSN

Mr. Barton: I very much consider it a threat. It is not just a threat to eye care. We are rapidly outstripping the capacity to pay for the technologies we are bringing in to health care.

We are providing an improved quality of life. If you are 40 years old, you are going to live to be 85, according to what the actuaries say right now. What people are more and more interested in is, not to live to 85, but, “What is my quality of life going to be while I’m trying to reach 85?”

If I am going to actively seek a high quality of life, then I need to be allowed and be capable of investing in that very issue.

I wonder about my children and what kind of health care system they are going to be under and what kind of burden they are going to be carrying to pay for me and for you in the coming years.

With the investments that Ed is talking about, technology is going to continue not only to create that challenge, but I think it has potential to accelerate it. And that potentially brings a higher cost burden, and we need to figure out how we are going to pay for that. I think one of our big challenges right now is when we look at $1 and see the way it is portioned, not enough of it is going to the actual care of the patients.

If you are industry, then you are saying, “Well, it’s in insurances and managed care.” If you are a physician, you are saying, “It’s in industry.” But I think we have to find a different kind of balance point so that people are being paid relative to the value that you bring. And I do not think administration is a high value option. We have to figure out how we can get money out of administration and put it into research and patient care. If we can do that and allow the patient to pay, then I think we will have a system that can function better than the system we have today.

Mr. Judy: I agree with Bill on that one. I think there are some real challenges out there, and if the reimbursement for ophthalmologists for doing a cataract procedure continues to decline without involving the patient-shared responsibilities, I think that we could be looking at a situation in which research and development dollars really dry up in the industry. Because as physicians are getting squeezed on the ophthalmologists’ side, they in turn put pressure back on industry to lower prices or keep prices the same, and then all of a sudden there are limited amounts of resources and dollars to dedicate toward advancements in research and development in future technologies.

But it is important that we involve the patients more and more in their health care decisions, for ophthalmologists to realize the value of the services that they are providing and then, in turn, to value the companies for the technology that they deliver. That, in turn, helps industry to further invest in the research and development dollars to bring forth new technology to continue that process.

Dr. Lindstrom: I think ophthalmology practices and industry can learn from each other a little bit as far as their planning. Many ophthalmology practices are totally Medicare-dependent, and they are certainly vulnerable to this reduced reimbursement per unit of care. But I do not know of any other field that has as much opportunity to bolt on things that are outside third-party payment. Julian, it seems to me that Allergan has hedged its interests a bit, too, from the perspective of: “We want some third-party pay that’s recession-proof.” But there is a big opportunity in the patient-shared responsibility for cost, as well. Should ophthalmologists be thinking more like this – like business leaders?

Mr. Gangolli: I think so. Discretionary income in the United States is meaningful. In 2004, some $12 billion was spent on minimally invasive surgical procedures for aesthetic purposes.

Dr. Lindstrom: Are they quality-of-life procedures, basically?

Mr. Gangolli: Yes, that is correct. I think what ophthalmology needs now is a new, killer application, to use a computer phrase. Phacoemulsification was game-changing. LASIK was game-changing. However, everything we have seen over the last 5 years has been an incremental improvement on what is out there. There have not been any real game-changing events.

Dr. Lindstrom: We need a revolutionary disruptive technology.

Mr. Gangolli: You need a sea change in the market. It happened with LASIK, and everyone jumped on LASIK. It happened with ASCs.

Our experience would suggest that you have to tap into the cash business because reimbursement is only going to go one way – it is going to go down.

Dr. Lindstrom: Third-party reimbursement?

Mr. Gangolli: Any reimbursement, coming from any provider base, other than the patient paying, is going to decline.

Workforce, innovation

Dr. Lindstrom: So you just brought up two of my other questions. Is the workforce in place to grow and sustain the industry? We need to remember the workforce includes ophthalmologists, optometrists, technicians, opticians, etc. And how do you see optometry fitting into the equation?

Mr. Taylor: It is the workforce on the industry side as well because we need the innovators. The dollars were not in ophthalmology some years ago. They were in the dot-com industry. The reason that we have a lot of innovation going on right now is that it is more attractive than business trying to figure out how to get groceries to your house at the push of a button. But sooner or later, people will come up with other technologies that start to drag the brain power into different market sectors.

In terms of the scope of the provider, it may be useful to show how inaccurate we can be at forecasting. Six years ago, we projected that the total market for optical coherence tomography imaging was 2,500 systems worldwide. We have sold 8,700 so far, and the market continues to expand. That is a great example of innovation driving clinical value and market growth.

Dr. Lindstrom: So you significantly underestimated the opportunity.

Mr. Taylor: I walked into the industry about that time, and what I was told was two facts everybody knew: “You will never sell more OCTs than the 2,500 unit projection, and you will never see an optometrist pay more than $40,000 for a piece of diagnostic equipment.” Both of those were painfully wrong, absolutely dead wrong. We have seen probably 30% of our sales of more sophisticated diagnostic stuff going into the optometric community and more into general ophthalmology. And I think that goes across the board. So we are going to have to tap into the whole range of providers to meet the patient demand.

And maybe jumping back for a minute in terms of the point Bill made about the overall health care system: It is not broken enough. Even in the current political community when you listen to all of the proposals that are on the table, there is nothing about real revolutionary restructuring. And that is true in France; that is true in Germany. Nowhere is anybody really getting at the problem.

We have all hired a landscaper or a redecorator, and you say, “What’s it going to take to fix my front yard?” And they say, “Well, what would you like to spend?”

And to some degree, that is health care. We can try to make people have perfect health throughout their lifetime, but can we afford it? In that light, what we have not had is the hard discussion of what we owe as a society and what the patient should have as an individual choice. Then you get to the concerns about two-tier health care systems and all of those related debates. And we are not close to having those debates. So I think we are going to be under reimbursement pressure for the next 5 to 10 years because nobody is getting at the underlying problem.

Mr. Peterson: In Europe, we are starting to see the corporate model emerge again. Maybe corporate is the wrong word, but it is providing places for ophthalmologists to do their work, be paid very well and have more time for their family or fly fishing or whatever it is, and they are not building this single entity any longer trying to provide all the services.

So I do not know what that model is, but I think there is probably some format for an investment model that is going to emerge over the next 5 years that is going to capitalize on a delivery system that is more efficient. Just as we were saying about aesthetics, Robert Grant just joined my board. Robert is the president of Allergan’s aesthetic business. His business is the fastest-growing business of any medical company in the world, more than $1 billion. Think about that. This is all private pay, and it is the fastest-growing company in all of medical companies, more than $1 billion in sales.

So perhaps if we start looking at the refractive side of our business in terms of a delivery process and focus on how we get more of those patients in to our practices, it will be good because if they are having their cheeks done, they also want to be able to see them.

Mr. Judy: The nice thing today in ophthalmology is we have a procedure out there to treat cataract patients with or without presbyopia, and we have a built-in audience that we do not even have to market to in order to attract them to your door. With LASIK, you had to market your practice as well as your success with the procedure in order to have the patient take the call to cation. In other words, make that initial trip in to your office.

Today, you have a treatment for the cataract patient with presbyopia, and it is only going to get better in the future with more advancements in multifocal IOLs and accommodating lenses and inlays. While there are nearly 3 million cataract procedures that are done in the United States, roughly 125,000 or 130,000 of them get a presbyopic treatment. Many of the remaining patients are not even aware of the new technology that is available. So you have a built-in pool of 2.8 million procedures that you do not have to advertise to because they are sitting in your waiting room today. Our challenge is helping them to realize that there are other options today besides the traditional monofocal technology that has been associated with cataract surgery for years.

Growing the market

Dr. Lindstrom: That should be, obviously, an extraordinary opportunity and that leads me into another thought. We are mostly all very Type A competitive people who are in this field. The question that arises: Do we sometimes spend too much time competing with each other rather than trying to grow the opportunity? Would we have a different opportunity in laser refractive surgery if we spent some of our money growing the marketplace rather than trying to steal a patient from a competitor? And maybe that can be said for industry as well. Would we be further ahead in the premium channel of IOLs as a whole if we were trying to grow the opportunity rather than make sure no one else had a good quarter? Is there any chance that kind of collaboration might grow? Do you think we would be better off if we took a more global view?

Mr. Judy: I think there has been a lot of discussion over this topic in the past, and I know the American Society of Cataract and Refractive Surgery and industry have tried to come together in the past to raise awareness. I think specifically they were targeting the safety aspects of LASIK a few years ago. A lot of discussions have taken place, but at the end of the day, I am not sure how much effect it has actually had in the marketplace.

You are right, we are all competitive Type A personalities, so there always is that feeling of looking out for your own interest. But I think there are opportunities to create some more awareness, especially about this premium lens channel, because today, as I said, 130,000 procedures are done. I would bet that only 350,000, maybe 400,000 people actually hear a message about a premium channel, so you still have 2.6 million procedures out there that involve a patient who has not even heard of premium channel presbyopic-correcting lenses, whether they be multifocal or accommodating, so I think there is an opportunity to raise the tide for everybody.

Dr. Durrie: I think that the interesting thing in working with industry is that you are all about market share, and to have market share you have to take away from the other company. And you can understand that in the cataract business because you cannot invent more cataracts. So the only way you can grow your business is to grow your market share. There are a certain number of cataracts, and you have to take it from the other guy to get the IOLs. And in pharma, it is somewhat the same way. It is all about market share.

But to grow the advanced IOL business, you have to have a different mindset as a company. You need to grow the total market. It is hard because they are so competitive in other areas. I have seen people I have worked with in the refractive area of a company get transferred over into the IOL area of the same company, and it is interesting how they hunker down and go market share, whereas you should be growing the market. I think you may have to split up parts of these companies a little bit because if you were a pure refractive surgery company, you would just want to grow the industry and work together with the other companies to do this.

Mr. Gangolli: That is a great comment. I think that is one thing that Allergan has done: It has helped build markets. It built the nonsurgical facial aesthetics market from effectively nothing in 2002 to where it is now. We were the first ones to do direct-to-consumer advertising for the Array IOL. Another example is Restasis (cyclosporine) for dry eye.

If you introduce new products to meet an unmet medical need, you have to build the market.

Dr. Lindstrom: We all win if we grow the whole market.

Mr. Gangolli: If you are going to be a leader, you have to invest and get to the health care professional and end user and say, “We have a product or an outcome that may be useful to you.”

Mr. Judy: It is a different story for devices, though. Back when Allergan was the first one to do a direct-to-consumer for the Array technology 8 or 9 years ago, at the time it just did not prove itself to be very effective. When you look at direct-to-consumer marketing and compare the pharmaceutical side vs. the medical device side, I think about 80% of the time a consumer walks in the door asking for a specific pharmaceutical product, they are prescribed that product from the physician.

It is different with a medical device because of its permanency. There is that tendency for a surgeon who is going to be implanting a medical device to really question the patient and make the best possible choice for that patient. I think the patient walking in the door asking about this device has less of an impact than it does on the pharmaceutical side.

Now, with that said, does that mean that you are never going to see direct-to-consumer advertising for IOLs? No, I do not think that is the case. I think as more and more surgeons start to embrace presbyopia-correcting lenses and the companies’ mindset around direct-to-consumer starts to change, I think down the road you will see a device featured in a direct-to-consumer campaign.

Changes in ophthalmology

Uday Devgan, MD, FACS: What I see is that many residents have an employee mindset when they finish. When they are 30, 31, 32, they are happy to work part time, work for an HMO, see a few patients and go home. Only a small number of them are actually driven and have an entrepreneurial spirit to get out there and do something major, take some risks and pursue ophthalmology as their passion.

We have to get the plastic surgery mindset. Two of my three sisters are plastic surgeons, and I have learned a lot from them. Having patients who are partially responsible, such as for presbyopic IOLs, is a good thing; having patients who are fully responsible, such as for LASIK or plastic surgery, is better. They start to lose that sense of entitlement, and they are willing to pay for things out of pocket.

Mr. Peterson: I saw an article in the last 6 months that the top 5% of graduates from residency programs across the United States are going to work at Kaiser Permanente.

Dr. Devgan: Those are some of my residents. They are smart and good clinicians, and they will take good care of the patients at Kaiser.

Mr. Peterson: So let’s just take this one step further. So the Kaisers of the world are getting the best of the best from our residency programs. You would agree?

Dr. Devgan: They are getting intelligent doctors who care about their patients but wish to have more time to pursue personal interests and family life. The driven doctors who pursue the practice of ophthalmology as a passion, perhaps at the expense of maintaining a more balanced life, tend to choose other avenues.

Mr. Peterson: We have this viewpoint in America that if it is a corporate model of delivering medicine, it is not going to be a patient care. There are bad stories about Kaiser, but a lot of them are historical stories and not more recent stories. I have no idea what that corporate model is, if there is one. But certainly we are starting to see many different models. There are several aesthetic groups now that are starting this model. But they are going after the best of the best physicians, and the people who I know who are working in those models are very good physicians. They care about their patients, but they also care about the other parts of their lives, whereas in the past, all we focused on was work. It is just how we were brought up. Many of today’s younger generation are not like that.

Mr. Taylor: Let me challenge that a little bit. I think we are looking at generational myopia here. I graduated with a bunch of really bright guys, and most of them did not really want to work that hard either. And the reason we have very successful people sitting around this table is because you each worked really hard. But I bet 90% of the people you graduated with found some way not to quite spend the same amount of time, energy and effort. And I do not know that saying, “I want to spend time with my wife and kids” necessarily means, “When I am working, I am not doing a great job.” It just means “I do not want to do it 80 hours a week. I want to do it 40 hours a week.”

In our own business, we have bright, young people who come in and say, “You know what? I don’t want to work 80-hour weeks.” And we say, “Jeez, now what are we going to do about that?” Do we get rid of them because they do not want to work 80-hour weeks?” Or do we say, “I’ve got the best 40-hour guy I’m ever going to have, and I’m going to make sure he’s happy because I get more out of him for 40 hours than this other person who wants to work 80 hours.”

So, overall, I do not believe it is that much different now than it was in my generation.

Dr. Lindstrom: I want to take us back to this idea of somehow moving to a different relationship between ophthalmology and optometry because our ophthalmology residencies are graduating about 450 ophthalmologists a year. If we have 18,000 to 19,000 ophthalmologists and they each work 30 to 35 years, then at least 3% of them are retiring every year on a go-forward basis. So that means 550 to 600 ophthalmologists are retiring every year. We are training 450 ophthalmologists, and the demand, as we have talked about, is about to explode. In addition, we are talking about a group of young ophthalmologists who may or may not want to work quite as hard as their parents did. Although, when I look at some of the younger partners in our group, who look like they are willing to work pretty hard, many studies suggest that private lifestyle is a higher priority for the echo boomer generation. They are clearly as bright as we were, arguably brighter in my opinion, but they may not want to work 60-hour weeks. If so, we have a disconnect between patient demand and ophthalmologist provider capacity.

So, John, when you are counseling practices to move into that next generation to be able to handle this demand, what do we have to do?

Mr. Pinto: We have to become more rational with the labor units than we are today. We cannot use ophthalmologists, who go through this amazing training program, to do work that can be done by technicians and others. We are now entering a phase in this profession where we can no longer have these bright, highly trained surgeons doing work that can be done by clerical, technical and optometric providers.

I will be personal about this. My own provider for my eye health care at this stage in my life is an optometrist. He does a spectacular job, and he works in an integrated eye care practice, so that if one day I need more sophisticated medical or surgical care, I have somebody right there on the team. And I think that is acceptable to most members of the buying public. I think we are getting past the era where you would have patients who would say, “Well, I don’t want to go to an optometrist.” Years ago we got over the difficulty of adding optometrists in an ophthalmology practice and having the ophthalmologist defer care of a significant portion of patients to their optometric colleagues.

Certainly, optometric training programs have proliferated. If ophthalmology does not rationally employ this burgeoning optometric labor force, then whether it is under a corporate employment model or one where optometrists themselves hire ophthalmologists, we are going to see an ever more integrated eye care delivery system emerge.

Dr. Lindstrom: We are definitely seeing a growth in some form of integrated eye care, where ophthalmologists, optometrists, technicians, nurses, opticians and ophthalmic administrators work collegially in an efficient delivery model. I think this model as it grows could impact industry in a positive way because in most situations you have separate meetings and separate reps who call on optometry and ophthalmology. In our practice in Minnesota, when a company representative comes in, they can talk to the ophthalmologist and the optometrist under the same roof. The same reps can talk to both about a pharmaceutical agent or a device and help educate in a more efficient fashion. Is this going to work and grow?

Mr. Barton: I am in agreement with John in terms of trying to align skill with work. I think that is something that we do not do very well right now.

This synergy that you are talking about, when you looked at the breadth of Alcon’s bag, is interesting. However, we do not have anybody at Alcon who can walk in and be expert with all these products in that bag. It is too big, so we have to have multiple people coming to your practice in order to provide the quality of service and information we work to deliver to our customers. So I do not see that as a real benefit to us as industry. Consolidation may, in fact, actually reduce the amount of product that is sold in terms of the diagnostics and so on. You may have the mega-practices taking fewer pieces of equipment.

Mr. Taylor: You have to get to the efficiency part of the equation and the productivity part of the equation. We have provided a wide array of different tools over the last decade, but I do not think we have evaluated well how to use those tools so that they are most efficient in clinical practice. As an industry, I think providing surgeons with more tools and hoping they will figure out how to best use them is not adequate — it starts to look like my kitchen. There is a Vegematic and a Cuisinart and a toaster, but nobody said, “This is how you use all these things to make breakfast quickly.”

Dr. Lindstrom: What about the interaction of optometry and ophthalmology in the premium IOL channel?

Mr. Judy: I think there is a real need in the optometric community for education because the majority of the patients coming in for eye care are first seeing an optometrist, so if we can help through the sales organizations that are calling on optometry right now to educate them about this premium channel, I think we are all going to be better off. We talked about the rising tide raising all ships, and I think if we all spend time educating and working with the optometric community, your job as ophthalmologists is going to be a whole lot easier because you are going to have an informed patient who knows about this premium channel walking in your door, so the amount of time and energy that you and your staff are going to have to spend would be greatly reduced.

Dr. Lindstrom: Thank you very much for participating. This was helpful and informative.

For more information:

• Bill Barton, Alcon’s vice president/area president of U.S. and global marketing, can be reached at 6201 South Freeway, Fort Worth, TX 76134; 817-551-4745; fax: 817-551-4030; e-mail: bill.barton@alconlabs.com.
• Uday Devgan, MD, FACS,OSN Cataract Surgery Section Member, can be reached at 10921 Wilshire Blvd., #900, Los Angeles, CA 90024; 310-208-3937; fax: 310-208-0169; e-mail: devgan@ucla.edu.
• Daniel S. Durrie, MD, OSN Refractive Surgery Section Editor, can be reached at Durrie Vision, 5520 College Blvd., Suite 200, Overland Park, KS 66211; 913-491-3330; fax: 913-491-9650; e-mail: ddurrie@durrievision.com.
• Julian Gangolli, Allergan’s corporate vice president and president for North America, can be reached at 2525 Dupont Drive, Irvine, CA 92612-1599; 714-246-5108; fax: 714-246-5888; e-mail: Gangolli_Julian@allergan.com.
• Mike Judy, Bausch & Lomb’s chief commercial officer, can be reached at 26970 Aliso Viejo Parkway, Aliso Viejo, CA 92656; 949-389-3601; e-mail: mike_judy@bausch.com.
• Richard L. Lindstrom, MD, OSN Chief Medical Editor, can be reached at Minnesota Eye Consultants, 9801 DuPont Ave. S, Suite 200, Bloomington, MN 55431; 952-888-5800; fax: 952-884-2656; e-mail: rllindstrom@mneye.com.
• Ed Peterson, president of AcuFocus and the Innovation Factory, can be reached at 32 Discovery #200, Irvine, CA 92618; 949-585-9511; fax: 949-585-9545; epeterson@acufocus.com.
• John B. Pinto, OSN Practice Management Section Editor, can be reached at 619-223-2233; e-mail: pintoinc@aol.com.
• James L. Taylor, president and chief executive officer of Carl Zeiss Meditec, can be reached at 5160 Hacienda Drive, Dublin, CA 94568; 925-557-4662; fax: 925-557-4481; e-mail: j.taylor@meditec.zeiss.com.