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Pittsburgh-area optometrists start their own laser center
PITTSBURGH—A group of optometrists here refused to wait and see how Food and Drug Administration approval of photorefractive keratectomy (PRK) would affect their practices. The ODs formed a professional corporation, purchased a laser and set up their own laser center.
--- Louis J. Phillips, OD
Louis Phillips, OD, one of four co-founders of AllSight Inc., a laser center organized by optometrists, said he and three colleagues—Mark Eger, OD; Arnold Eger, OD; and Melvin Lilly, OD—surveyed the practice climate 2 years ago as PRK approval approached. He saw laser companies and entrepreneurial ophthalmologists poised for it, and saw a threat to his myopic patients, a solid part of his—and most ODs'—practice base.
"We were concerned that if we started referring our myopes out to an entity that was, in all respects, our competitor," Phillips said, "we would be in a situation where we could lose control of our myopes."
After some preliminary research, in January 1995 the four members of his group called together optometrists in Western Pennsylvania. Phillips and his colleagues assembled about 100 ODs and told them that they needed to take action as a group if they wanted to retain control of their patients and their destiny.
At first, he said, they were simply looking for the best laser company to partner with. To fund the group's efforts, 170 ODs gave $50 each to bring companies in, send mailings out and provide legal counsel. Phillips and his partners spent 3 months reviewing the information. In March 1995, the group was convinced that the ODs would have to own the entity themselves.
Absence of local control
Phillips felt none of the models they researched gave the local providers any control. The companies, he said, would "be nice to the local providers" because they did not want the providers referring elsewhere. "But that's assuming there's someplace else to take them," Phillips said. "If other centers are floundering, then we don't have somewhere else to take them, and we lose control of our referrals."
They also saw conflicts between the goals of the profit-oriented laser companies and those of the primary care providers. "The plan for these laser companies was to make a lot of money, and we knew that if they made a lot of money it would be money taken out of patient care," he said.
So Phillips and his colleagues outlined goals for their own laser company. Primarily, no one owner could own a large amount of stock. "We want the investors to realize a return, but we thought it would be more advantageous if we kept the money in the realm of clinical care," he said.
The group formed a professional corporation and made a stock offering to ODs and MDs at $1,000 a share "to find out if they were serious," he said. Eighty-seven doctors bought shares. They then made an offering of a maximum of six shares at $2,000 a share, which attracted nearly 100 investors, including seven MDs. This gave them the working capital they needed.
The investors then elected a board of seven members—including an MD—and hired a center manager. Phillips serves as president of the board.
Stressing the family doctor's role
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The primary strategy of the center is that it does not market patients off the street. "I don't want this center advertising in the marketplace like I don't want Bausch & Lomb opening up kiosks to fit and sell contact lenses," Phillips said.
AllSight's public relations activities have stressed the role of the family doctor, he said. "Your family eye doctor can help you decide if PRK is right for you," Phillips said. "If you go directly to the center you may receive a biased opinion. It's like going to a Chevy dealer to find out which is better, a Ford or a Chevy."
Patients who do come straight to the center for screenings or information are referred to an affiliate provider for consultation, Phillips said.
The first laser procedures were performed March 1, 1996. The center has a growing list of 237 affiliates who refer exclusively to the center. Dave Vivian, national sales manager at Summit Technologies, said this is "the largest group working with one laser center in the country."
No pressure to refer
According to Phillips, "One of the reasons we wanted a huge network was to be in a position where affiliates did not have to refer to make the center work."
In centers where there are only 35 or 40 doctors, he believes the doctors can be pressured into referring, because the center needs patients to run. "We, like every center, can use more patients, but the base is so large we don't need many referrals from each affiliate to make the place run," he said.
Vivian, who worked with Phillips as he formed the center, agreed. "Because of the sheer number in this group, each optometrist can be objective with each patient," he said. "Optometrists can truly offer all alternatives available to a patient. It's a win-win situation for everyone in the group."
Phillips hopes the large network will drive AllSight's success. "We're not spending the money on marketing; we are spending the money and time in doctors' offices," he said. "Doctors can market directly to their patients, and their target is specific."
The center is used only by the affiliates, and one surgeon—Robert C. Arffa, MD—performs the procedures. "Our model encourages physician affiliates to stay at home. It's much more efficient if one well-trained corneal specialist does most of the procedures," Phillips said.
Center charges a set fee
A unique aspect of the center, Phillips said, is its set fee. It is based on the surgeon's fee, Pillar Point's fee for use of the laser, and a center fee, and the affiliates can bill whatever they want. "The patient arrives at the center knowing exactly what the fee is," he said. "The center takes its fee out and rebates to me whatever I say I want."
Phillips draws an analogy with contact lenses. "Bausch & Lomb doesn't tell me what to charge above the cost for their materials. There is no difference between laser, contacts and glasses," he said.
One competitor has called the set-up "communist," Phillips said. But none of the major laser companies have opened centers in Pittsburgh, although three ophthalmologists and one hospital have lasers.
Other ODs can do this, too
Phillips is convinced other optometrists can set up centers. He said, "the leaders must be elected, and they can't hold more stock than anybody else."
Vivian said other groups of ODs have already approached him about forming laser companies. He finds ODs particularly suited for this because, while MDs tend to have an older patient base, he said, optometrists have "the young, myopic population, the group in which the procedure will be done."
Primary care providers should look around their community, Phillips said, and "if they can't honestly say, 'I'm really comfortable sending my patients to this place,' then they should think seriously about setting something like this up."
In the long run, he thinks AllSight will have to be turned over to business people, but "for the short term, primary care providers have to have real input into this," he said. "This is us pushing forward and not sitting back and waiting for someone else to tell us what is best for us and our patients."