Since we last reported on the discounting of LASIK fees, the price pressure has intensified more rapidly than anyone, even the corporate discounters themselves, had expected. To help you figure out what that means for you, Ophthalmology Management interviewed dozens of refractive surgeons, ophthalmic business consultants, corporate executives and industry analysts. We found that a surprising number of surgeons feel they have no choice but to bring their fees down. On the following pages, you'll hear from them, as well as from those who are remaining competitive without lowering fees.

Meet William B. Hart, M.D., of Lake Charles, La. He may come across as a folksy, small-town ophthalmologist, but he's a fierce and sophisticated competitor who runs his practice in a way many corporate CEOs would envy. "Competition is nothing new to me," says the 54-year-old practitioner when asked how he's coping with today's cutthroat environment in laser vision
correction. After 15 years in practice, Dr. Hart has developed a formidable array of professional and business skills, and he's needed all of them to remain
competitive and profitable in laser vision correction. He may well be a model for how to approach what is now a troubling, escalating trend for independent surgeons -- downward pressure on LASIK fees.

"This thing is nuts," says Dr. Hart. "I'm not only competing with the discounters, I'm up against independents in southwest Louisiana and east Texas who are charging as little as $900 an eye."

While Dr. Hart is confident he won't have to lower his fees, a flurry of activity -- centered around price -- is taking place around the country.

Feeling the pressure

"The laser vision correction market has evolved and changed more quickly than any market I've ever seen," says analyst Al Kildani, who covers the industry for Pacific Growth Equities, Inc. in San Francisco.

Consultant Susan Villamena is seeing it, too. "My experience has been that overall the independent ophthalmologists aren't faring very well," she says. "Many of them are just now feeling the pressure to lower their price to $1,000 per eye."

Price is increasingly mentioned on independents' Web sites, which wouldn't have been the case only a short time ago. Practices are touting limited-time offers of $1,000 per eye or less and offering discounts to patients who have both eyes done the same day.

Even nationally known practices have reacted to the pressure. Charles Moore, M.D., who practices with Jack Holladay, M.D., in Houston, says they lowered their fee slightly during the last year, but are now holding. "We lowered our price because we felt we had a little leeway," he explains. "We can still deliver quality and make a reasonable profit."

Other practices are initiating tiered pricing. Jack Moore, administrator for Minnesota Eye Consultants in Minneapolis, which includes Richard Lindstrom, M.D., David Hardten, M.D., and others, explains that their price is based on levels of myopia, hyperopia and astigmatism -- four tiers, four prices.

"The tiers give our telephone staff and surgery counselors the opportunity to keep people on the phone longer and bring them into the practice," he says. "We convert most patients who meet our surgeons and see our facility. The tiered system is a way to hold an average price against the discounters. More and more practices are adopting this system."

All types of practices are conceding ground and bracing themselves for the fallout. "I still see my prices having to come down," says Neil Robinson, M.D., of Ocean Eye Institute. His Toms River, N.J., practice, located in a middle-class area, trimmed its fee for bilateral LASIK from $4,500 to $3,600 in June. "We chose to make that move to bring up our volume," explains practice administrator Mary Gailis. "The price cut triggered a 20% increase in volume, but the numbers have backed off again. Now we're hearing that people are waiting because they think the price may go down further. So the price decrease may have backfired; it's too soon to tell."

Dr. Robinson says that patients will pay several hundred dollars more to stay with the doctor they like, but they won't pay $1,000 more. "If you're the first guy in your area to offer LASIK, or the number-one guy, you may be able to keep patients with high fees," he says. "But everyone else has to lower prices at least a little. Your market makes a difference. If people are wealthy, differences in price don't matter. If they're not wealthy, price matters a lot."

One satisfied patient that Dr. Robinson recently treated, a stockbroker who had no problem paying his fee, passed on 20 of Dr. Robinson's business cards to friends. Only one of those people followed up. "People hear that prices are declining, and they wait," Dr. Robinson explains. "The discounters' New York and Philadelphia commercials reach this area."

Watching and waiting isn't the answer

Dr. Robinson's practice isn't just letting market forces take over, however. First of all, they're re-evaluating their laser arrangement. Right now, they have a 3-year contract to use a Laser Vision Centers, Inc. mobile laser, but they're considering moving to a group-purchase situation. "Buying your own laser is risky," Dr. Robinson says. "Sharing a purchased laser does mean competing with co-owning doctors, but economics may force us to use this option. Currently, we have the lion's share of the market, experience and reputation. We were the first in our area. Our competitors take their patients an hour outside of town to get to a laser, but it's only a matter of time until one of them brings in his own laser. They'll do it with or without me. So I'd rather have them do it with me.

"I've heard of doctors who've bought high-quality lasers so patients could undergo LASIK at the practice. Then a competitor buys a less expensive laser and undercuts the price. How can you compete in that situation? You can't. The only solution is to avoid getting into that situation in the first place."

Dr. Robinson believes a shared buying arrangement could work for him, if the parties purchase the laser and run things themselves. "A hospital or group running it for you will take a big percentage. The economics are too tight for that!"

The practice leaders have also sought education on converting prospects into patients. "That has helped us the most," administrator Gailis says. "It improved our conversion rate and helped us build our practice. It helped us make patients feel comfortable about us as a practice, not to worry about price, but about care. If you keep patients happy and comfortable, you'll increase your conversion rate and capture the ones who are on the edge of deciding. Part of that is letting the same physician take care of the patient from start through follow-up." (See "Handling the Interested Patient Effectively," on page 49.)

Dr. Robinson says another way to deal with the price pressure is through aggressive advertising in combination with successful patients. "The largest, most successful practices that I see use print, radio, TV, billboards and airplanes with banners. I believe serious marketing is absolutely mandatory."

Answering a wake-up call

Indeed, analyst Kildani says, independent ophthalmologists must be proactive in their approach to the LASIK marketplace because at least some of the big corporate players aren't going away. "TLC has about $80 million in cash; Laser Vision and LCA-Vision each have about $40 million. They have the financial strength to be around for the long haul."

Back in Lake Charles, the ever-creative Dr. Hart would agree. He realized early that the best way to compete with anyone, including the price-slashers, is with quality care, personal service, savvy marketing and astute practice management.

"I started my practice here in my hometown in 1985 and quickly came to the sobering conclusion that I was surrounded by established ophthalmic surgeons," says Dr. Hart. "I realized that my medical practice was a business, with a product and competitors. I knew I would have to further develop my professional skills, run my practice cost-effectively and advertise in order to grow. At that time, advertising by physicians was considered a pretty radical idea."

Dr. Hart embarked on a multifaceted effort to make his practice on Bayou Pines Drive as competitive as any in the country. He first sought the advice and counsel of top eye surgeons in nearby Houston, honing his cataract surgery and radial keratotomy (RK) skills until he could perform the procedures quickly and expertly.

He then began attending workshops and meetings to learn the secrets of effective advertising. He surveyed fellow physicians to determine what kind of campaigns had the best chances of success. Armed with this knowledge, Dr. Hart personally initiated a multifaceted advertising and marketing campaign "to let the public know they could get state-of-the-art eye surgery right here in Lake Charles."

By offering monthly in-office seminars for potential refractive surgery patients and participating in each patient's work-up, Dr. Hart also won what he calls "the war of word-of-mouth." The Hart Eye Center came to be known as the patient-friendly clinic where each question is answered and the same people who do the work-up are there for the surgery.

Though Dr. Hart normally charges $1,750 an eye for laser vision correction, he also has a group rate for businesses, school districts and organizations. "My surgical coordinator, Elaine Dyer, is in charge of the in-house marketing program," he says. "We'll go to chemical companies and refineries in the area and explain that laser vision correction can help their employees in their jobs. We've also done the procedure on a number of school bus drivers. We can usually sit down with any group and work something out."

The Hart Eye Center also provided LASIK for the New Orleans Police Department SWAT team -- and obtained testimonials from team members, which Dr. Hart uses in his radio advertising and on-hold telephone message. "It takes a lot of work, but we're weathering the storm," concludes Dr. Hart.

The Focus Eye Center in Ottawa, Canada, recently weathered a storm of its own. Instead of dropping its LASIK fee, the multilocation practice fought off a discounter by:

�         promoting its highly regarded surgeons in its marketing campaigns and on talk shows

�         giving patients a high level of physician attention

�         encouraging new patients to speak with patients who previously had LASIK at the center

�         developing a highly skilled telephone staff

�         offering a convincing contrast between the overall value of Focus Eye's $4,000 total-care procedure and the discounter's quick and impersonal $2,000 procedure.

Interestingly, this effort was so highly focused it didn't require increased advertising expenditures.

And in the Philadelphia area, where a discounter mockingly lists competitors' names and prices in a radio commercial, Steven Siepser, M.D. F.A.C.S., director of Siepser Laser Eye Care, has carved out a profitable niche catering to upscale professionals who place a high priority on personal service in an attractive setting.

"I'm really only looking to tap into the top 10% of the market," says Dr. Siepser. "Those are the only refractive surgery patients I want."

How proactive are you?

As a rule, it's this type of proactive thinking that best protects a practice from price pressure. Take, for example, Lawrence Katzen, M.D., in West Palm Beach, Fla. He's increased his fee for LASIK three times, from $1,500 per eye to $1,800 to $2,000, to the current fee of $2,150. He admits that his situation isn't typical because he was the first in the area to have a physician-owned, dedicated laser center. "We established a reputation. This is very different from someone without his own laser center who's just starting out," he says.

But in addition to distinguishing the practice with quality and service, obtaining solid results, and letting patients know about all of that, Dr. Katzen makes sure he accomplishes a lot of cost-sharing with other segments of his practice. "Because we offer multiple services, including cataract, refractive and oculoplastics, our cost structure is different. Laser centers usually don't function at full capacity. They have downtime and underused space. Except for the laser suite, we cross-utilize our resources. Our staff is cross-trained, so we don't need a separate receptionist, for example. And because we use staff for multiple purposes, our overhead is lower," he explains.

Offering multiple refractive services can be another key to battling LASIK price erosion. According to William Rabourn Jr. of Medical Consulting Group based in Springfield, Mo., "Our clients are becoming comprehensive refractive surgeons. They're offering laser thermal keratoplasty for hyperopia and Intacs in addition to LASIK. Patients understand that one size, one procedure doesn't fit all."

Furthermore, he says, the savvy patients question the gap in price between you and the discounters. "If a practice does its job, it can help them understand why there's a difference."

Houston's Dr. Moore concurs. "Low price has created confusion with the public. They need to know why costs vary."

Lowering your fees just adds to their confusion. "It leaves a bad taste with your patients who've already had the procedure," says Stanley Teplick, M.D., of Portland, Ore. "They wonder why they paid so much when your fee is lower now."

Michael Malley of the Center for Refractive Marketing (CRM) in Houston says, "We shouldn't blame the public for responding to discount centers. They've been spoon-fed LASIK and a price. They believe all LASIK is created equal." Malley recommends reminding patients of the importance of making an informed decision with something as important as their vision. "Invite them to come to the practice, where together you can go through the process step-by-step, answering all of their questions. Then let them know you'll do everything possible to make the procedure as affordable as you can. LASIK is still one of the biggest decisions people make. We tend to forget that."

Patient financing programs have also helped independent surgeons maintain their volume by overcoming patients' price objections. Practices find that offering several financing options is especially beneficial. "Financing is important," says consultant Rabourn. But he cautions, "At one time, we thought patient financing would be the panacea, but it's not the cure-all we thought it was. Be careful. Most practices aren't set up internally to have a revolving line of credit with patients. There's no collateral, nothing to repossess."

Partnering as an option

Like Dr. Katzen, Dr. Hart does what he can to lower his costs in certain areas. For example, he didn't purchase a laser. Instead, he says, his 3-year affiliation with Laser Vision Centers has been cost-effective and productive. "They own the laser and bring it to my office four times a month. They provide a technician and bear the cost of keeping the technology upgraded. I get their marketing expertise and an association with a nationally known brand. It's very important to have that brand behind me. It tells people that I've gone through a screening process and been judged to be a good surgeon."

The Hart Eye Center also receives referrals from Laser Vision. These patients are almost always members of a health or vision plan who receive a discount on the procedure. "These referrals account for only about 10% of my LASIK patients," notes Dr. Hart. "We generate the rest through our own efforts." (See "Is Affiliating for You?" at left.)

If you have no interest in affiliating with a public company, other opportunities are cropping up in response to the price pressure. The PlusCare Network is one example. This marketing and support services organization for refractive surgeons was recently launched by The Hillside Group, which specializes in providing business solutions for the healthcare industry.

"Our role is to market our ophthalmologists, handle the initial processing of potential patients, and arrange affordable financing for them," says Donald Fagen, executive vice president for sales and marketing. "We expect to have more than 200 affiliated surgeons by the middle of next year."

Fagen says the PlusCare Network will operate on a pay-for-performance basis. "We'll only get a fee if we process the prospective patient, send the individual to a surgeon and a procedure is performed," he says.

Industry analyst Kildani points to yet another option for independent refractive surgeons seeking to achieve economies of scale in marketing, purchasing and/or computer services. "You can form a regional group of independent surgeons who agree to share costs," he says. "It's not something you hear about every day, but it's been done with some success."

In fact, ClearVision Laser Centers, which is based in Denver, was started in 1995 by a group of Colorado ophthalmologists who got together to share the costs of a laser. From those beginnings, ClearVision expanded to become the largest privately owned laser vision correction company, with company-owned centers and affiliated refractive surgeons in 13 states.

Where is this headed?

As practice owners wrestle with whether to lower their fees -- or how to go about ensuring that they won't have to -- varying outcomes are predicted.

Refractive consultant Mark Danzo, of Danzo International, sees a definite cause and effect dynamic. "In general, only two options exist: Build more value into your existing product/brand and leave your price as is, or drop your price. Unfortunately, more and more practices are dropping price because the path to building value/brand is either a mystery or too much work," he says.

Analyst Kildani sums up the situation this way: "The downward pricing pressure will ease somewhat, but a range of $1,000 to $1,200 an eye will probably be sustainable for some high-volume providers." He sees challenges for independents, but also lists a number of opportunities:

�         thirty to 40% annual volume growth in procedures

�         equipment costs coming down

�         new procedures on the horizon, such as custom ablation, that will command premium pricing

�         more managed care deals for discounted and partially covered LASIK in which independents can participate.

"Looking at this market realistically, the high-profile surgeons will still be able to get $3,500 for LASIK," says Kildani. "The inexperienced or unknown surgeons who try to go it alone in a major metropolitan market will have the toughest time. But for the majority of independent ophthalmologists who do refractive surgery, I think the answer is to obtain some of the advantages of scale by partnering and forming alliances."

John Pinto, president of the ophthalmic practice management firm J. Pinto & Associates, also expects stratification. "The LASIK market is clearly stratifying into at least three discrete price segments, in broad bands of $500 to $1,000 per eye for the discounters, $1,100 to $1,400 for the mid-market players and $1,800+ for the premium providers," he says.

"Doctors in appropriate markets with excellent operating fundamentals (strong sales staff, upscale facilities, large installed base of surgical alumni, etc.) can readily support premium pricing, and they should hold back from reducing their fees, even if their lead and case volumes dip.

"Almost all other non-corporate practitioners (either those with otherwise great fundamentals, but in less-affluent markets, or those with less experience) should be aiming at the middle market. If you're finding the only way you can develop a practice is with a sub-$1,000 fee, something is terribly wrong in one or more operational dimensions of your organization.

"With my apologies in advance for describing a medical service in such commercial terms, although discount programs, 'stand-by' discounts and other efforts at creative pricing can help harvest extra cases, no efforts work as well as a superior in-house sales team with tight database management and staff rewards for closing the sale. In this regard, LASIK is first and foremost a retail business, but one joined at the hip with science, technology and the oldest traditions of medical caring."

Doing what it takes

As the situation continues to evolve, Dr. Hart, of course, will keep strategizing and competing. "The stampede to lower prices does no one any good," he says. "I'm an entrepreneur. I do what it takes to keep patients coming in the door."

Handling the Interested Patient Effectively

Independent ophthalmologists find themselves so affected by the current tumbling of prices because they're not handling the interested patient effectively. The key to holding price lies not only in the hands of the doctor, but also in the hands of the receptionist who answers the phone, the coordinator who meets with the patient, and the technican who evaluates the patient. If these people aren't enhancing their selling skills effectively, then patients will continue to shop, think things over, react to price and use fear as an excuse.

Our clients are educating themselves and their staff members on the subtleties of a no-pressure, yet effective selling strategy. They're also looking at hiring coordinators who are true sales people with a proven track record. All in all, the ones who will stay ahead of the curve are the ones who recognize the importance of this.

-- Susan Villamena, Co-founder
Practice Solutions Rx, New York, N.Y.

How the Corporate Players Plan to Survive

Leaders of the large corporations that participate in laser vision correction have widely differing business strategies, but they agree on one point: None of them expected price competition to become so intense so quickly in what's still a largely untapped market.

Though patient volume is expected to increase 50% this year, to approximately 1.4 million procedures, pricing pressures and marketing costs have all the publicly owned corporate players, except Laser Vision Centers, bleeding red ink.

"It's hard to imagine prices going much lower," says James Watson, executive vice president of operations for Lasik Vision, the Canadian company that many in the industry point to as the instigator of the current price wars.

With the laser vision correction market in a period of rapid change and uncertainty, Ophthalmology Management interviewed the leaders of Lasik Vision, Laser Vision Centers, LCA-Vision and TLC Laser Eye Centers for insight into their current and future business strategies. Here's what we learned:

�         Lasik Vision. Lasik Vision's Watson says the company's long experience in laser vision correction, first in Canada and more recently in the United States, combined with its position as a high-volume provider, enables the company to achieve efficiencies and economies of scale in most areas of its operations. He maintains the company can do this and still provide high-quality patient care.
"We feel we're charging the right price for the procedure," says Watson, who asserts that the marketplace is large and segmented enough to accommodate different types of providers at a wide range of price points.
"There's been criticism leveled at us as a discounter, but the independents should play the cards they have," says Watson. "Their strengths are personalized care, long-term relationships with patients and ties with their communities."
Watson says Lasik Vision plans to rapidly expand its U.S. presence from its current 15 centers, but concedes that cash constraints may delay or alter those plans. He says the company isn't counting too much on custom ablation as a future source of revenue. "Frankly, we don't see that as a huge market," he says.
Overall, Lasik Vision would like to emerge as a dominant provider of laser vision correction in the United States, but as industry analyst Al Kildani of Pacific Growth Equities, Inc. notes, its three major corporate competitors all have much deeper pockets.

�         Laser Vision Centers, Inc. St. Louis-based Laser Vision Centers has evolved from strictly a service and equipment provider for independent ophthalmologists to a company that now forms joint-venture partnerships with refractive surgeons. The company prefers to partner with doctors in smaller cities and suburban areas where price competition is less intense.
"We have a surgeon-friendly business model," says Laser Vision Chairman and CEO John Klobnak. "We believe that, given the choice, most people want their vision correction procedure performed in the office of the local doc who's known and respected in the community. By providing the laser, the technical support and participation in a national marketing effort, we share both the risks and the opportunities with the individual surgeon."
Laser Vision consults on pricing with its affiliated surgeons but allows flexibility in that area. Klobnak sees the market headed for some form of tiered pricing structure in which more complicated or difficult procedures command a premium.
"We believe that only about 20% of patients choose a surgeon based on price," says Klobnak. "The price predators will learn that you can't survive if you don't make a profit. Most of these discounters will be running out of cash."
Money shouldn't be a problem for Laser Vision. The company is profitable, debt-free and has about $40 million in cash.
"This industry is going to consolidate, and when it does we will be in a great position," says Klobnak. "We currently have more than 700 affiliated surgeons in 46 states, giving us the scale to build more alliances with managed care plans."

�         LCA-Vision, Inc. Stephen N. Joffe, M.D., F.A.C.S., the chairman and CEO of Cincinnati-based LCA-Vision, is steering his company into a middle-market niche that he calls "value pricing." To implement that strategy, LCA Vision has recently been opening multiple centers bearing the LasikPlus brand in selected metropolitan markets, such as Atlanta and Washington, D.C., where the demographics indicate high concentrations of potential patients.
"We're currently being flexible on our price points because we're taking on the discounters," says Dr. Joffe.
Outside of the metropolitan areas, LCA-Vision has built a loose network of independent surgeons who receive patient referrals through the company's arrangements with the Cole Vision network, EyeMed and other managed care plans, which Dr. Joffe says currently cover a total of approximately
50 million lives.
"I certainly don't see independent surgeons as competitors," says Dr. Joffe. "We subcontract with independents. An independent who has built personal relationships with patients and in the community should be able to obtain a premium price. I think that's as it should be."
With 33 LasikPlus centers in the U.S. and initiatives in Europe, Canada and Japan, LCA-Vision is using its financial strength to expand aggressively. While Dr. Joffe says he sees future potential in new products such as Intacs prescription inserts and custom ablation, he's not devoting much time to them.
"Right now, 99% of our business is traditional LASIK. That's where we have to put our focus."
Dr. Joffe says his company will be well-positioned once the industry pricing picture stabilizes. "It's an enormous market, and LCA-Vision is one of very few companies that can offer LASIK on a national basis," he concludes.

�         TLC Laser Eye Centers. With 60 laser vision correction centers in North America, $80 million in cash and Tiger Woods as its high-profile endorser, TLC is probably the most visible of the corporate players. Despite the hotly competitive pricing that has swept up competitors, TLC is holding the line on prices and sticking to its long-range plan.
TLC Chairman and CEO Elias Vamvakas, who calls the current laser vision correction environment "very destructive," says his company may experience procedure growth of only 13 to 15% in the next year because of its stand on pricing. Procedure volume for the industry as a whole is expected to grow 35 to 40%.
"We're a premium provider working with top surgeons," says Vamvakas. "We won't do anything to compromise on quality of care. The industry is going through turbulence now, but we're in a solid position for growth."
Vamvakas points to three strategies designed to generate long-term growth for TLC:

o       A The company's Corporate Advantage program, which offers discounted LASIK to employees of hundreds of companies, is enabling TLC to develop ongoing relationships with employers. These relationships have the potential to be highly profitable when LASIK becomes a covered or partially covered employee benefit.

o       A TLC has just begun an initiative to partner with independent refractive surgeons in secondary markets where the company doesn't have its own centers. If this plan is successfully implemented, it will give TLC a national network of centers and affiliated surgeons, making the company more appealing as a partner for managed care plans.

o       A TLC believes it has the technology lead in custom ablation, which may be approved in the U.S. sometime in the next several years. Vamvakas would like TLC to be the first in the U.S. to offer custom ablation.
"Our Canadian operations have been able to gain a lot of experience in custom ablation and custom LASIK," he says. "We're ahead of the market in some proprietary technologies and should be able to gain a 'first mover advantage' when these procedures are approved for the U.S. market."

While each of the corporate leaders we interviewed believes his company has a winning business model, analyst Al Kildani says finding paths to profitability in laser vision correction won't be easy until the industry consolidates.

"It's a very difficult marketplace, especially now," he says. "There are lots of challenges for everyone who participates in this industry."

-- Jerry Helzner, Associate Editor

Three Prices in 3 Minutes

When I heard a new LasikPlus radio ad offering laser vision correction in the Philadelphia area for $749 an eye, I called the nearest center to inquire.

"Our price is $2,498 for both eyes," said the person who picked up the phone.

"But what about the $749 an eye you're advertising on the radio?"

At that point, I was switched to another employee at the LasikPlus center.

"Our price is $749 an eye for an examination, a basic procedure with a VISX laser and three follow-up visits," said this person, who identified herself as the laser technician. I then learned the cost would be an additional $100 an eye for a year of follow-up care and free enhancements if needed.

The technician said the particular center I had called didn't have the VISX laser. Those prices only applied to another, more distant LasikPlus center located near the Pennsylvania/Delaware border.

"You'd have to have the surgery there if you want the VISX price," said the tech. "But we can do everything else here."

And what if I chose to have the procedure done at the nearby center?

It would be $2,498 using a recently approved, state-of-the-art Bausch & Lomb laser that offers a 99% chance of achieving 20/20 vision and that's capable of correcting individuals with larger pupils, I was told.

All well and good. But the only price mentioned in the radio ad was $749 an eye.

-- Jerry Helzner, Associate Editor

Is Affiliating For You?

Don't be surprised if you're approached by a corporate laser center with an offer to partner in some way. A growing number of independent practitioners are deciding this is beneficial.

Three of the corporate players in laser vision correction -- Laser Vision Centers Inc., LCA-Vision, Inc. and Prime Medical Services Inc. -- have specific types of partnership or referral arrangements with independent refractive surgeons. TLC Laser Eye Centers, Inc. is just beginning a physician partnership program, primarily in smaller markets. And Eye Care Plan of America, a large managed vision care plan, works directly with independent ophthalmologists.

If you're affiliated with any of these organizations, you will, at a minimum, become a participant in a broad-based patient referral network, obtaining refractive surgery candidates through managed care plans, national advertising, company Web sites and "800" telephone numbers. You'll normally pay a fee (typically about $400) to the referring organization for each patient that comes to you through the network. Some companies, such as Laser Vision and Prime Medical, offer refractive surgeons a true business partnership, which includes providing you with a laser, keratome technician and other support services.

Sydney Tyson, M.D., M.P.H., an associate surgeon with Wills Eye Hospital who has offices in southern New Jersey, affiliated with Laser Vision last year.

"With this arrangement, I can do laser vision correction in my office at a price I set, without being tied into a center or having to purchase equipment," says Dr. Tyson. "It's neat and clean. I also get referrals from Laser Vision, but that's a small percentage of my overall LASIK procedures. Some of my colleagues who bought lasers are sorry that they did."

Jeffrey Whitman, M.D. chief surgeon for the Key-Whitman Laser Center in Dallas, is a member of the LCA-Vision physician network. "The majority of our LASIK patients come through our independent practice. We've been here 30 years and do our own marketing. But being part of the LCA-Vision network adds to our volume. Those patients are directed to us primarily by optometrists through the Cole Vision national network. The patients get a discount, so we take a lower profit margin on those cases."

Dr. Whitman has been in the LCA-Vision network for about 18 months and is satisfied with the arrangement. "We've had zero problems with them," he notes. "It would be very hard for us to have access to this large pool of potential vision plan business if we tried to do it on our own."

Interviews with independent ophthalmologists tend to confirm that those who are part of the LCA-Vision network are seeking a "loose" relationship, with the simple goal of generating additional procedure volume, while those who affiliate with Laser Vision Centers want a business partner.

"I went with Laser Vision because they are focused on the surgeon," says one ophthalmologist. "I didn't want to be in an optometrist-centered network."

The "turnkey" concept

Prime Medical Services, which operates 14 refractive surgery centers around the country, develops new, stand-alone facilities in partnership with well-established ophthalmology practices.

"We can pretty much provide a turnkey operation," says Teena Belcik, vice president and treasurer of Prime Medical Services Inc. "We handle the facility staffing and all the support services so that the surgeons can focus on doing what they do best."

Some Primecenters are "open access," offering unaffiliated eye surgeons the opportunity to perform procedures when the laser isn't being used by any of the partners.

Michael T. Furlong, M.D., of Furlong Vision Correction in San Jose, Calif., used an open access facility when he first set up his practice several years ago. He's now affiliated with Laser Vision and has his own equipment.

"Using the open access facility worked out fairly well for me," says Dr. Furlong. "It's a low-overhead way for an ophthalmologist to perform refractive surgery. You pay a fee for each procedure you perform. Scheduling was a bit of a problem because the ophthalmologists who owned the facility had first call on the best times. And with open access, you have to use the equipment that's there. With my own center, I have the laser and keratome I prefer."

Raymond P. Gailitis, M.D., of The Center for LASIK in Margate, Fla., is in the LCA-Vision network. He uses a Surgilight open access facility in nearby Fort Lauderdale.

"We have two doctors using the center and it works for us. We haven't encountered any real scheduling problems."

Dr. Gailitis says referrals from LCA-Vision account for about 15% of his practice's refractive surgery procedures. He calls the LASIK marketplace in the Fort Lauderdale area extremely competitive. "We've had to advertise heavily and reduce our price to $1,500 an eye to keep our procedure volume up," he notes.

-- Jerry Helzner, Associate Editor