82 I CATARACT & REFRACTIVE SURGERY TODAY I NOVEMBER/DECEMBER 2005

TODAY’S PRACTICE

Three years ago, I became deeply concern-

ed about the lowering of LASIK retail

prices, and I wrote an article1 to try to shed

some light on the issue of pricing and how

it relates to consumers’ adoption of LASIK.

The key points of the article could be sum-

marized as follows:

• lower prices were failing to stimulate additional demand

for LASIK;

• the decline in LASIK prices, widely promoted by some

ophthalmologists and corporate providers, devalued the

entire value proposition offered to consumers by refractive

surgery;

• a surgeon who cut his price in half had to work 2.5 times

harder to achieve similar profitability; and

• with only 5% penetration, LASIK was only reaching the

early adopters within the consumer population.

The following spring, I wrote a second article that quanti-

fied the impact discounting had had on the refractive sur-

gery category.2 By that time, LASIK’s dramatic drop in price

had caused many surgeons to re-evaluate their

desire to perform the procedure. Such a re-

sponse was not surprising, considering the data

from 2000 through 2002. When average LASIK

prices declined from their high nationally by

24%, total procedural volume nationwide

declined by 18%. I assessed the resulting financial

impact on the category as follows:

• discounting cost the industry $1.67 billion,

which amounted to $335,000 for the average

refractive surgeon, and

• because the discounting was funded by a

reduction in revenue (with costs remaining the

same), every bit of this amount was lost profit.

Ouch!

I also suggested that, although it took 5 years

to build the value of refractive surgery in the

mind of the consumer, it took just a few months

in the year 2000 to destroy much of that value.

Value pricing, as it was called by advocates back

then, was a failed experiment. LASIK did not appear to fol-

low the typical economic laws of supply and demand. To

the contrary, most people continue to value their eyesight

over their other sensory functions and think long and hard

before allowing anyone to touch their eyes. The fear quo-

tient about the LASIK procedure remains high today.

ANOTHER CROSSROADS

Now, more than 2 years later, we are at yet another cross-

roads in refractive surgery. The good news is that the past

36 months have shown a dramatic turnaround in LASIK

pricing. As Figure 1 shows, average pricing has increased by

nearly $100 each year and should reach $1,900 per eye for

the year 2005. Notably, the total number of procedures per-

formed has also increased during this time period. More-

over, the 10-year accumulation of data continues to rein-

force the notion that lower prices do not lead to higher

LASIK procedural volumes.

This turnaround did not happen by accident. For exam-

ple, the industry made a concerted effort to develop

Retail Pricing inRefractive Surgery, Part III

Signs of a turnaround.

BY SHAREEF MAHDAVI

Figure 1. This chart shows US LASIK procedural volume and the average

price per eye, 1996 to 2005. Unlike traditional economics, the decrease in

LASIK pricing was followed by a decline in overall procedural volume,

and the increase in LASIK pricing seen since 2003 has been followed by

an increase in overall procedural volume.

(Courtesy of Market Scope.)Average price pre-1999 estimated by SM2 Consulting.

TODAY’S PRACTICE

NOVEMBER/DECEMBER 2005 I CATARACT & REFRACTIVE SURGERY TODAY I 83

technology that improved refractive surgery in the minds of

consumers. Providers adjusted their fee schedules to simpli-

fy patients’ operative choices and also offered creative

financing to make the procedure more affordable. I want to

review each of these points and how they shape the overall

image of refractive surgery in the mind of the public. This

topic is timely, because we are now at the early stages of

refractive IOL technology, for which the lessons learned

from LASIK are equally applicable.

MAKING IT BETTER

In late 2002 and early 2003, two technologies emerged that

significantly impacted laser vision correction: customized

ablation and femtosecond lasers. Both required

expensive upgrades that promised to improve

LASIK’s outcomes and safety for patients. Manu-

facturers invested heavily in developing the right

messages for surgeons to use when promoting the

technologies and educating consumers, and the

messages shifted from the marketing of the tech-

nology itself (a feature) to what the technology

could do for the patient (a benefit).

Doctors increased their fees to offset the cost

of these new technological upgrades (Figure 1)

and reported that patients were not balking.

Seemingly, the new technologies have helped

reduce patients’ concerns about the risk of bad

outcomes and increased their willingness to con-

sider surgery. For example, surveys of surgeons

who offer flap creation with the Intralase FS laser

(Intralase Corp., Irvine, CA) have shown that the

“no blade” message has proven easy for the clini-

cal staff to communicate and for patients to

understand. The bottom line here is that

patients are more willing to pay for a surgical

procedure when they can see its value. New

technologies have proven to be an antidote to

the disease of discount pricing.

COMPARING MODELS

Granted, some argue that factors such as the

economy and the Iraq war are behind fluctua-

tions in procedural volumes. I acknowledge that

a correlation does seem to exist between con-

sumer confidence and LASIK procedural vol-

umes, and the Market Scope newsletter tracks

this relationship very closely. However, what if

we could find a controlled comparison for the

market of refractive surgery? Is there another

product or procedure subject to the same envi-

ronmental factors? Indeed there is. Breast aug-

mentation is the most widely performed surgical

procedure by plastic surgeons, and its surgical fees of $3,400

per patient are in the same ballpark as LASIK’s. So what’s

happening in that category?

As Figure 2 shows, the relationship between price and

volume in breast augmentation has been very different than

for LASIK. During the 9-year period ending in 2004, plastic

surgeons have increased their fees by nearly 21%, and proce-

dural volume has tripled. Same time period, same economy,

and same catastrophic events (9/11, Iraq war). Furthermore,

the plastic surgery industry has withstood negative PR simi-

lar to LASIK’s (the rupture of implants).

So, how does one explain the different outcomes be-

tween these similar markets? The history and dynamics of

Figure 2. This graph shows US procedural volume and average surgeon

fees for breast augmentation, 1996 to 2004. Breast augmentation per-

formed by plastic surgeons serves as a control group to understand

whether or not changes in price and procedural volume can be attrib-

uted to outside factors such as the economy. In contrast to LASIK,

providers in plastic surgery have raised prices by 21% and have seen the

total procedural volume more than triple during the same time period.

Figure 3. This graph demonstrates financing as a percentage of revenue.

Nearly all automobile purchases are financed, as are nearly one-third of

typical consumer purchases such as furniture and electronics. Although

refractive surgeons as a group lag behind, some of the higher-volume

surgeons are financing 40% or more of their LASIK procedures via third-

party patient financing companies.

(Courtesy of CareCredit.)(C

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TODAY’S PRACTICE

84 I CATARACT & REFRACTIVE SURGERY TODAY I NOVEMBER/DECEMBER 2005

the plastic surgeon’s relationship to

his patients is based more on the

skill of the surgeon than the preci-

sion of the technology. These sur-

geons have done a very good job

of maintaining the value of their

role in the surgical process. Their

professional societies closely moni-

tor advertising and have strict rules

governing what surgeons may and

may not say to patients in terms of

promising results. Moreover, as a

group, plastic surgeons tend to

have a much better understanding

of what it takes to deliver an over-

all experience that reduces

patients’ fear of surgery and builds

on physicians’ primary asset, word-

of-mouth referrals from satisfied

customers. In contrast, the

approach in refractive surgery has

been to overpromote technology,

price, and results.

MAKING IT SIMPLER

The second positive trend in refractive surgery during the

past few years has been the reduction of tiered pricing,

which began in the late 1990s as an attempt by providers to

give their patients greater surgical choices at different price

points. Patients were allowed to choose between different

technologies or even different surgeons, each at a different

price point. Some surgeons even stratified price by refractive

error. However, there are unintended consequences to ex-

panding the range of choices for patients. In his book, The

Paradox of Choice: Why More Is Less,3 psychologist Barry

Schwartz illustrates how choice overload can make a con-

sumer second-guess and stall his decision. More options

mean more effort, and any postoperative problems will be

interpreted by the patient as a bad decision. In refractive

surgery, which inspires fear in many consumers to begin

with, offering too many choices may cause patients to sim-

ply say, “I’ll wait.”

Because the new refractive technologies have allowed

surgeons to clean up their fee schedules, many have revert-

ed back to a single-price philosophy that sets the fee to

include whatever technology is best indicated for each

patient. Multiple-year surveys of Intralase customers4 have

confirmed this trend: the percentage of those surgeons

incorporating the femtosecond laser into their basic surgical

fee has increased from about one-half to two-thirds. Single-

option pricing has simplified the discussion of cost between

the counselor and the patient.

MAKING IT EASIER

The third trend that has helped

displace the discounting mentality

in refractive surgery has been

providers’ increased adoption of

zero-interest financing. A spinoff of

the successful model used by

automakers, no-interest financing

has created the perception of value:

patients can spread their payments

for LASIK over 12 months or longer

and not have to bear the interest.

This message has been used effec-

tively both to attract and to con-

vert interested consumers into

patients. Consumers are familiar

with financing, and this method of

payment is easier to fit into a

monthly budget than a large cash

outlay. No-interest financing pro-

vides more motivation to act than

simply getting a lower price, and

the option makes sense in the refractive category, where

lower prices are associated in consumers’ minds with lower

quality.

Oddly, refractive surgery lags far behind other consumer

categories’ adoption of financing. As Figure 3 shows, only

22% of consumers use third-party financing (not including

credit cards) for refractive surgery, a rate much lower than

that used in the consumer electronics and furniture cate-

gories. A survey of 25 refractive practices that rank in the

top one-third regarding LASIK volume showed a financing

rate of 25% to 40% (data on file with SM2 Consulting).

Many of those practices indicated that patient financing

has expanded their marketing potential. My guess is that

refractive surgery’s lower average adoption rate is outdated

thinking on the part of providers who view patient financ-

ing as a necessary evil rather than a strategic weapon.

Reality dictates that financing will become more impor-

tant in the future. Household debt has nearly tripled in the

past decade in the US (Figure 4). Factor in the introduction

of premium IOLs at retail price points of $8,000 to $11,000,

and financing becomes even more necessary in order to

expand market acceptance. Just like the technological

advances described earlier, patient financing is another anti-

dote to the disease of discounting fees.

IMAGE MATTERS

Although the past several years have brought a healthy

rebound in refractive pricing, the aftereffects of discounting

will persist. Perceptions can become firmly planted in the

Figure 4. During the decade ending in 2003,

credit card debt nearly tripled to approximate-

ly $9,000 per household. Similar surveys have

shown that only one in four adult Americans

has more than $500 in his checking account.

(Continued on page 86)

(Courtesy of http://www.cardweb.com.)

THERAPEUTICS

NOVEMBER/DECEMBER 2005 I CATARACT & REFRACTIVE SURGERY TODAY I 85

During the last 5 years, PRK has re-emerged as a

common procedure among most experienced

refractive surgeons. Numerous reasons for this

resurgence are that (1) PRK avoids flap-related

complications, (2) PRK may be safer in some eyes with re-

gard to preventing ectasia, (3) PRK allows the treatment

of some corneas that are too thin for LASIK, and (4) the

introduction of mitomycin C to prevent haze has broad-

ened the treatment range of PRK to include high myopes

and deep ablations.

The drawbacks to PRK include more pain and a slower

visual recovery compared with LASIK. I certainly think that

LASIK is more convenient for patients and that it therefore

will remain most informed patients’ procedure of choice

for the near future. However, I believe we are entering an

era of much better pain control with PRK patients, and

this change will make the procedure better accepted by

patients.

For me, the biggest advance in pain control for PRK

patients involves the routine use of topical anesthetics

such as Tetracaine (Alcon Laboratories, Inc., Fort Worth,

TX) during the first 4 days after surgery.

RESULTS

I have used topical Tetracaine to control pain after

PRK in all of my patients during the last 2 years. In that

time, I have treated 541 eyes of 293 patients without

any serious complications. One of my patients experi-

enced delayed epithelialization in both eyes (see sidebar,

Case of Delayed Wound Healing, on page 86), but he sus-

tained no visual loss and eventually recovered fully. All

of the other eyes I have treated have achieved complete

epithelialization within 1 week of surgery.

REGIMEN

My postoperative regimen for PRK is as follows. Imme-

diately after surgery, I instill a fluoroquinolone antibiotic in

the patient’s surgical eye and place a bandage contact lens

(Bausch & Lomb, Rochester, NY). Next, I instruct patients

that they may use Tetracaine q.i.d. for the first 4 days post-

operatively to help control their eye pain. Because I supply

them with a single, 2-mL bottle, patients who use the

medication too often will run out of it before they injure

themselves. I also tell patients that they may use a topical

NSAID q.i.d. for the first 4 days after surgery to help con-

trol their eye pain.

For antibiotics and steroids, patients start the following

regimen on the day after surgery. They use Quixin

(Johnson & Johnson, New Brunswick, NJ) q.i.d. for 1 week.

Starting the day after surgery, patients use Lotemax

(Bausch & Lomb) q.i.d. for the first week, t.i.d. for the sec-

ond week, b.i.d. for the third week, and q.d. for the fourth

week. I instruct patients to use artificial tears every 1 to 2

hours for the first 2 weeks after surgery and then as need-

ed for symptoms of dryness.

Finally, I prescribe one or more of the following oral

medications as needed: Tylenol No. 3 (Johnson &

Johnson); Ambien (Sanofi Aventis, Bridgewater, NJ);

and/or Celebrex (Pfizer Inc., New York, NY).

CONCLUSION

Without topical anesthetics, only a minority of PRK pa-

tients’ pain is well controlled on topical NSAIDs and/or

oral pain medication. In contrast, an overwhelming major-

ity of my PRK patients have reported that topical Tetra-

caine effectively controlled their pain. Many have said to

me that, in retrospect, they would be genuinely fearful of

undergoing PRK without having Tetracaine as an option to

control their pain postoperatively.

I consider the use of topical anesthetics for PRK patients

Tetracaine for Post-PRK Patients

The drug provides pain control after surgery without serious complications.

BY RICHARD MAW, MD

“I have used Tetracaine to control

pain after PRK in all of my patients

during the past 2 years.”

minds of consumers, and the idea that

LASIK is available for $299 hurts the

image of refractive surgeons in

patients’ eyes. Secondary to refractive

surgery’s primary benefit—that it can

get rid of glasses—consumers focus

most on price. The industry must

therefore work hard to change its

image so that patients think about

how great the surgeon is, not what

price he charges.

SUMMARY

My goal in this article has been to

put to rest any notion that price

can be pulled like a lever to stimu-

late the demand for refractive sur-

gery. A multitude of issues affect

consumer demand, but price has

not proven to be one of them.

Unlike the economy, population

demographics (eg, aging baby

boomers), war, hurricanes, and

avian flu, price is one issue that the

surgeon fully controls. Additionally,

physicians who plan to offer refrac-

tive IOLs can benefit from the les-

sons learned with refractive surgery

over the past decade and thus help

the field to grow and positively

impact the lives of the spectacle-

dependent population. ■

Shareef Mahdavi draws on 20

years of medical device marketing

experience to help companies and

providers become more effective and

creative in their marketing and sales

efforts. Mr. Mahdavi welcomes com-

ments at (925) 425-9963 or

shareef@sm2consulting.com. Archives

of his monthly column may be found

at www.crstoday.com.

1. Mahdavi S. Retail pricing in refractive surgery.Cataract & Refractive Surgery Today. 2002;2:9:29-38.2. Mahdavi S. Retail pricing in refractive surgery part 2.Cataract & Refractive Surgery Today. 2003;3:6:39-42.3. Schwartz B. The Paradox of Choice: Why More Is Less.New York, New York: HarperCollins Publishers Inc.;2004.4. Mahdavi S. IntraLase: coming of age. Cataract &Refractive Surgery Today. 2005;5:10:117-120.

TODAY’S PRACTICE

86 I CATARACT & REFRACTIVE SURGERY TODAY I NOVEMBER/DECEMBER 2005

(Continued from page 84)

THERAPEUTICS

to be within the standard of care for refractive surgeons today. Again, I would

emphasize prescribing no more than 2mL of anesthetic without refills in order

to avoid the potential abuse of the medication and subsequent injury. (All of

my PRK patients must read and sign an informed consent that discusses the

potential for vision loss due to neurotrophic keratitis from the use of topical

Tetracaine.) ■

Richard Maw, MD, is a board-certified ophthalmologist and refractive

surgeon in Las Vegas. He states that he holds no financial interest in

any company or product mentioned herein. Dr. Maw may be reached

at (702) 228-4554; richardmaw@hotmail.com.

One of my patients experienced delayed epithelialization after PRK. He was a

24-year-old white male with a history of hepatitis C. His medical history was oth-

erwise unremarkable, and he was in good health. The patient was using no med-

ications, and he had no history of unusual wound healing. He underwent un-

complicated bilateral PRK and received the usual postoperative medications, in-

cluding Tetracaine (one drop to both eyes q.i.d. as needed for pain for 4 days

postoperatively).

The patient’s preoperative prescription was low (-3.00 -1.50 X 095 OD and

-3.25 -1.75 X 087 OS). He had thin corneas (460µm OD and 456µm OS). On

the first postoperative day, the patient’s visual acuity measured 20/25 OD and

20/30 OS. His bandage contact lenses fit well, and he had routine, 5-mm epi-

thelial defects in each eye. On postoperative day 5, it was obvious that his eyes

were not healing in a normal manner: both eyes had persistent 3- to 4-mm

epithelial defects; the stromal tissue of both corneas had become edematous;

and his visual acuity had decreased to 20/60 OD and 20/80 OS.

The patient denied abusing the Tetracaine. Regardless, I instructed him to dis-

continue the use of all anesthetics (including NSAIDs), and he returned the bottle

of Tetracaine to me as proof that he was not overusing the medication.

I followed the patient closely during the next several weeks and varied his

treatment regimen. By week 3, both eyes had fully re-epithelialized. Even then,

however, he suffered several episodes of bilateral, central epithelial breakdown.

After 2 more weeks of failed therapy with bandage contact lenses, his eyes finally

responded well to pressure patches. His final visual acuity was 20/15 OU, and he

experienced no further episodes of epithelial breakdown after postoperative

week 5.

It took 5 weeks to achieve and maintain complete epithelialization in both of

the patient’s eyes, and he only used the Tetracaine for 4 days postoperatively. For

these reasons, it seems unlikely that his extremely delayed wound healing was

due to his using Tetracaine during the immediate postoperative period. In 2 years,

with more than 500 PRK eyes treated, this is my only patient with delayed wound

healing after PRK. Consequently, this patient has not deterred my use of Tetracaine

in the first days after surgery.

CASE OF DELAYED WOUND HEALING