Seven trends may provide the answer to the question, “Will Millennials, LASIK and Cataract surgery technology influence Ophthalmology?” These emerging beliefs, commercial strategies, and technologies portend an environment rich with opportunity for those who adapt and frustrating for those who do not.
Millennials – Providers and Patients
Four millennial children in my family make me acutely aware of the traits exhibited by this age demographic. Much is written about the trends, possibilities, and pitfalls arising from this group’s coming-of-age.
For ophthalmology, Millennials are a conundrum because they are both providers and patients. They think, work, and act differently than most of their parents and patients. Millennials are influencing our society.
Three recent conversations I had with junior and senior partner ophthalmology practitioners illustrated a division in thinking. In all instances, the senior partner believed the junior lacked the drive required of him to build the practice. And the junior wanted a different lifestyle and practice style than his senior associate.
Both the senior and junior partners told me that their feelings in no way reflected negatively upon the other. So while they recognized a difference, neither had a good solution of what to do about it.
My hunch is that when the now senior partner was the junior, a similar dissonance was present in the Practice. It’s called a generation gap, and there’s not much to do about it other than recognizing it is there. Sort of like a “threat” in a SWOT analysis.
Patients are a similar and different story. Millennials as patients are the first “connected” generation, expect immediate gratification, proof of expertise, and ready access to the care of their choice.
And, they’re willing to pay to get the things they want if the value is present.
So this whole deal is similar to a “threat” in a SWOT analysis. You know it’s there, you talk about it, study it, and make adjustments if circumstances dictate changes.
The Success of LASIK – An unrealistic standard or a harbinger of possibility?
In August of 2016, the American Academy of Ophthalmology published a study comparing visual satisfaction of contact lenses and LASIK. The results of this three-year longitudinal survey and many others show LASIK to improve vision and have a high rate of patient satisfaction.
Does the success of LASIK create a generation of patients with an unrealistic expectation of visual rehabilitation? Or the opportunity to continue a life-long relationship of visual goal attainment with a patient.
In my experience, the success or failure of business development in a practice is because of attitude and personality. So few practices remain in contact with their past LASIK patients that it boggles my mind. And most doctors, at least they say they do when asked, understand market data shows more than 50% of patients come from a referral.
The key with these patients is that they have high expectations and are willing to pay to receive the outcome they’re seeking. Amazingly, many doctors fail to mine in the veritable vein of gold right in their own practices.
Instead, many say, “My area’s different.” No. It’s not, there are too many exceptions to prove it isn’t. And a happy LASIK patient is a good source of referral for more LASIK patients and cataract patients, too.
Patient Shared Billing Offers Options and New Revenue
In May of 2005, Patient Shared billing passed the US Congress, was enacted, and altered the health care landscape. At the time, pundits believed 30% of patients will opt for an upgraded, outcome directed procedure within the next ten years.
Today, more than eleven years later, the utilization in the US holds steady at about 15% of the market. Some blame technology, others the economy, and me, well, I think it’s the system.
Most doctors aren’t built to sell, and these procedures require selling. For most, the fallback position of a $600 reimbursement for doing a cataract procedure is acceptable.
Others invest in the facilities, technology, and staff to build an experience designed to help patients understand the possibilities and achieve visual outcomes they may never have experienced before in their lives. Patients are flocking to these forward-thinking doctors.
And their investments are paying off. In spades.
I know of a Practice in the Midwest where a surgeon left the large group in town to go off on his own to focus on delivering personalized, visual outcomes-driven care. Surprisingly, his former partners readily allowed him to do this because they didn’t want the trouble of patients with such high expectations and didn’t believe the investment required in equipment, facilities, and staff would ever really pay off.
This surgeon is now one of the premier experiential, patient-directed visual outcomes practices in the United States. And I imagine he out-earns his prior practice 3 to 1.
Millennials are technology savvy. What’s also true is Baby Boomers are, too. Many physicians I visit around the country tell me they don’t need an up-to-date website, a Facebook page, or a Spa-Like office. Perhaps so with the Spa-like office, and not so with the others.
Most patients, regardless of age, now arrive educated and looking for validation of their choices. Remember, people buy on emotion and back-it-up with logic. Gone is the asymmetry of information between doctor and patient.
In addition, patients want to be connected to their provider at all times, have access to records, and get questions answered in seemingly real-time. This is frustrating for some, liberating for others, and an opportunity to excel for a rare few.
One of the most interesting aspects of this trend that I witness in the market is how little emphasis most practices put on marketing. In fact, I’d say eight out of ten offices I visit have no marketing plan, no person dedicated to marketing, do not understand their market opportunity, or use any technology available to help them succeed in their market.
And along these lines, most understand and acknowledge that more than half of patients for LASIK and cataract surgery are referred from past patients. There’s lots of data that support this fact and, amazingly, most doctors cannot explain their method of keeping in touch with past patients to generate referrals.
I don’t write any of this to be derisive of doctors. After all, they’re the engines of their businesses, most have no business training and they generally find marketing distasteful.
I get it. It’s just, ophthalmology is becoming a consumer product and ophthalmologists will begin to practice more like Dentists. The best thing they can do is raise their hand and ask for marketing help.
The Femtosecond Laser as the New “Anchor of the O.R.”
“Anchor of the O.R.” is a term used in the business of ophthalmology. What it means is a piece of capital equipment sold into a facility and financed with an EPRA (Equipment Purchase Repayment Amount – or some creative variation of this acronym) used as the mechanism to amortize the cost of the equipment. These range from five to seven years in duration and are the bulwark of the medical device business growth strategy.
Think Gillette with the razor and razor blade method – with a really expensive razor!
Alcon surgical pioneered this concept in ophthalmology by “bundling” cataract surgery products around a phacoemulsification machine used to remove cataracts. A phaco machine sells for $45k-$65k and Alcon has 70% plus of this market as a result of both good technology and successful execution of this strategy over a long period of time.
Today, the femtosecond laser (Alcon LenSx, AMO Catalys) has supplanted the phaco machine as the device to bundle around in ophthalmic surgical suites. The FS Laser automates several of the steps in cataract surgery, provides enhanced visualization during the procedure and offers the opportunity for a customized visual outcome with the correction of astigmatism. It is the future of patient-driven cataract surgery.
While a phaco machine costs around $50k and has a $3k annual maintenance plan, an FS Laser sells for $375k, is a highly technical device to operate, runs on sophisticated software, requires an annual maintenance agreement that may exceed $40k per year and uses one patient interface device per procedure that costs another $300 each.
Combine all of this and you can imagine an anchor that is getting heavy! To many, alarmingly heavy.
And all of this is paid for out-of-pocket by the patient. As you may agree, this new anchor has the potential to sink the boat if not properly managed.
How Doctors and Facilities Access Equipment is Changing
Medical devices are quickly becoming part of the Internet of Things (IoT) and with this transition, some challenges present. In his excellent book, The Inevitable, Kevin Kelly (Affiliate Link) writes about how people are less likely to want to own technology and more often than not are looking for some kind of “sharing” solution with a higher level of service. Think, Uber meets Geek Squad.
The flip side of this coin is that along with this new “anchor” may come changes in how physicians practice. As the tidal wave of diagnostic and surgical equipment builds, where will surgeons find the financial and operational efficiencies required to feed the beast? Where and how will they harness, interpret, and act on the data derived from these unique sets of interactions?
The change is coming and the industry must adjust to serve surgeons and offer variable access to all of the technologies they need to serve their patients. And doctors and facilities must learn that the luxury of having all of this equipment sitting around an O.R. unused for 80% of the time is bad business.
Office-based cataract surgery is coming more quickly than people are expecting. Why can my son go in and have four Wisdom Teeth extracted from his mouth in an office setting but not a cataract? I’ve seen them both and even though I’m not a doctor, I don’t have to be to see the improvement in experience and efficiency for everyone involved.
Cataract surgery is the most frequently performed surgical procedure in the world. The demographics indicate this will continue and an expectation that the reimbursed portion of the procedure is expanding is delusional. The financial burden on the system is not sustainable.
The good news is that the opportunity to determine one’s own financial future was long ago secured by Patient Shared Billing. Those who choose not to reach for this veritable holy grail of financial freedom have only themselves to blame as they complain about higher costs of technology and declining reimbursement.
Millennials, Gen-Xer’s and even the late Boomer’s expect to pay because we’ve been conditioned to do so by HSA’s, our cable companies, and cell phone providers. If you want something other than basic, it’s going to cost more. So when we see the value, we’ll pay.
So when all of these groups see the value, they’ll pay. Deliver value and avoid accepting the fallback position too quickly.
Millennials are the first of the always-connected generations. Surprisingly, their parents and grandparents are not far behind them when it comes to connections. They just may do it a bit differently and, perhaps, a bit less garishly.
What this means is a tremendous opportunity to forge relationships via bits instead of visits. Self-service is what people desire and help to create an on-demand, patient-driven type of experience. And, bits are way more efficient than visits (or phone calls) so using tools to create these opportunities is essential.
As I am about to publish this post, I am in my hotel room at the Chicago Hilton on the eve of my 25th American Academy of Ophthalmology meeting. I am filled with gratitude for all of the people in the business of ophthalmology and the opportunities afforded by my family and me because of the fruits of our collective efforts.
My heartfelt “thanks” goes out to those who have shown me kindness and taught me things over the years. And, the Good Lord willing, here’s to another 25 years!
Nice work on this Joel.
Great read, Joel – A take on the future with a high probability of coming to fruition. Thanks for sharing.
I have enjoyed reading your posts and this was was very nicely written! Congrats on 25 years…this is a great business that we work and live in and I truly enjoy working with your team.
Thanks, Julie. You’re right, we’re lucky to be a part of a great industry. Here’s to lots more years!