Ophthalmology

Vilfredo Pareto, the charming 19th century Italian economist, noted that 20% of his bean plants generated 80% of his beans. The well-known "80-20 rule" applied ever since is being played out in the distribution of surgical cases and overall ophthalmic market share. A small percentage of high-volume surgeons and surgical institutions are harboring a slowly growing majority of patient care. This is happy news for larger institutions. Not so much for smaller players. Unless you're nearing retirement, think about how the Pareto effect may play out in your market and how you might combine forces with others.

You don't have to Google very hard to find strong opinions on all sides about the future trend for inflation. Obviously, not even central bankers have a 20/20 crystal ball. However, the toughest scenario for a largely price-fixed fee profession like ophthalmology is one in which dollar-denominated fees are uncontrollably stagnant or falling, while dollar-denominated practice costs are rising with inflation.

Pollyanna lives. At this time, the consensus of economists is that we have emerged, and will continue to steadily emerge, from the Great Recession. A small countercurrent opinion holds that our country's return to positive growth (and a hoped-for resurgence in optical, elective care, cosmetic and related eye care categories will rise in lockstep) is a false dawn, brought on by unsustainable federal stimulus. If these contrarians are correct, we will experience a broad U-shaped recovery (with a much longer trough than we've had thus far) or even a multi-dip W-shaped recovery.

What does big oil have to do with our modest boutique profession of eye care? Most of the major petroleum fields of the world have passed their peak production and are rapidly depleting, which is why oil prices spiked last year just before the Great Recession. Although oil prices have been sharply lower since then, some economists and peak-oil theorists agree that as post-recession oil demand rises, reserve capacity will be stretched thin and barrel prices will be briskly leveraged back upward into triple digits, snuffing out the nascent global economic recovery. A U.S. economy that falls backward or only grows anemically will have several knock-on effects for eye care providers, including:

So-called physician practice management companies, or PPMCs, were launched in the early 1990s concurrent with the same conditions seen today: a soft economy, fast-rising health costs and fear of top-down federal reform. An economic resurgence tabled reform efforts 16 years ago, and this combined with severe flaws in the enterprise model of most PPMCs in the ophthalmic space extinguished such firms. However, with a cohort of peri-retirement providers trying to divest their practices, and with renewed health reform jitters, the ground for a new generation of PPMCs is fertile. I forecast that the model ahead is less likely to be a publicly traded roll-up such as PRG, but rather private, regional consolidations.

Only about 10% of you reading this blog (OK, 20% — you're likely younger and more progressive) are using electronic medical records at present. Everyone else is on a very crowded fence. But there is now an industry-wide sense of inevitability about going paperless that was not present a few years ago. EMR adoption is still moving at a glacially slow pace in ophthalmology. I'll venture here that by 2020, well more than 75% of you will have taken the plunge based on current sentiments, falling prices and ongoing federal incentives. Doctor and staff satisfaction will slowly rise from today's uncertain approval as software and systems improve and everyone learns from the success stories of others.

Left-handed transnasal vitrectomies, anyone? Ophthalmology has always been vanguard in the hunt for new benefits to provide to patients. Not all of these have worked out well, economically or clinically. Many novel variations on refractive surgery disappoint. Blepharopigmentation was a bust. Facial skin resurfacing is rarely commercially successful. Selling cosmeceuticals and nutritional supplements is a low-margin challenge. Unexpectedly, selling hearing aids is working well in motivated settings.

Would you like a pay raise? The best-compensated eye surgeons in America work closely with optometry. They do so either through co-management relationships or through traditional employment arrangements. In both situations, control over access to surgical cases is improved, and the surgeon's workday is narrowed to high-value/high-satisfaction surgical care.

Most LASIK practices are still running at about half of historic highs as the Great Recession, and high unemployment rates linger. Refractive surgery started as a low-barrier-to-entry, RK-based service with an even distribution of low-, medium- and high-volume surgeons. LASIK changed this with higher capital and marketing costs, and separated the committed from the less so, even after open access and roll-on, roll-off centers were developed. We are now in an era, perhaps a long-lingering one, in which a strong contraction in consumer credit (patients are less willing to borrow money for care) and a shifting demographic mean that high-volume, well-run LASIK centers will struggle and the diminishing number of low-volume private "boutiques" will return to the general, geriatric disease management segments of eye care. They don't give out prizes for going broke slowly. If your LASIK practice is losing money, fix the problem or withdraw sooner rather than later.

Here's just one dimension. Forty years ago, your medical record was a 2-cent 5 x 7 inch card with the scrawl, "Patient doing fine; see in 1 year." Before long, you may need a half-million dollar EMR system and an on-call IT expert. That's just the start. New legal and regulatory demands are around every corner, with higher penalties for error. Payer contracting nuances abound. There are myriad new clinical procedures to stay current with. Fast-accelerating technology upgrades are getting harder and more costly to keep up with. Patient demands are rising. Count on more of the same for the rest of your career. Make sure you're hiring detail-oriented managers and staff to stay on top of it all.