Ophthalmic Surgeon Report

Q2-2010 Ophthalmic Surgeon Report: IOL Procedure Growth Slows and Refractive Procedures Decline Further as the Rate of Economic Recovery Lags

2010-10-05T18:49:46Z

Refractive procedures continue to reflect the ongoing weakness in the economy.

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Thank you for participating in our recent survey of ophthalmic surgeons. This edition of our report includes results from our Q2-2010 survey. Our survey report is based on our analysis of 500 surveys received from US refractive and cataract surgeons. Forty-six percent of responding surgeons called themselves cataract surgeons, while 38.6 percent referred to themselves as combination refractive/cataract surgeons. The remaining 15.4 percent limit their practices to refractive surgery.

In general, response rates for Market Scope surveys are better among high-volume practices. About 41 percent of responding surgeons reported performing 100 or more procedures during the second quarter of 2010, although we estimate that these high-volume surgeons make up only 11 percent of the total population of cataract and refractive surgeons.

Q2-2010 survey responses continued to reflect the impact of the recession and the slow rate of recovery as refractive procedure numbers slipped further and the growth rate in IOL procedures slowed. The Consumer Confidence Index (CCI) averaged 51.6 during the quarter, roughly half of the normal level of 100 that indicates neutral consumer sentiment, and economists also forecast continuing high unemployment rates. These factors continue to constrain the refractive surgery market.

Q2-2010 Ophthalmic Surgeon Report: Refractive Surgeries Slip Another 3.9 Percent

2010-10-05T18:49:45Z

Refractive procedures declined again with non-laser refractive procedures taking the biggest tumble.

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Demand for refractive surgery continues to mirror the overall economy with an increase in the rate of decline in the second quarter that is not unlike what we have seen in US employment and consumer confidence data. Respondents to Market Scope’s Q2-2010 survey of refractive surgeons reported that refractive surgical procedures (including LVC and non-laser procedures) declined 3.9 percent when compared with the same quarter last year—from more than 200 thousand in Q2-2009 to just under 193 thousand in Q2-2010. Most economists are forecasting that weak economic conditions will persist well into 2011 and the more pessimistic predict a double-dip recession. Many economists have also revised forecasts for unemployment upward for the balance of the year and into 2011. As a result, Market Scope has reduced our forecast to a decline in procedures for the full year from our previous forecast of a small increase.

US laser refractive procedures declined 2.2 percent to 188 thousand in Q2-2010, when compared with 192 thousand procedures in Q2-2009. Procedures decreased 16.2 percent when compared with a seasonally stronger Q1-2010. The first quarter is traditionally the strongest quarter of the year as many patients take advantage of employer-run flex spending plans that allow for payment with pre-tax dollars and also effectively provide twelve-month interest-free financing. In addition, New Year resolutions play an important role in motivating some patients. Also, the second quarter is historically stronger than the third and fourth quarters.

Refractive surgeons reported that non-laser refractive procedures, including conductive keratoplasty, refractive lens exchange, and phakic IOLs, declined 57.4 percent when compared with Q2-2009, performing significantly worse than the laser refractive surgery market. Much of this decline has been due to a falloff in the use of CK. In addition, an estimated 2,500 procedures were performed on US patients who traveled to Canada and Mexico for refractive surgery in Q2-2010.

The number of US laser centers continued to decline during Q2-2010, dropping by a net of seven centers when compared with Q1-2010 and 51 centers when compared with Q2-2009. Declines in procedure volumes have led to the closing of many laser centers, but this trend is expected to slow as many centers with weak performance are now closed.

Responses to the Q2-2010 Market Scope Refractive Survey indicated mixed performance at the surgeon level with 33.1 percent reporting that procedures were the same as last year, 26.4 percent reporting increases in volume, and 40.5 percent reporting declines in performance. Reasons for this divergence in performance include differing economic conditions, with some metro areas seeing signs of a recovering economy, reduced competition in some markets due to center closures, and improved or renewed marketing efforts at some centers. While the data leave a mixed message, significant improvement occurred in one measure. In Q2-2009, only 3.8 percent of respondents reported an increase in procedures and 76.2 percent reported a decline from the second quarter of 2008.

Q2-2010 Ophthalmic Surgeon Report: Refractive Technologies

2010-10-05T18:49:44Z

We asked surgeons about the rates at which they used various refractive technologies, including surface ablation and non-laser refractive procedures, during Q2-2010.

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Surgeons responding to the Market Scope survey reported performing surface ablation and Epi-LASIK in 13 percent of cases in Q2-2010. Surface ablation rates have been relatively constant in the range of 12.2 to 13.3 percent for more than two years. Concerns over corneal ectasia are often cited as reasons for surface ablation.

Based on surgeons’ responses, nearly 50 percent of Q2-2010’s LASIK procedures were performed with wavefront-guided technology. Approximately 32 percent were wavefront-optimized and more than 18 percent were conventional LASIK procedures.

Q2-2010 Ophthalmic Surgeon Report: Wavefront-Guided LASIK

2010-10-05T18:49:43Z

We asked surgeons what percentage of their laser refractive surgical patients underwent wavefront-driven surgery during Q2-2010.

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In Q2-2010, customized wavefront-driven LASIK (WFL) accounted for 49.9 percent of procedures at all laser centers, up slightly from Q1-2010, but down from 54.2 percent in Q2-2009. WFL decline was due to a combination of economic conditions and market share gains by Alcon’s WaveLight lasers―WaveLight laser users employ an alternative wavefront-optimized technique in the vast majority of cases. At wavefront-capable centers, WFL procedures were 68.8 percent of total procedures, up from 62.8 percent in Q1-2010 and down from 71.5 percent in Q2-2009.

Q2-2010 Ophthalmic Surgeon Report: Enhancement Rates

2010-10-05T18:49:42Z

We asked surgeons about their enhancement rates for refractive procedures.

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Thirty-eight percent of survey respondents reported enhancement rates of 2 percent or less for their laser vision correction patients, while 26 percent reported enhancement rates of 5 percent to 6 percent and 21 percent reported rates of 3 percent to 4 percent. Twelve percent of those responding said that 7 percent to 10 percent of their LVC patients required enhancement, and only 3 percent reported a rate higher than 10 percent.

Q2-2010 Ophthalmic Surgeon Report: Surgery Locations

2010-10-05T18:49:41Z

We asked surgeons about the locations at which they performed their refractive surgeries during the quarter. We also analyzed refractive procedure numbers by location.

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Survey respondents reported that about 61 percent of their refractive procedures were performed in surgeon-owned surgery centers in Q2-2010. Thirty-one percent of procedures took place in corporate-owned centers and 8 percent were performed in an institutional setting (in hospitals or hospital- owned ASCs).

Based on survey responses, we estimate that nearly 117 thousand refractive procedures took place in surgeon-owned surgery centers in Q2-2010, while about 58 thousand took place in corporate-owned centers. Institution-owned facilities were the setting for just over 15 thousand refractive procedures.

Q2-2010 Ophthalmic Surgeon Report: Refractive Lens Exchange

2010-10-05T18:49:40Z

We asked surgeons whether or not they offered refractive lens exchange (RLE) during Q2-2010.

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We also asked combination refractive/cataract surgeons if they offered refractive lens exchange (RLE) during Q2-2010. Fifty-one percent of respondents reported offering these procedures, up from the 34 percent who offered RLE in Q1-2010.

Q2-2010 Ophthalmic Surgeon Report: PC-IOLs

2010-10-05T18:49:39Z

We asked surgeons if they offered presbyopia-correcting IOLs during Q2-2010 or if they planned to the lenses in the future.

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With the severe downturn in laser vision correction procedures experienced during the current recession, increasing numbers of refractive surgeons are also offering presbyopia-correcting IOL (PC-IOL) procedures. In the second quarter of 2009, 77.6 percent of responding refractive surgeons reported offering PC-IOLs, but in Q2-2010, 80 percent reported offering these lenses. An additional 4.7 percent also planned to offer them in the future. While 16.8 percent of respondents did not offer PC-IOLs in Q2-2009, the percentage dropped to 15.3 in Q2-2010.

Q2-2010 Ophthalmic Surgeon Report: Pricing Strategies

2010-10-05T18:49:38Z

We asked surgeons about their LVC pricing strategies and the per-eye price they charged for various refractive procedures during the quarter.

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Many surgeons consider the single-price model a simpler approach for staff and patients to understand. After a brief move away from this approach that coincided with increasing recessionary pressures in the first half of 2009, in Q3-2009 through Q1-2010, surgeons’ survey responses showed a return to the single-price model for all laser-based procedures. However, the practice dipped in frequency in Q2-2010 with 49.6 percent using the one-price strategy, compared with 54.1 percent in Q1-2010. This parallels the county’s increasing uncertainty about the rate of economic recovery and fears of a double-dip recession that came to the fore during the spring and early summer.

Of surgeons who reported using a same-price strategy for LVC, 79 percent charged from $1,501 to $2,500 per eye for LVC. Sixteen percent charged more than $2,500, while 5 percent charged $1,500 or less.

At $2,091, the average reported Q2-2010 price for LVC procedures fell below the $2,171 average reported in Q2-2009. However, the year’s second quarter continued the upward trend in average price since a low of $2,033 was reached in Q4-2009.

Responding surgeons reported a range of procedure fees for specific refractive procedures. The median fee for one-price procedures was $2,125, and 50 percent of fees fell within a range of $1,950 to $2,400. Fifty percent of fees for wavefront-guided LASIK with IntraLase were within the $1,950 to $2,400 range. Median fees for conventional LASIK with bladed microkeratome and conventional LASIK with IntraLase were $1,575 and $1,963, respectively. The highest fee, $7,500, was reported for RLE with a PC-IOL, while the procedure’s median fee was $4,500. Fifty percent fell within a range of $3,850 to $5,000. RLE with a monofocal IOL had fees as high as $6,000 and a median fee of $3,325. The median fee for phakic IOL implantations was $3,500.

Q2-2010 Ophthalmic Surgeon Report: Referral Sources

2010-10-05T18:49:37Z

We asked surgeons about referral sources for their refractive patients during Q2-2010.

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Surgeons reported that 49 percent of their patients were referred by other patients. Optometrists referred nearly 19 percent of patients, while 13 percent of patients used the Internet to make their choice of surgeons. Nearly 12 percent of patients used radio, TV, or newspaper advertising to choose their surgeon, and just under 6 percent found their surgeon by way of their employer health insurance contract. Slightly less than 2 percent found their surgeon using other sources.

Q2-2010 Ophthalmic Surgeon Report: PC-IOL Education

2010-10-05T18:49:36Z

We asked surgeons about their use of PC-IOL education tools for their refractive patients during Q2-2010.

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When asked about PC-IOL education tools, just over 88 percent of surgeons reported using brochures and more than 71 percent relied on patient counselors. Videos were used to educate patients by more than 56 percent of respondents. Slightly more than 24 percent used Eyemaginations software, while more than 10 percent used LVC Counselor software.

Q2-2010 Ophthalmic Surgeon Report: Marketing

2010-10-05T18:49:35Z

We asked surgeons about their marketing emphases during the quarter, and we asked them to rate the effectiveness of various marketing methods on a scale of 1-5.

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When asked to indicate their primary marketing emphasis among six choices, more than 68 percent of surgeons who answered this question chose surgeon’s experience and reputation. This remains the most common choice throughout our survey’s history. Patient benefits and surgical outcomes were each chosen by more than 28 percent, and nearly 28 percent of surgeons chose technology. Price was listed as a primary marketing emphasis by just under 7 percent of surgeons.

Surgeons were asked to rate the effectiveness of various marketing methods on a scale of 1 to 5, with 1 representing the least effective and 5 representing the most effective. Internet search ads again received the highest rating with an average of 3.50 and radio advertising was second with 3.18. Television‘s average rating was 3.04, and patient newsletters received an average rating of 2.76.

Q2-2010 Ophthalmic Surgeon Report: Advertising

2010-10-05T18:49:34Z

We asked surgeons about their advertising spending in 2010's second quarter and their plans for future advertising spending.

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Advertising spending per procedure fell to a three- year low of $137.94 in Q1-2010. In Q2-2010, the average ticked up to $141.46, but was still under Q2-2009’s per-procedure average of $158.80. Advertising dollars spent per procedure varied significantly during the quarter. As in Q1-2010, nearly 42 percent of surgeons reported spending $50 or less per procedure in Q2-2010. However, just under 9 percent reported spending more than $300. More than 31 percent reported spending from $101 to $250 per procedure during the quarter, up from less than 25 percent last quarter.

Nearly three quarters of responding surgeons reported plans to maintain the same level of advertising spending in Q3-2010. Fifteen percent of respondents reported plans to increase advertising spending in Q3-2010, while 11 percent said that they expect to spend fewer ad dollars during the quarter.

Q2-2010 Ophthalmic Surgeon Report: Financing Options

2010-10-05T18:49:33Z

We asked surgeons about financing sources for refractive procedures and the circumstances within which they offered financing options.

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Nearly 86 percent of surgeons reported that Care Credit was a financing source for the refractive procedures they performed. Slightly less than 30 percent indicated that Chase Health was a financing source. Close to 6 percent reported self-funded financing (down from 12 percent in Q1-2010), while about 10 percent reported local banks as a procedure financing source.

Surgeons were asked about the circumstances in which patient financing was offered in Q2-2010. Nearly 72 percent of responding surgeons reported offering financing options to all patients, while 25 percent reported offering financing to price-sensitive patients. More than 9 percent said the offer was made during consultations, and just over 3 percent said the offer was made with premium services. More than 9 percent reported offering financing to match competitors’ offers.

We also asked surgeons if they offered financing during Q2-2010, and, if they did, what percentage of their patients chose to finance their procedures. Ninety percent of respondents reported offering financing during the quarter and 20 percent indicated that 50 percent or more of the patients financed their procedures. Just under 30 percent of respondents reported that 25 percent to 49 percent of their patients opted to finance, and nearly 17 percent responded that 15 percent to 24 percent of patients chose a financing option. Only 0.5 percent reported that fewer than 5 percent of patients financed their procedures.

Q2-2010 Ophthalmic Surgeon Report: Conversion Rates

2010-10-05T18:49:32Z

We asked surgeons whether or not they tracked conversion rates in the second quarter and, if they did, what those rates were.

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Conversion rates are key measures of the effectiveness of a practice’s internal marketing efforts. These rates represent the number of patients scheduling consultations divided by the number of patients contacting the office to inquire about refractive surgery, as well as the number of surgical cases divided by the number of patients who have consultations. Forty-eight percent of survey respondents reported that their practices tracked conversion rates during Q2-2010, while 52 percent of respondents indicated that they do not track conversions.

Practices that tracked conversion rates reported that, during Q2-2010, 67.1 percent of prospective patients who called the office about refractive surgery ultimately scheduled a consultation, and 69.5 percent of those callers who had a refractive surgery consultation during the quarter scheduled a refractive procedure.