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Changing market forces laser centers to adjust business plans for 1997

Issue: January 1997

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While some laser companies logged more than their share of bumps and bruises last year, others have been able to step back and reflect on growth and success. All look hopefully to 1997 — a year in which private investors will fund expansions, mergers may help companies expand their market presence and optometrists will still be an important part of the mix.

In interviews with Primary Care Optometry News, officials from five laser vision correction companies shared their thoughts on the previous 12 months and their goals for this year.

Laser Eye anticipates growth

---Jack W. Melton, OD

Laser Eye Institutes of America met its goal of opening 10 laser centers in 1996, and president Jack W. Melton, OD, credits that success with a flexible business plan.

"We did a good job of interpreting the market and adapting our business plan to the market," he said.

For example, Melton said, he did not believe that advertising excimer laser surgery directly to the general public was the best way to get patients into laser centers. "It's more important to have internal marketing, with doctors communicating with their patients. We put our dollars with our doctors," he said.

As a privately held company conceived and headed by an optometrist, Melton said Laser Eye Institutes wants to open as many as 50 affiliate centers in 1997.

"We look at the future as being very bright," he said. "The market is still only a tenth of what it will be in 2 to 4 years and the industry is young. The numbers haven't been what everybody thought they would be, but my outlook is as optimistic as ever."

Laser Eye Institutes of America functions as the administrative body that works with a panel of doctors through an affiliate company called LExES.

Beacon funds expansion

Toronto-based Beacon Eye Inc., a subsidiary of Hawker Siddeley Canada Inc. (HSC), raised $25 million from institutional and private investors 6 months ago to expand Beacon Eye Institute Inc. in the United States and Beacon Eye Centre Inc. in Canada. As a result, new investors will own 48.6% interest in Beacon, and HSC will further reduce its ownership in Beacon as additional equity is raised to fund continuing expansion.

HSC and Beacon president and CEO Keith Moore, said in a press release that Beacon "intends to be a significant player in a market estimated to have the potential to grow to several billion dollars annually. We are pleased with our progress and anticipate strong, long-term value creation in this emerging, high-growth market."

Beacon currently operates five U.S. laser centers: in San Antonio; the Dallas/Fort Worth area; Houston; Austin, Texas; and Denver, in addition to a center in Toronto.

Three additional laser centers — in Fort Lauderdale and Tampa, Fla., and Atlanta — opened last December, and Beacon's goals for this year include doubling the number of laser centers.

"Consumer demand is increasing," Moore said. "I am more enthused than ever about the potential for Beacon."

TLC, 20/20 merger benefits all

---J. James Thimons, OD

The recent merger of Canadian-based TLC The Laser Center with 20/20 Laser Centers Inc., based in Bethesda, Md., should serve the optometric profession well, said practitioner J. James Thimons, OD.

In December, TLC signed a definitive agreement to purchase 20/20 in an acquisition worth approximately $25 million. 20/20 centers will continue to operate under its own name. The Maryland company owned nine surgical centers that networked 875 ophthalmologists and optometrists. TLC owns 14 clinics in the U.S. and Canada that combine 5,000 optometrists. The agreement is subject to regulatory and shareholder approval.

"While many groups initiated the laser vision correction process, it was likely there would be some consolidation and mergers," Thimons said. "This should benefit optometry greatly because it clarifies the significance of the procedure and says a great deal about the commitment of companies to have the long-term role as patient care providers collaborating with optometry and ophthalmology."

Thimons said an examination of health care at every level reveals a trend toward consolidation, economy of scale and the delivery of service through regional, national or international organizations.

"I anticipate the excimer laser industry will simply reflect these trends," he said. "It shows strength and long-term commitment when you undertake these large-scale endeavors."

Summit seeks changes

Summit Technology president D. Verne Sharma, PhD, promised a kinder, gentler laser company during his October speech at the American Academy of Ophthalmology meeting in Chicago.

The company has undergone a rocky path the past year, after angering ophthalmologists and optometrists, replacing founder David Muller and facing a stock price drop from more than $30 a share to less than $10, where it has remained. Optometrists felt that Summit's purchase of Lens Express, a direct-mail contact lens company, would undercut their contact lens business. Ophthalmologists felt that Summit's start-up of 19 laser centers threatened their refractive surgery business.

Sharma told the audience in Chicago: "Summit has let a number of you down," and then he outlined how the company intends to make amends. Summit will help its excimer users with marketing and patient database development. Because former contact lens wearers are highly motivated to seek refractive surgery, the company will offer its Lens Express database to users of Summit Apex excimer lasers.

He added that Summit has learned a great deal about what motivates customers to undergo refractive procedures and will provide the information to doctors at cost.

Sharma said Summit will open no more laser centers; however, "We are currently evaluating all options available to us as we review the operations and future of the existing centers."

At the Academy meeting, Sharma told doctors, "The fact is, Summit is willing to confront the issues. The important thing is that we help people. We want to help our customer succeed."

Global's conservative approach

Like Summit, Global Vision has experienced a slower-than-anticipated start in the laser vision industry. Also like Summit, Global lost its chief executive officer, James Cefaratti, although under friendlier circumstances than Muller.

Global will continue without a CEO by spreading duties among its vice president of marketing, vice president of professional services and, particularly, chief operating officer, Steve Fitzpatrick.

"We believe we have an extraordinarily talented and dedicated team," he said. "We feel very strongly about our ability to move ahead in the market."

To handle the changes presented by 1996, the company focused on existing centers and implemented a more targeted growth strategy. The company now has seven centers and will rededicate itself toward expanding those markets, said center director Louis J. Catania, OD, also a Primary Care Optometry News Editorial Advisory Board member.

---Louis J. Catania, OD

"Our philosophy included a very aggressive growth strategy in addition to developing the centers in existence," Catania said. "Our current approach to growth in new markets has become more conservative, and will concentrate more on developing the existing seven centers in operation. We have spent an extraordinary amount of money in development, and will continue to move forward and grow in strong potential markets rather than high-risk markets."

Toward that goal, the company continues to privately capitalize. In October, Global raised $1.5 million from Pacific Venture Group, which followed another $2.5 million received from Crosspoint Venture Partners.

Laser Center Companies: contact information