This article is more than 5 years old. Information may no longer be current.
Temporary turndown in LASIK no reason to panic
Economic slump and national “uncertainty” have affected LASIK volumes. Recovery will come in time, experts say.
Click Here to Manage Email Alerts
Excimer lasers are not lighting up nearly as often for LASIK as they were this time last year. The downturn in LASIK volume started in early summer. It began with a sluggish economy and a natural lull in the evolution of a refractive procedure. As the year end approaches, it has been intensified by a now full-blown recession compounded by a national uncertainty after the terrorist attacks.
“Some of my clients have experienced as little as a 10% drop in LASIK leads, consults and cases, while others are experiencing as much as a 60% drop,” said ophthalmic practice management consultant John Pinto of J. Pinto and Associates of San Diego.
The only pattern to emerge so far has to do with advertising.
“If there’s any pattern at all, it would be that the advertising-oriented practices — the ones that get 60% to 70% of their leads through consumer advertising — seem to have been hit the hardest, while the ones that have been hurt the least are those that rely on alumni, patient-to-patient referrals and professional referrals,” he said.
In short, it seems the corporate laser centers are taking a harder hit. According to David Harmon, refractive surgery consultant and editor of the MarketScope newsletter, almost all laser centers have experienced a decline in volumes that began about mid-year. However, the corporate centers in particular had a large drop-off in procedures at the end of the third quarter.
“Surgeons, who usually don’t advertise and market as much, are pulling patients from their existing general ophthalmology practices, whereas laser center companies rely more on advertising and referral networks,” he said.
A random telephone survey conducted by Harmon of about 25 individuals with information about approximately 150 laser centers indicated that in the 2 weeks following Sept. 11, LASIK screenings dropped 80% to 90% at most centers.
“People were frozen to their televisions, nobody was paying attention to LASIK. It started to pick up after that but not to the levels that it was prior. Since that date, the stock market really has not recovered and consumer confidence is down. In addition, the anthrax scare and the war in Afghanistan have combined to reduce interest in LASIK,” Mr. Harmon said.
The corporate view
One should expect a high-volume laser center to be hit on two levels, according to Mr. Pinto.
“The first would be that their patient base is a lot more tentative; the second is that they might be expected to have a tougher time in that in most settings they do not provide full-service eye care. The corporate centers are de pendent on basically one product line and unless they’ve got awfully deep pockets, they’re not going to have the necessary staying power,” he said.
TLC Laser Eye Centers Inc. has established itself a premium provider of LASIK services, with a strong network of referring doctors. TLC says it is gearing up to rebound as soon as the economy does. In a press release, Elias Vamvakas, chairman and CEO, said, “for us the general economic downturn comes right on the heels of a period of industry-specific turmoil. To manage our way through the current business environment, we plan on aggressively escalating implementation of the performance improvement programs that have already enabled TLC to successfully meet the industry challenge.”
TLC’s Bill Leonard, executive vice president of operations, told Ocular Surgery News, “The recent downturn in the economy has affected everyone, and the laser vision correction industry is no different. At TLC, we have been proactively managing our business by reducing our costs and making smart investments in activities such as marketing to increase revenues. ... We are taking appropriate action now to ensure we’re ready to rebound when the economy improves.”
TLC recently acquired Laser Vision Centers Inc., in a stock deal valued at about $106.8 million. The deal should produce annual cost savings of at least $10 million in pretax income, company officials said. St. Louis-based Laser Vision had fiscal 2000 revenues of about $96.1 million. TLC had fiscal revenues of about $174 million. Before that deal, TLC acquired ClearVision Laser Centers, Inc.
According to LCA-Vision, Inc.’s chief executive officer Tom Wilson, times are tough but they could be worse.
“While the decrease in procedure volume and the resulting operating loss this quarter are disappointing, our competitors are reporting even larger year-over-year reductions in volume and we continue to grow our market share. Looking ahead, we are taking the necessary steps to put this business back on solid growth trajectory in the first quarter of next year and beyond,” he said.
LCA-Vision owns and operates 31 LASIKPlus laser vision correction facilities in the United States, plus one in Canada and a joint venture in Europe.
Manufacturers, too
Laser manufacturers, too, are feeling the sting of the economic slowdown.
“The economic downturn has definitely had a negative impact on sales,” said Randy Mansfield, Bausch & Lomb’s director of marketing for cataract, refractive and vitreoretinal businesses. “We have seen some decline in equipment sales and in annuities. The LASIK procedure is elective, and in that sense can be considered a discretionary spend. During times of economic uncertainty consumers are less likely to spend their incomes on any type of elective health care. Slowing patient streams, in turn, often lead to a reluctance on the part of physicians to purchase new capital equipment.
“The economic downturn was most likely impacting sales even before the tragic events of Sept. 11 occurred. Those events definitely exacerbated the losses in LASIK sales,” Mr. Mansfield continued.
“However, differences in pricing and consumer confusion about the procedure and quality of the technology used to perform the procedure are also playing a role. The media also doesn’t do the industry any favors when they focus on the 1% of procedures that have gone awry as opposed to focusing on the overwhelming number of success stories.”
Alcon Laboratories’ Scott Corning, senior product manager, excimer lasers, told Ocular Surgery News, “It’s safe to say that surgical procedures industry-wide have slowed because of the downturn in the economy, and were also adversely affected because of the tragic events of Sept. 11. Starting in the summer, the industry started to see a dip and obviously September didn’t help any.”
Mr. Corning hopes refractive surgeons will remain committed to their pricing strategy rather than react to dropping procedure volume by lowering prices.
“You won’t necessarily see an uptick in volume just because you drop your price,” he stressed.
Nidek Inc.’s director of marketing, Sam Larson, says his company is still placing systems despite the economic slowdown.
“Many refractive surgeons who are concerned about the slowdown in the economy are now considering Nidek, based on the quality of our clinical outcomes and the economic advantages of having a Nidek system. They realize they cannot afford to throw away thousands of dollars in per-procedure fees every month,” he said.
“We realized right away that business would be secondary for some period of time after Sept. 11, but people are slowly getting back to some sense of normalcy, and we see that in our customer activity,” he added.
In a press release, Visx, Inc., reported that “the severity of the continued economic downturn has resulted in a sequential decline of 25% to 30% in licensing revenues as well as lower than anticipated international and domestic equipment sales.”
Liz Davila, Visx chairman and CEO, stated, “Like many other industries, the laser vision correction industry has not been immune to the downturn. As an elective procedure, laser vision correction is easily postponed by the consumer in times of uncertainty. During this time, Visx is maintaining its leadership and remains well positioned to take advantage of the tremendous growth opportunity within our marketplace once the economy improves.”
Anecdotal examples
A private practice with 60% of its income coming from cataract and geriatric and general eye care and 40% from elective refractive surgery is really quite resilient, according to Mr. Pinto.
“A practice like that can have a few bad months, even a few bad quarters in refractive surgery, remain committed to the category, come back out and relaunch its marketing efforts when the dust settles and be just fine,” he said.
Long-time LASIK surgeon Stephen Brint, MD, of New Orleans, said his practice anticipated the LASIK slump and so far has experienced just a 10% decline. To counteract the effect on his practice, he plans to “stay with the basics — great patient care, internal marketing and keeping the price up — $2,200 per eye.” He said the outcomes he achieves with LADARVision technology and large treatment zones help him sustain that price.
Pennsylvania ophthalmic surgeon Louis Nichamin, MD, has taken a somewhat bigger hit with a drop-off in LASIK volume in the 25%-to-35% range.
“We plan on simply holding to our current aphorisms and commitments. Our approach has never been to discount the surgery or bring hype to the procedure,” he said. “We have no intentions of lowering our price, and remain committed to excellence in the field, and I would expect that patients will come around to seeking quality over cost. Refractive surgery is not going to go away, and based upon our reputation that we have worked hard to establish and clinical positioning within our region, I personally feel that the future is quite bright.”
Dr. Nichamin has a Bausch & Lomb Technolas 217 and a Visx laser.
Refractive surgeon Mark Lesher, MD, of New Mexico, began to notice a drop in interest in LASIK as early as May. That was followed by a significant drop in interest following Sept. 11. He estimates that his practice has experienced a 40% to 50% decline in volume compared to the first 6 months of 2001. Dr. Lesher, who has a Nidek EC-5000 and a Visx S-3, had plans for a direct-mail offer to established patients for $200 off LASIK scheduled before the end of 2001.
Minnesota ophthalmic surgeon David R. Hardten, MD, has experienced a 15% reduction in LASIK. His plan is to wait for the economy to recover and to take advantage of the seasonal surge in refractive surgery that usually comes with the start of a new year. Dr. Hardten has both a Visx and a Bausch & Lomb Technolas laser.
Hard questions
There is no question that refractive surgery is in a lull. The questions are “why” and “what now?” The economy was beginning to stagnate well before Sept. 11, but the events of that day pushed it over the edge, according to MarketScope’s Mr. Harmon.
“Approximately 145,000 LASIK procedures fell out of the third and fourth quarters according to our estimates,” he said.
But do not be mistaken, said Mr. Harmon, those are not lost patients.
“They didn’t go away, their decision just got postponed. That’s 70,000 to 80,000 people who will have refractive surgery maybe in 3 months, or maybe in 2 years. The only certainty is that they are not going to have it done now.”
“My impression is that we are in a recession now that is going to be leveraged by the Sept. 11 events,” Mr. Pinto said. ‘None of us knows how long it’s going to last or how deep it’s going to go, but the consensus of analysts is that it’s going to last a little bit longer and go a little bit deeper than the average recession. Which means about this time next year we should be well and truly heading out of this problem. Consumer confidence should be coming up and, of course, that’s a direct correlate to the phone ringing to ask about refractive surgery.”
Meanwhile, geriatric eye care will continue to sail right along, Mr. Pinto said.
“I’m starting to sense a sort of anecdotal drum beat out there that some seniors will be coming forward for more care toward the end of this year because they read the handwriting on the wall. We’re putting a lot of national resources into the war effort and on the security effort, and that’s going to potentially bleed dollars out of Medicare. Over the next 1-year watershed period, geriatric surgeons are going to do just fine. This is a time that if you’re not geriatrically oriented to recommit yourself to that.” (See Mr. Pinto’s article in an upcoming issue of Ocular Surgery News on repositioning your practice).
Recession and uncertainty aside, veteran refractive surgeon Daniel Durrie, MD, discussed other reasons for the current LASIK setback.
“I’ve been in refractive surgery development for more than 20 years, and I’ve watched this happen multiple times,” he said.
For instance, radial keratotomy started out tentatively and then gained interest once the Prospective Evaluation of Radial Keratotomy study showed its effectiveness. Following that, the procedure picked up momentum and surgeons began to push its limits. Price wars followed, then it slumped as patients began to hear of photorefractive keratectomy and considered waiting for that. LASIK, he said, is experiencing a similar evolution, with even more momentum because there is so much more capital invested in the technology.
“The other thing that is having an influence is the public got really confused about what they should pay for this surgery,” Dr. Durrie said. “During the discounting phase, most of which failed or forced the centers to close down, the consumer metaphorically said, if you can’t figure out how much this is worth, I’m just going to wait until you figure it out. I don’t know if I am taking too many risks if I get the $999 model or if I’m being stupid if I pay $3,000.”
The eventual recovery of the economy and new technologies such as custom ablation will spur a turnaround, he said.
“Refractive surgery is not going away. It’s going to come back stronger than ever,” he said.
For Your Information:
- John Pinto can be reached at (800) 886-1235; fax: (619) 223-2253, e-mail: pintoinc@aol.com.
- Dave Harmon can be reached at 13610 Barrett Office Drive, Suite 211, St. Louis, MO 63021; (314) 835-0600; fax: (314) 835-0606.
- Daniel S. Durrie, MD, can be reached at 5520 College Blvd., Suite 200, Overland Park, KS 66211; (913) 491-3737; fax: (913) 491-9650; e-mail: ddurrie@novamed.com.
- David R. Hardten, MD, can be reached at 710 E. 24th St., Suite 106, Minneapolis, MN 55404; (612) 813-3600; fax: (612) 813-3658; email: dhardten@mneye.com.
- Mark P. Lesher, MD, can be reached at 101 Hospital Loop NE, Suite 203, Albuquerque, NM 87111; (505) 883-6800; fax: (505) 878-9128; e-mail: mplesher@aol.com.
- Louis Nichamin, MD, can be reached 50 Waterford Pike, Brookville, PA 15825; (814) 849-8344; fax: (814) 849-7130.
- Stephen F. Brint, MD, can be reached at 5649 Read Blvd., Suite 900, New Orleans, LA 70127; (504) 246-2136; fax: (504) 244-3256.
- More information on LCA-Vision Inc. can be found at www.lasikplus.com.
- For more information on TLC Laser Eye Centers Inc., contact Public Relations Director Farah Tayabali, at 5280 Solar Drive, Suite 300, Mississauga, ON L4W 5M8; (905) 238-3943; fax: (905) 602-7956.
- For information on Nidek, contact Sam Larson, Director of Marketing, 47651 Westinghouse Drive, Fremont, CA 94539; (800) 223-9044; fax: (510) 226-5750; e-mail: Sam_Larson@nidek.com.
- For information about Alcon Laboratories, contact Mary Dulle, Communications; (817) 551-8058; e-mail: Mary.Dulle@alconlabs.com or Scott Corning, Senior Product Manager, Excimer Lasers; (617) 413-1685.
- For information on Bausch & Lomb, contact Ericka Weeks, Manager, Marketing Communications, (909) 399-1245; fax: (909) 399-1525.