The LASIK market is fragmenting into two camps

For surgeons just entering the LASIK market, the question is, how do I find my place?

The first laser in situ keratomileusis (LASIK) camp consists of established doctors and practices that charge between $1,800 and $2,700 per eye. These doctors have established a critical mass of happy patients that spread the word to their families, friends and work colleagues. They usually advertise in their local markets to attract new LASIK candidates, although some have reduced their advertising recently because their internal marketing is generating sufficient numbers of new patients. People who go to these ophthalmologists are usually wealthy, want only the “best LASIK doctor” and seek personalized attention — red carpet treatment.

The second camp consists of LASIK discounters that have invaded approximately 50 of the major markets in the United States. LASIK discounters are usually large companies (some of which are publicly traded) or entrepreneurial doctors who hope to run the local competition out of business. The LASIK discounters usually charge $1,000 or less per eye. They advertise heavily to attract new patients. Many LASIK discounters lose money initially, hoping to show profits later through volume and grabbing of market share. Their strategy is to eventually raise prices when they are the only show in town.

In some markets, the discounters have even forced the well-entrenched doctors to lower their prices somewhat. Patients who go to discounters usually have less disposable income and are under the impression that LASlK is a commodity and it doesn’t matter who does it. As long as the price is right, these patients don’t seem to mind being seen by one doctor preop, having another doctor do the surgical procedure and having a third doctor do the postop care. They also don’t know or don’t care about the difference between an optometrist and an ophthalmologist doing the postop care.

There are signs that some of the LASIK discounters are hurting. Many are showing losses every quarter, their investors are becoming increasingly impatient and there is disagreement and squabbling among upper management of the companies. If this continues, LASIK prices may ultimately settle between $1,400 and $2,000 per eye — a profitable level for most ophthalmologists.

Some doctors have cleverly straddled both camps by maintaining their “elite” practice and also running (at arm’s length) a discount operation usually staffed by ophthalmologists fresh out of training who perform LASIK for a small reimbursement per eye.

Breaking into the market

We recently received a letter asking how to break into the LASIK market. The letter is reprinted with permission. We also include our response below:

Dear DoctorNet: LASIK is something we want to start in our practice. We are a bit discouraged by the fact that there are advertisements now for LASIK in Southern California for as low as $900 per eye. Given that places like the University of Southern California’s Doheney Eye Institute charge about $800 per eye for LASIK facilities fee, how can one make enough to cover costs? It seems that you would even lose money this way. Am I missing something? Or are there alternatives to such high facilities fees? Any advice? --- Julia Valdez, MD

DoctorNet’s response

Dear Dr. Valdez: Thanks for your inquiry. The problem you are facing is similar to what many start-up LASIK surgeons around the county are encountering, as competition stiffens.

Typically, most major university-affiliated laser centers charge top dollar as a facility fee. They have to pay for their usually higher overhead, and they often have “big name” doctors using their facility. These “established” doctors charge approximately $2,500 per eye and can, therefore, afford to pay the $800 facility fee. For people starting out, like yourself, it would be extremely difficult to get any market share at all with a $2,500 fee. Most doctors starting out at this time are charging approximately $1,200 to $1,900 per eye, depending on their geographic location. The doctors who are charging $900 per eye are also well established and generally have their own lasers in their office and run a high-volume operation with emphasis on slashing overhead.

To get started, we would suggest you contact several of the doctors or centers in your area who are advertising $900 per eye and see if they would be willing to let you use their laser for a $500 to $800 facility fee. Many of these doctors or centers have lots of laser down time and would be pleased to have you pay them to use their laser, even if they only make $200 profit (after deducting their overhead for running the laser). If you can find such a facility, you can probably charge $1,500 per eye to the patient and still make a reasonable profit. If you can somehow differentiate yourself in the marketplace (credentials, advertising, connections), you may be able to charge more per eye.

A few words of caution: Most university laser centers run a tight ship and have good quality control. Some laser centers operated by individual doctors or by small companies may not pay as much attention to quality as you would like. Before using any center, you should contact several doctors who use that center regularly and find out if they are satisfied. Inquiring about the incidence of infection or the incidence of Sands of the Sahara (diffuse lamellar keratitis) are good ways to determine how “good” a center is. Also, make sure the equipment is up to date and that they are using the latest version of the laser software and the latest version of the microkeratome. If the equipment is new to you, watch several cases before you do any of your own.

Try to use a center that has a generic name, rather than the name of a doctor attached to it. If your patients see clearly that you are using the “Bill Jones, MD, LASIK Laser Center,” they may decide to send their family and friends to Dr. Bill Jones rather than to you, even if they’ve had a good result by you. Many doctors who own lasers and are eager to let their colleagues use the laser for a facility fee are keenly aware of this issue and have cleverly removed their names from the “centers” they own. Instead, they call it something generic, such as ‘’Mid-City LASIK Laser Center” and often detach it somewhat from their regular office where they see patients.

In an attempt to attract business, many doctors who own lasers will offer to supervise you through several cases until you are comfortable with their facility and equipment. This is important because you want yourself (and your patient) to feel comfortable when performing this procedure.

Booming business

Regardless of which camp you belong to, it is clear that LASIK is a booming business. The number of procedures has increased approximately 55% in the past year, to approximately 1.5 million procedures in the year 2000. See www.optistock.com/spotlight4.htm for market details. Whether you are just starting your LASIK practice or are well established, one of the best ways to get new LASIK patients with minimal expense is from the Internet. This requires that you have a Web site and that your Web site get publicity so that patients can find it.

For Your Information:

• David Michaels can be reached at DoctorNet.com, PO Box 221, East Brunswick, NJ 08818; e-mail: dm@DoctorNet.com.