To increase LASIK volume, know your market

A survey shows decreased procedure volume and pricing. Patient demographics are shifting toward the mainstream.

Issue: September 1, 2002

ByJeanne Gonzalez

PHILADELPHIA – Although LASIK procedure volume has dropped recently, surgeons may be able to maintain their refractive surgery practices by getting to know the characteristics of their local market, according to a refractive surgery market researcher.

David Harmon, publisher of the MarketScope newsletter, presented statistics on the LASIK market at the Outpatient Ophthalmic Surgery Society meeting held here in conjunction with the American Society of Cataract and Refractive Surgery meeting.

He said that although LASIK procedure volume has dropped, a vast potential audience still exists, and survey data suggests that the LASIK candidate is becoming more mainstream in terms of income and education level. Pricing, patient income, education and marketing trends show that different types of patients are now getting LASIK.

Confidence drop

“LASIK procedure volume is closely correlated with economic factors,” Mr. Harmon said. “Keep your eye on the consumer confidence index.”

According to Mr. Harmon, there was a dramatic increase in quarterly LASIK procedures from 1996 until the first quarter 2001. Volume declined during the last three quarters of 2001. He cited decreased consumer confidence as one of the primary reasons for the drop.

“Fear and uncertainty are still the primary reasons for postponing a LASIK decision. When you add economic uncertainty, LASIK is going to be hit in tough economic times,” he said.

According to MarketScope surveys of LASIK patients, most people take approximately 1 year to decide on the procedure, so a good long-term relationship with prospective LASIK patients is important, he said. And because most people select a surgeon based on a friend’s recommendation, the perception of the quality of a surgeon’s care is very important.

MarketScope quarterly estimates of procedure volumes showed a healthy increase in numbers of procedures during the first quarter of 2002 as compared to the fourth quarter of 2001. However, Mr. Harmon said volumes were still below those of last year and preliminary analysis indicates that second-quarter volumes are also well below those of 2001.

Refractive procedures per laser centers are at an all-time low, reaching numbers not seen since 1997, Mr. Harmon said. One reason for the decline may be the continued increase in the number of laser centers. He said there is currently a net increase of about 25 laser centers per quarter.

“There is a lot of economic pressure on the individual laser center right now in the face of declining procedure volumes,” Mr. Harmon said.

Shifting audience

“The prospective LASIK patient is shifting toward the mainstream. Surveys indicate that the percentage of patients with lower refractive errors, lower incomes and lower education levels is increasing. This has broad implications in the way laser centers and refractive surgeons market to patients. It is also a requirement to expand the market and see long-term growth in procedure volumes,” he said.

Although the majority of patients getting LASIK still earn incomes higher than the national average, patients from lower incomes groups have begun to enter the market, Mr. Harmon said.

“The average household income for LASIK patients today is more than $80,000 per year. Based on Census Bureau data, this places the average patient well within the highest-earning one-fifth of U.S. households. However, the average income level of LASIK patients is down from last year and it is important for this trend to continue in order to expand the market,” he said.

Price range broadening

Prices have been declining since the fourth quarter of 1999. In that year, the average LASIK price was $2,081 per eye. Now average prices are approximately $1,550 per eye. Although many discount centers still advertise low prices, often these serve only as advertising promotions that are available to a very small percentage of patients. A common technique is to advertise a $499 price, which is available only to patients with refractive error of less than –1 D without astigmatism.

In contrast to the discount centers, some surgeons have raised their prices, positioning themselves and their practices as the most experienced surgeon in the area.

“For a while, the price range was compressed. Low-priced laser centers and surgeons were increasing fees and higher-priced surgeons were reducing fees. Now we’re seeing the price range expand once more, with some increasing prices and others reducing prices, but the average is still slipping slightly,” Mr. Harmon said.

Price ranges are expected to broaden even further as new technology emerges and custom ablation, wavefront diagnostics, laser microkeratomes and phakic IOLs become available.

Surgeons should set their prices based on the demographics of their prospective patients’ population and their relative position in their local market. In looking at relative market position, a surgeon should consider his experience level, the technology employed in the laser center and the image of his practice, Mr. Harmon said. By knowing their audience and the perception of their practice, surgeons can tailor their services to a level that supports the price, he said.

“High price strategies must be supported by experience and technology,” he said.

MarketScope LASIK patient surveys show that 8.3% of LASIK customers are still attracted by a low price; although that is a small percentage, last year, the number was only 2.9%, he said.

“Long term, I would expect this number to climb to 15%,” Mr. Harmon said. “If you talk to major eye care retailers, many will tell you that the low price segment is 15% of their business.”

Spreading the word

Long-term predictions for LASIK growth are moderate. Mr. Harmon estimated that procedures will grow to 2.5 million annually by 2006. This is a conservative number, he said.

Key to reaching those estimates is reaching out to a younger population. His survey showed that most people do not get LASIK until their fourth decade.

Referring to young people turning 21 years of age, he said, there are 7.6 million new eyes that enter the market each year.”

Mr. Harmon said that by 2015 he would expect about 20% of the vision correction population to be reached. He noted that contact lenses took about that long to penetrate to the same percentage of their potential market.

In 2001, there was a slight increase in refractive surgery among age groups 21 to 25 and 26 to 30, although the majority of patients getting the procedure are between the ages of 31 and 45 years, he said.

“It is a small percent compared to the percentage from the higher age groups, but surveys indicate a higher percentage of patients from the age groups. This is a good sign and a long-term requirement for continued growth in LASIK demand,” he said.

For Your Information:

David R. Harmon is president and senior editor of MarketScope, and publisher of Refractive Market Perspectives, a newsletter focused on the refractive surgical industry. He can be reached at 13610 Barrett Office Drive, Suite 211, Manchester, MO 63021; (314) 835-0600; fax: (314) 835-0606; e-mail: daveharmon@market-scope.com.