LASIK procedure volumes have plummeted since April 2008. By
late April 2009, many LASIK centers reported procedure volumes off by 40% to
70% compared with the previous year, leading to severe revenue losses,
significant staff reductions, and red ink aplenty.
So, where is the LASIK industry headed? When will it
recover—and what might the LASIK marketplace look like when it does? How does
this possibly affect our optometric practices?
market shows that it is beholden to the Consumer Confidence Index,” says
Shachar Tauber, M.D., corneal specialist and director of ophthalmic research at
St. Johns Health System, Springfield, Mo. “Despite advances in knowledge, along
with advances in pharmaceuticals and technology that have improved the quality
and safety of this procedure, we are in the midst of a great downturn in LASIK
volume. We have seen many practitioners and corporate providers exit from
markets throughout the U.S.”
Fortunately or unfortunately, my experience in the LASIK
marketplace serves as a good chronicle of where the market has been, and where
it may be headed.
Diving Head First Into LASIK
|Laser vision correction procedures reached a peak in 2000,
and declined sharply with the economic downturn in the past two years.
While I enjoyed treating ocular disease and working with
athletes, my strong suit was in helping patients see sharp and clear. Up until
1995, this consisted of prescribing glasses and contact lenses. Suddenly, with
FDA approval of the first excimer laser, the possibility of refractive surgery
eroding my practice base seemed surprisingly possible.
During this same time, I was part of a local group of
optometrists who worked with an ophthalmologist within our practices. We
decided to take the risk and opened a jointly owned laser center in Sacramento,
beginning operations in September 1996. Within six months, we were profitable.
By spring of 2000, we had opened 10 Pacific Laser Eye
Centers throughout California and Nevada. Each center was 49% locally owned by
a large number of optometrists and a few ophthalmologists in each region.
Particularly exciting were the openings of a Pacific Laser Eye Center at both
Southern California College of Optometry and the University of California,
Berkeley, School of Optometry.
By late 1999, we had incorporated a management company in
order to oversee the burgeoning business.
The centers were growing, and we had
a model that worked well integrating the skills of optometrists and
ophthalmologists, while providing high-level care to our patients within our
Laser vision correction volumes nearly doubled during each
year from 1996 through 2000. We were excited at the growth, and thrilled to
have entered the market early and at the right time.
In 2000, LASIK volumes skyrocketed to more than 1.4 million
procedures in the U.S. The transition from PRK to LASIK had been brilliant—with
patients reporting little pain and discomfort, and a “wow!” factor at the
one-day postoperative visit. Insiders predicted that the market would top 2
million procedures at some point between 2002 and 2006.
Unfortunately, a confluence of factors struck with a
vengeance—a catastrophic pricing war, the burst of the “tech bubble,” and the
September 11 terrorist attack. Suddenly, what seemed so rosy and upbeat was
looking like an overreach into Alan Greenspan’s “irrational exuberance.”
LASIK volumes sank. Beacon was taken over by TLC, and both
LASIK Vision of Canada and Aris Vision closed. The stock market dropped
precipitously. Fearing the market may take years to come back, Pacific Laser
Eye Centers’ board decided to sell or close five of our centers.
Looking back, 2000 procedure volumes still stand as the high
water mark for laser vision correction procedures.
Link to Consumer Confidence
|Estimated laser vision procedure volumes in North America
have tracked fairly closely with consumer confidence ratings (red line).
David Harmon of MarketScope (which tracks the ophthalmic
laser vision marketplace for investment analysts) noted that procedure volumes
tracked fairly closely with consumer confidence ratings.
Consumer spending accounts for about two-thirds of the U.S.
economy, so it has an enormous influence on our market. During good times,
consumer confidence levels can soar to more than 100 ranking points. For many
years, the index ranged between the upper 70s and low 120s.
The lowest point in recent memory was in 1991, after the
recession that was precipitated by the onset of the Gulf War. At the time,
consumer confidence fell to a “historic low” of 55.3.
More recently, consumer confidence had fallen to the low 60s
in June 2008, a 20-year low. The financial meltdown spooked consumers, bankers,
politicians and investors alike. Consumer confidence then fell from 61.4 in
September 2008 to 38 in October, its third-largest individual drop.
By February 24, 2009, consumer confidence hit an all-time
low of 25—its lowest point since the index was launched in 1967—followed by a
similar low in March.
Into the Maelstrom
The vengeance with which the drop in consumer confidence
struck was a bellwether to the devastation of the LASIK marketplace. LASIK Plus
reported a 51% drop in the fourth quarter 2008, and a 37% drop in the first
TLC, in its 2008 earnings report, announced the company lost
$98 million on revenue of $276 million, compared to a loss of $42 million on
revenue of $298 million in 2007.
First quarter results in the LASIK industry are the most
important of the year, and usually greater than the remainder of the year.
Patients have the opportunity to utilize tax-free dollars through their
flexible spending accounts (FSAs). With both TLC and LasikPlus reporting
substantive losses, this creates major challenges for the upcoming, typically
lower volume, months ahead.
The Optometric Council on Refractive Technology (OCRT) has a
membership that is active in refractive surgery. Almost all members have
reported that their center volumes are down significantly. Imagine how you
would cope if your gross revenues were off 40% to 50%—within a matter of
“We have been down anywhere from 15% to 90% since the
financial meltdown began last September,” says Greg Moore, O.D., clinical
director of the West Virginia Laser Eye Center. “Unfortunately, now consumer
confidence is gone. The problem, as I see it, is not one so much of economic
disaster causing a loss of disposable income as much as it is a fear of
economic disaster causing a hoarding of disposable income.”
Dr. Moore says the best example of this was a week in early
October 2008, when 11 clients who were scheduled for evaluations cancelled the
day the stock market dropped 700 points. “We have not had anything like that
ever—even after the attacks on September 11,” he says.
To tackle this, his centers are moving into a new direction.
“Within the next two months, we should be offering additional and, more
importantly, insurable surgical services,” Dr. Moore says. “If you offer only
one type of service, and you do not find other recession-proof revenue streams,
you will not likely weather this storm.”
What Does the Future Hold?
Recall the strong economy before 2008—the housing bubble
seemed unbreakable. Meanwhile, refractive procedures became more reliable. Yet
refractive surgery volume reached its peak in 2000. And procedures actually
dropped from 2005 onward.
Why didn’t the LASIK market grow during these years when the
economy was robust and awash in refinance dollars? What other factors kept
procedure volumes stagnant over the period from 2005 to 2008? What is a
realistic forecast for LASIK volumes in the near future and onward?
There are a number of factors that come into play.
contact lens technology has improved markedly during the past decade. Secondly,
the accommodative IOL and multifocal implants have provided new avenues for
ophthalmologists to pursue. As the LASIK market has tightened and stagnated, the
growth in premium IOLs has increased.
“Most everyone in our segment of the industry agrees that
LASIK is indeed discretionary spending, and therefore it has been cut out of
many consumers’ ‘to do’ list for the foreseeable future,” says Blake Michaels,
Alcon’s Regional Refractive Director, Western U.S. “As confidence increases,
volumes should return to successful practices. Will they return to pre-2008 run
rates? No one knows, but most experts believe that will not be the case in
MarketScope, our industry barometer, noted in its August 12,
2009 newsletter, Ophthalmic Market Perspectives, “Persistently low consumer
confidence and tight credit continued to severely reduce demand for refractive
surgery in Q2-2009, especially when compared to a relatively robust Q2-2008.
Six quarters of double-digit volume declines has begun to take a severe toll on
U.S. laser vision surgery providers and led to record number of laser center
closures. Although there are some signs of improvement in the economy, continuing
high rates of unemployment and economic stress are expected to dampen consumer
confidence and restrict demand for vision correction surgery for the balance of
2009. U.S. laser refractive procedures declined 30.8% to 192,000 in Q2-2009
when compared with 277,000 procedures in Q2-2008.”
The Luxury of LASIK
Interestingly, other elective surgical procedures did not
suffer near the same fate as LASIK during the economic downturn of 2001/2002,
or even this year’s recession.2 While elective procedures overall went down in
volume, the wide variance in LASIK pricing served to confuse consumers rather
than attract them to great quality at a discounted price point. Pricing has
certainly come down some, but not to the basement levels that resulted from
panicked providers after the last economic downturn.
“The economy is in such flux that I think it’s hard to make
any reliable forecast for a discretionary and luxury [expense] such as LASIK,”
says Shareef Mahdavi, a medical device consultant who is widely credited with
coining the term LASIK. “The only thing I can say for sure is that people are
spending money, just being more selective in how they spend it. This puts the
onus on LASIK providers to be more customer-centric and friendly. Typical
doctor office behavior (poor phone skills, waiting room, and the like) just
won’t cut it and probably never again will be tolerated.”3
Many consultants are pointing out the high degree of
acceptance of LASIK surgery among the upcoming generations. As a comparison,
orthodontic braces were a luxury at one time, but today they are often viewed
as a rite of passage for early teens. Still, until the credit crisis passes and
consumer confidence returns to more normal levels, the early twenty-somethings
won’t hurry to embrace LASIK.
Weathering the Storm
The key will be to weather the storm. As Dr. Moore noted, it
is important to add other services and procedures. Certainly, cataract surgery
is much more recession-proof, but it necessitates an ambulatory surgery center.
For example, LASIKPlus believes that as long as the market
does not continue lower, it will be able to weather this economic downturn. To
do so, the company announced in April 2009 that it would begin to offer eye
care for patients beyond LASIK evaluations and postoperative care. The new
program will also “allow us to more fully utilize the highly trained and
skilled ophthalmic surgeons and optometrists within the company,” the company
The reality is that refractive surgery will not be going
away anytime soon, and optometrists need to see LASIK and accommodative and
multifocal intraocular lenses as additional opportunities to participate in
their patients’ vision care.
“Today, the outcomes from laser vision correction are better
than ever, so optometrists need to continue to mention the procedure to all
eligible patients. Also, it is an opportunity for optometry to get involved
with the premium IOLs,” says OCRT President Jim Owen, O.D., M.B.A.4
Business consultant Gracie Pimental, M.B.A., says, “The
economic downturn is an excellent opportunity for all practices to evaluate
their existing profit centers of LASIK, premium IOLs and optical. Take this
opportunity to streamline processes, improve customer service, and to increase
patient referrals and hence profitability from your existing patient base.”5
The state of LASIK is incredibly challenging for many.
Staffing in many LASIK centers has been cut back dramatically, with no
certainty of weathering the storm. My company, PLEC Management Group, Inc., was
not so lucky. As revenues and procedure volumes plummeted, we were unable to
react quickly enough. Soon, we went from being current on all our bills to
being behind to many of our referring optometrists and surgeons. Unfortunately,
while most of our centers are valiantly attempting to ride out the storm, the
management company has had to file for bankruptcy.
The good news in all this is that the demand for eye care
and optometric services—including LASIK and premium IOL cataract surgery—should
afford the optometric practice to not only survive this economic downturn, but
also to position itself for significant growth over the next few years.
On a hopeful note, consumer confidence rebounded in May 2009
to 54.9, its highest level in eight months. As of mid-August, the Index was at
54.1, up from a dip of 47.4 in July.
In September, a similar index, the Reuters/University of
Michigan Index of Consumer Sentiment, increased to 73.5—the highest since the
beginning of 2008.
In the next two decades, for example, there may well be more
demand for ophthalmic surgical procedures in the U.S. than there are surgeons
to provide the surgical care.6 This is, in part, why a keynote speaker at the
recent Academy of Ophthalmology meeting pointed out the importance of
ophthalmologists working more closely with optometrists.7
Dr. Fuerst, formerly CEO for Pacific Laser Eye Centers, is
now in a multi-doctor practice near Sacramento, Calif. He is also president of
a biotech firm, Ocugenics, LLC., and president of Vision of Hope, a charity providing
vision care to underprivileged children.
1. Personal communication.
2. American Society of Plastic Surgeons website. 2008
Plastic Surgery Procedural Statistics. Available at:
September 13, 2009).
3. Personal communication.
4. Personal communication.
5. Personal communication.
6. Manpower needs, shortages altering primary care in
ophthalmology practices. Ophthalmology Times. Nov 12, 2007. Available at:
(accessed October 1, 2009).
7. Fineberg H. 2008 opening session keynote address.
American Academy of Ophthalmology website. Available at:
http://220.127.116.11/meetings/annual_meeting/keynote.cfm (accessed October 1,