Viewpoint

The High Cost of Low-Price Shopping

Larry E. Patterson, MD
From the Chief Medical Editor

I have been fortunate to visit a number of ophthalmology practices over the years, and equally fortunate to have a number of visitors at my own. A few years ago, a colleague from a nearby Tennessee town was visiting to see what pearls he could glean about starting a surgery center, as his was to begin construction soon. He was quite happy that he had been given an offer on a phaco machine that seemed to be an absolute steal. "How much will the packs cost?" I asked. "What do you mean?" he replied. (Uh-oh, I thought to myself.)

I asked him to consider a scenario involving two surgeons who each did 1,000 cases per year. Dr. Rush bought a brand new machine for only $25,000. His packs, viscoelastic and implant bundle added about $250 to each case. Dr. Shrewd paid $80,000 for his machine. But he got his packs, viscoelastic and implant bundle for about $150 each. At the end of the first year, Dr. Rush spent around $250,000 for his consumables above and beyond the cost of the machine. Dr. Shrewd spent $150,000. In just one year, Dr. Shrewd had saved $45,000 by buying the "more expensive" machine. And over the first five years, Dr. Shrewd actually saved $445,000 compared to Dr. Rush.

I learned that lesson long ago, and have taught it many times over the years. But this teacher still has lots of similar lessons to learn himself. Here's my latest.

I was doing LASIK recently when our microkeratome malfunctioned. I was unable to complete the case, and had to reschedule the rest of the day's patients. In the meantime, I had to get the instrument fixed ASAP. We got the quote soon after arrival at the service department. Some little gizmo had malfunctioned and had to be replaced. It wasn't expensive — just $11.67 for the part.

Here's where it got ugly: it was going to take 10.5 hours of labor to repair the unit, at $250 per hour. No, that's not a misprint. Labor was $250 per hour. (As an aside, I was at our airport recently and noted that its FAA-certified mechanics charged $55 an hour for working on aircraft.) But they had me. The final tab of $2,636 was unpleasant but certainly cheaper than buying a new one.

Many of us are headed to the AAO meeting this month in Chicago. While there, we'll part with large sums of money to buy phaco machines, lasers and government-ordained computerized medical record systems. As these are bigticket items, most of your negotiation will likely center around purchase price only. May I suggest that you inquire a bit more deeply? How long is the warranty and what does it cover? If out of warranty, how much do you charge per hour for your service? Are loaners available for next-day (or, ideally, same-day) replacement so that I won't lose revenue from cancelled or rescheduled cases?

Most of us are pretty good doctors and surgeons. And from what I've gathered, most of us — sometimes including yours truly — are pretty lousy businessmen. In this economy, and with the very real threat of reimbursement cuts, you need to be careful with your money. Be Dr. Shrewd, not Dr. Rush.