The needs of aging population may reshape ophthalmic economics

The aging baby boomer generation and the looming demographic shift in the U.S. population foretell a dramatic increase in the need for ophthalmic services. But the growing number of older individuals moving through the health care system in the next decade also has the potential to redefine both how eye care is delivered and how ophthalmologists remain economically viable.

Experts estimate that the 15% of gross domestic product currently spent on health care could rise to as high as 20% in 2020 if left unchecked As the number of individuals aged 65 years and older swells, a likewise increase is expected in the number of eyes affected by age-related degenerative conditions such as cataract, dry eye, glaucoma, macular degeneration and presbyopia. Epidemiologic predictive models, designed to measure the prevalence of blindness in the U.S., estimate that about 937,000 individuals are legally blind, but that figure could rise 70% to 1.6 million by 2020.

Researchers have also predicted a dramatic rise in specific eye conditions brought on by the aging process. According to one study, about 20 million Americans have cataract in at least one eye, but that figure could rise to 30 million in the next 10 years. Other research, pointing to the aging population, has predicted an increase in the prevalence of age-related macular degeneration — currently affecting about 1.75 million individuals but expected to increase to about 2.95 million — and open-angle glaucoma — currently about 1.8 million cases with an expected increase to 3.36 million cases, with black individuals exhibiting three times the age-adjusted prevalence — by 2020.

For ophthalmology as a specialty, the rise in expected need comes amid a stagnating number of new providers entering practice and at a time when many practitioners are nearing retirement age. Moreover, health care reform, viewed by some as a necessary step to lower health care costs before the surge in demand as a result of the aging baby boomer population, may both lower physician reimbursement while adding even more individuals to patient rosters.

John A. Hovanesian, MD, FACS, believes ample communication and responsiveness to patients’ concerns are critical to maintaining good relationships with aging patients. Image: Hovanesian JA

To some, this era of niche population explosion offers a potential boon for business. According to ophthalmic consultant and OSN Practice Management Section Editor John B. Pinto, the increasing number of seniors is a ready-made revenue stream that should help ophthalmic providers survive any suspected cuts in compensation.

“Seniors use about 10 times the amount of eye care services compared to the commercial-age population. There is a tremendous leverage to that fact,” Mr. Pinto said. “There are 610 million eyeballs in America and an unlimited market demand for not going blind.”

But others, while looking at those same numbers of new patients and the perpetual shortcomings of government-backed insurance for seniors, see a need for a dramatic change in the way eye care is delivered.

“It’s really going to strain the way our offices are structured, and I think people are going to have to change the way they do things and the way they practice,” Robert J. Noecker, MD, MBA, a professor of ophthalmology at the University of Pittsburgh School of Medicine, said.

Not without risk

According to Dr. Noecker, the growing ranks of seniors may offer a promise of stable or even new business opportunities, but it also presents a unique set of challenges for ophthalmology.

“Certainly, it’s an opportunity, but it’s also a risk given our current economic environment and increasingly limited resources to deal with these things,” Dr. Noecker said.

Especially ominous to ophthalmology is the changing Medicare landscape, from which ophthalmology as a specialty generates a significant portion of revenue. Starting this year, the Centers for Medicare and Medicaid Services will begin phasing in increases to several ophthalmology codes — among them cataract surgery, trabeculectomy, new eye exams and complex retinal detachment — that may help practitioners generate significantly more procedure-based revenue by 2013, when the increases will be fully implemented.

However, Dr. Noecker said he is skeptical whether the final increase will truly represent a significant increase over current compensation levels given that procedure-based compensation has been so deeply depreciated in value over the past decade. In addition, Dr. Noecker pointed out that the entire CMS enterprise suffers from a fundamental underfunding that could ultimately spell its demise.

Robert J. Noecker

“I look at CMS, and CMS has enough money to keep going until 2017 in the current structure, when it will run out of money,” he said. “Something has to change structurally to keep this system going. Something’s got to give.”

Legislation currently moving through Washington could further affect whether Medicare remains a reliable revenue stream for ophthalmology. As of press time, Congress had voted to suspend a proposed 21% pay cut to physicians through Medicare. In November 2009, the House of Representatives passed H.R. 3961, the Medicare Physician Payment Reform Act of 2009, which redefines how physicians are compensated for providing care to Medicare patients. At present, the Senate is exploring various options to move away from the sustainable growth rate formula. Both the House and Senate measures would be necessary to avoid the 21% cut in reimbursement from becoming permanent.

Therefore, the pending demographic shift as baby boomers age presents an opportunity and a risk: an expanding patient base and more individuals seeking medical care through government-backed insurance but, at the same time, an extensive proliferation of need that could ultimately undermine the funding system that ophthalmology is heavily dependent on for revenue.

“There has to be a change in the payment because coming up here with the baby boom bubble, there are going to be a lot more outlays then there is money coming into the system,” Dr. Noecker said.

Another unknown factor is whether health care reform will extend coverage to currently uninsured individuals. According to Dr. Noecker, the various proposals currently in discussion suggest a swelling of 10% to 15% on top of current capacity.

“Where’s the capacity in the system? Most doctors you talk to just can’t take that influx after you are established after a couple of years in practice,” he said.

Changing practice patterns

But in the face of all these external pressures on the field of ophthalmology, Dr. Noecker said that he sees the greatest risk to the field as not that detrimental.

“The big risk is that we will get more business than we want,” he said. “The good thing is that we will not be losing patients, but we will have to be smarter about dealing with increased demands from patients.”

However, Dr. Noecker added, the coming increase in patient demand suggests an opportunity to critically review operations to maximize patient flow-through, with the overarching goal being to find a way to deliver high-quality care at minimal overhead cost to the provider.

At the facility level, that may mean identifying bottlenecks in patient flow and correcting them so that more patients can be seen. “You always want the doctor to be the rate-limiting step,” Dr. Noecker said.

Delegating responsibility for certain tasks may also increase efficiency. For instance, diagnostic testing can be performed by technicians while the physician is in the operating room. In that vein, optometrists may be called on to handle refractions and diagnostic exams.

The need for ancillary support staff to aid in the delivery of eye care is borne out of the greater role that technology is playing in ophthalmology, Dr. Noecker said. In the future, innovations such as teleophthalmology may become more useful to triage less acute medical needs while identifying those patients most in need of the expertise provided by ophthalmologists.

The University of Pittsburgh School of Medicine has already set up a teleophthalmology pilot program to screen for diabetic retinopathy. According to Dr. Noecker, diabetic retinopathy is a disease state in which revenues are largely driven by surgical fees, but routine screening of patients with diabetes to find those in need of surgical follow-up may also help revenues.

“If you can shift that and have a camera up in the primary care office or elsewhere, you can basically read the images that are taken without increasing the stress on the system,” Dr. Noecker said. “Plus, you have a built-in referral source.”

Remote screening may also be applicable for other disease states, such as glaucoma, in which technology is already helping to identify patients who require more intense follow-up. The incorporation of optical coherence tomography, retinal tomography and nerve fiber analysis, in addition to traditional fundus photography, has added quantitative data that has improved confidence in tracking disease progression.

“I think we are getting better at targeting the right population, distinguishing between the patients that are stable vs. the ones that are getting worse,” Dr. Noecker said.

Need for adaptation

If the shifting reimbursement landscape dictates changes regarding how much and by what means physicians are paid, ophthalmologists may have no choice but to adjust practice patterns to sustain their practice’s economic viability.

“What I would say generically to the typical ophthalmologist is this: that you can expect for the balance of your career that you’re going to be paid less per unit service in the coming years; therefore, you have to work at all levels to be more efficient to preserve and enhance personal earnings,” Mr. Pinto said.

John B. Pinto

The movement toward reimbursement paradigms that favor efficiency is already under way in proposed regulatory changes. The proposed House and Senate health care reform bills, in an effort to root out waste, propose the redistribution of health care dollars to medical centers with lower per-patient Medicare spending, thereby penalizing centers with high expenditures. Opponents of the legislation contend that while the move attempts to pay for value, it does not take into account that some medical centers spend more Medicare dollars by virtue of seeing more at-need patients, and that the change could result in a dramatic slashing of budgets at medical centers that serve higher-risk populations.

According to Mr. Pinto, the quality of a physician’s services will become increasingly important in the future. Irrespective of regulations that attempt to reward efficiency, patients will still continue to gravitate toward physicians who offer both high-quality service and good outcomes.

“Increasingly, there is a transparency about who are the good doctors and who are the not-so-good doctors. And that’s not just objective surgical outcomes; that’s how pleasant was the office staff, how easy was it to park,” Mr. Pinto said

Overall, the shifting revaluation of the payment landscape, the expanding number of seniors and the decreasing supply of ophthalmic providers may speak to a need for ophthalmologists to consider every aspect of the practice to be just as important as surgical outcomes.

“In order to be an effective ophthalmologist these days, you have to be effective at every level of business,” Mr. Pinto said. “If you are leaving out any of the steps, you are as sure to fail in business today just as in surgery. Leaving a step out of a surgical procedure leads to disaster; leaving a step out of your business practice will lead to disaster. This was not the case in the past.”

New markets, new opportunities

One potential consideration to handle the graying population is for ophthalmologists to offer new services tailored to the needs of the geriatric market. Services such as cataract removal and dry eye management will be in greater demand, as will the need for glaucoma care and management of AMD.

Ophthalmologists already have a history of adapting to changing needs in the market. According to Mr. Pinto, savvy ophthalmologists added refractive surgery to their menu of offerings when demand surged but rebalanced their surgical portfolio when the economic downturn suggested that fewer individuals would spend discretionary dollars on elective procedures.

“This sort of tidal ebb and flow of interest and activity, if done adroitly and out ahead of the curve, will leave the doctor in the economic sweet spot of the industry,” Mr. Pinto said.

Just as adding a service might be in the best interest of a practice, subtracting an offering in which a physician is inefficient, so that the provider can refocus efforts on those areas in which he or she is efficient, may also be beneficial. One catalyst of that type of change is the potential adoption of new technology, such as femtosecond lasers in cataract surgery, that requires a huge capital outlay but offers to provide better results for patients.

“Not every small surgery center is going to want to invest in that kind of technology, and yet those that do are going to be the providers of the more premium services,” John A. Hovanesian, MD, FACS, OSN Cornea/External Disease Board Member, said.

The surge in use of premium IOLs is fragmenting the cataract market, as patients are beginning to expect refractive results after their cataract removal. Already, Dr. Hovanesian said, a higher volume of cataract surgeries is being performed by a proportionally smaller number of surgeons, and that trend only promises to continue.

“Those who are higher-volume surgeons that pride themselves on consistency of results are already using the lenses, and those that are on the fringes are now making the decision whether they are going to make the effort to do tomorrow’s kind of cataract surgery,” he said.

The expanding array of dry eye diagnostic and treatment modalities is also changing the management of that disease state. Dr. Hovanesian pointed to the introduction of LipiView (Tear Science) and the TearLab Osmolarity System as new tools useful for the identification and differentiation of patients with dry eye. As well, the Maskin Meibomian Gland Intraductal Probe (Rhein Medical) offers a new treatment possibility, and another device, LipiFlow (Tear Science), is currently in review by the U.S. Food and Drug Administration for the treatment of dry eye. Some of these devices are already covered by patients’ insurance, while other require out-of-pocket expenditures.

However, Dr. Hovanesian said he believes that how care is delivered is just as important as what care is delivered. Patients should feel that they are cared for and that there is ample and constructive communication between patient and physician. “That’s just old-fashioned values, but that is still the most important thing for people,” he said.

But more than just good patient care, providing an environment where patients feel their needs are taken care of and where ancillary staff share the values of the physician in providing good quality care can also help differentiate a given practice as a destination patients seek out when thinking about their eye care needs.

“We do know that to survive whatever storm is coming, we need to differentiate ourselves in the eyes of the community as being the place to go, the premium providers. The practices that are going to flourish in the decades to come are going to be the ones using media like the Web and things like blogs and other outlets to let the public know about their services and why they are a premium place to come for eye care,” Dr. Hovanesian said.

“It’s not enough to come to work and do the best for your patients and try to form good relationships with physicians in the community to excel in the coming age of medicine. You really have to either be a good marketer or employ a good marketer,” he said. – by Bryan Bechtel

What effect would the proposed cuts in Medicare and TRICARE compensation have on ophthalmology?

References:

• Congdon N, O’Colmain B, Klaver CC, et al. Causes and prevalence of visual impairment among adults in the United States. Arch Ophthalmol. 2004;122(4):477-485.
• Congdon N, Vingerling JR, Klein BE, et al. Prevalence of cataract and pseudophakia/aphakia among adults in the United States. Arch Ophthalmol. 2004;122(4):487-494.
• Friedman DS, O’Colmain BJ, Muñoz B, et al. Prevalence of age-related macular degeneration in the United States. Arch Ophthalmol. 2004;122(4):564-572.
• Friedman DS, Wolfs RC, O’Colmain BJ, et al. Prevalence of open-angle glaucoma among adults in the United States. Arch Ophthalmol. 2004;122(4):532-538.
• Kempen JH, O’Colmain BJ, Leske MC, et al. The prevalence of diabetic retinopathy among adults in the United States. Arch Ophthalmol. 2004;122(4):552-563.

• John A. Hovanesian, MD, FACS, can be reached at Harvard Eye Associates, 24401 Calle De La Louisa, Suite 300, Laguna Hills, CA 92653; 949-951-2020; fax: 949-380-7856; e-mail: drhovanesian@harvardeye.com.
• Robert J. Noecker, MD, MBA, can be reached at University of Pittsburgh Medical Center, Eye and Ear Institute, 203 Lothrop St., 8th Floor, Pittsburgh, PA 15213; 412-647-2200; fax: 412-647-5119; e-mail: noeckerrj@upmc.edu.
• John B. Pinto can be reached at J. Pinto & Associates Inc.; 619-223-2233; e-mail: pintoinc@aol.com; Web site: www.pintoinc.com.