Laser surgeons turn eye to price

October 10, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

"Deep discounting," "special introductory offer" and "convenient mall location" -- strategies long used to entice American consumers -- are now being employed to sell something customarily discussed in the hushed tones of doctors' offices: eye surgery.

Laser vision correction, however, is not ordinary eye surgery. It's an elective procedure, seldom covered by insurance. Thus surgeons have turned to the selling points of the retail world -- price and easy access -- to persuade consumers to spring for it.

"It's a discretionary expenditure," said David Harmon of St. Louis-based Market Scope, publishers of a newsletter called Refractive Surgical Market. "It competes with cars and boats and new PCs."

It's a bizarre atmosphere and a bazaar atmosphere as medical marvel collides with consumer commerce.

The collision may be louder in Baltimore than anywhere else. The Baltimore market is being watched as a test of two concepts that push the boundaries of medical marketing:

Heavy discounting backed by price-focused advertising.

When one laser center lost its star surgeon to a rival chain, it responded by aggressively promoting a price of $2,995 for both eyes, for a procedure that generally costs about $5,000. Another competitor countered with a price of $2,950 and ads that promise "The Best Price in Baltimore -- Guaranteed!" It has made price a subject -- and sometimes a matter of negotiation -- in many patient-surgeon conversations.

"They come in with their newspapers, and it says `$3,000' right on it," complained one surgeon, Dr. Sheri Rowen. "You don't have to meet the price to hold the patient, but you have to come closer to it. I've had to come to a point where there's a compromise, which makes me feel like a used-car salesman, and I hate that."

A surgery center in a mall.

Visual Freedom Center opened one of the first mall-based laser centers in the country last month at The Mall in Columbia, in a new wing with Godiva chocolate, Lady Foot Locker and Yankee Candle Co. With a glass-fronted operating room, surgery on a Saturday afternoon draws more than two dozen watchers. Some carry shopping bags. Some sip cafe latte from cardboard cups. There are gaping kids in full soccer uniform, complete with shinguards.

"You don't expect to go shopping at Nordstrom's and then get your eyes done," said Jennifer Southam of Co- lumbia, a prospective patient who had come to observe. "It's sort of California-esque."

LCA-Vision, Inc., a Cincinnati-based national chain with a discount operation in the Baltimore market, said volume at its centers in Towson and Annapolis was up 151 percent for the three months that ended in September, compared with the corresponding period a year earlier. (Volume at all their centers open a year was up 51 percent.)

Even with the $2,995 fee, the company makes as much profit as before on each eye corrected, said Larry Rapp, chief financial officer. And with volume up, he said, the centers earned back the added promotion costs in about two months, and the two discount centers are more profitable than ever.

Long-term questions

LCA now plans to test the discount model further at five centers in California.

Others, however, are skeptical about how the discount model will work over the long term, and see Baltimore as a key test.

"Particularly the investment types that are backing the laser centers, they've paid a lot of attention to this [Baltimore] market," said Harmon.

The stakes are large.

Irving Arons, managing director of Massachusetts-based Spectrum Consulting and publisher of the newsletter Executive Laser Briefing, estimates the target market for laser correction -- those who can benefit from the procedure and can afford the out-of-pocket costs -- at 60 million people in the United States.

Fewer than a million Americans have had laser correction, barely 2 percent of the target market. But the numbers are growing rapidly -- the industry expects to reshape nearly a million American eyes this year, up from about 450,000 last year, at a cost of more than $2 billion dollars.

Newer technique works well

Driving the growth is the introduction in the United States in late 1995 of laser-assisted in-situ keratotomy, known by its acronym, LASIK.

Surgeons have been working for decades to perfect a method of eliminating eyeglasses by reshaping the cornea, the transparent front of the eyeball. Earlier efforts could be painful, took months to bring improvement, and sometimes resulted in eye problems.

Then came LASIK. By slicing a flap in the cornea before the laser is used, LASIK largely eliminated the pain.

The procedure takes just a few minutes. While some patients do have eye problems as a result, the complication rate is lower than for earlier procedures. And patients can see better immediately, producing what some analysts call "the wow factor."

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