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Discount LASIK Business Closes, Stranding Patients

Laser Vision is Safer Close to Home

Discount LASIK Business Closes, Stranding Patients

Ophthalmology Times, By Cindy Grahl
Industry News Section
June 1, 2001

Vancouver, BC – It seemed too good to be true – LASIK for $499 an eye. And it was.

The company offering that low price, Lasik Vision Correction Corp. of Vancouver, BC, was bought by Toronto-based Icon Laser Eye Centers in February. Finding that it could not afford to pay personnel with the $499-fee structure, Icon closed Lasik Vision’s 27 clinics in the United States and Canada in the first week of April.

The closings were done on a supposedly temporary basis and were due to "a deteriorating financial situation," according to an Icon press release, but there was no indication of when the situation might be resolved.

David Harmon, an analyst of the eye surgery industry and editor of Market Scope, supported the idea that the trouble at Lasik Vision related not to quality, but finances. "[The problem] was Lasik Vision’s policies and the way it ran the business," he said. "The company asked extremely low prices."

Those bargain-basement rates could not be sustained. Eye surgery industry analyst Al Kildani of Pacific Growth Equities noted in the San Francisco Chronicle that Lasik Vision was trying to offer services below cost while investing heavily in advertising and large, luxurious offices. "That’s not a strategy for long-term success in the business world," Kildani told the press. "You don’t have value-shop for a surgical procedure."

According to The Seattle Times and The Washington Post, one of Lasik Vision’s hallmark operating policies was for patients to pay for services up-front, even before physicians determined if they were good candidates for surgery. Company literature promised to return the money within 21 days if the surgery could not be performed. In the wake of the closing, customers have been unable to get reimbursements for services that remain undelivered.

However, The San Francisco Chronicle reports that even before the closings, the Oakland, CA, branch of the Better Business Bureau had been looking into cases in which some Lasik Vision patients who decided against going ahead with LASIK had trouble getting reimbursements, and others received them in discounted Canadian funds.

The Washington Post reports that about 2,000 Lasik Vision patients paid for surgery they did not receive and they have not been given a refund. Icon is directing these patients to go to a bankruptcy trustee, Deloitte & Touche, at its Vancouver office, to apply for reimbursement.

Lasik Vision is undergoing bankruptcy proceedings for its Canadian assets, but there is no information about how the U.S. assets will be handled. The bankruptcy was necessitated by "greater-than-anticipated operating liabilities as Lasik Vision, exacerbated by a work stoppage by Lasik Vision doctors," said Ernest Remo, Icon chairman of the board.

The surgeons, informed by Icon that full back pay owed to them would not be forthcoming, staged a walkout in March before the Icon takeover.

There’s no money

Indeed, surgeons - and patients looking for reimbursement – may have to compete with other Lasik Vision employees, who are asking for back pay for a reported six weeks of work, according to Steven Wexler, MD, of Laser Vision Centers Inc., in St. Louis.

Icon announced in late March that it would not be able to pay the Lasik Vision staff.

Although the Lasik Vision closings have made headlines in the lay press, analyst Harmon says the laser vision correction industry should not be badly effected by the news.

"This is not a story of bad clinical results of LASIK," Harmon said. "That would indeed be a black eye for the industry. But this story could have gone either way, and it went to the financial side with the overwhelming number of patients who could not get their money back."

The message for patients, Harmon says, is do not pay up-front, and only deal with financially stable practices.

The confusion over names

Meanwhile, several well-funded LASIK eye clinics are going to great pains to let consumers know they are solvent and offering quality care.

For instance, the financially healthy Laser Vision Centers, Inc., based in St. Louis, is worried about being mistaken for Lasik Vision due to the similarity of their names.
That company put out a news release on April 4 saying that "business models such as that used by Lasik Vision and others are not viable."

It also established a toll-free number for patients who need to find a surgeon in their area. Laser Vision operates in 300 locations in 46 states.

Dr. Wexler noted that "the opportunity for patients to confuse ‘Laser’ with ‘Lasik’ Vision is my biggest problem.

He has advertised that he will deduct the amount patients gave Lasik Vision from his standard fee for surgery, which is about $1,300 per eye.

He noted that there might be liability problems for him in directing follow-up care for Lasik Vision patients who had surgery. But, he said, former Lasik Vision surgeons and ophthalmologists are making sure they have local space in which to monitor their former patients.

"They feel that it’s the right thing to do," he said.
Icon is developing a comprehensive strategy to address the needs and concerns of former Lasik Vision patients, according to Icon CEO Simone Mencaglia. Icon is activating a call center and will distribute the telephone number when the center becomes active.

"Icon’s immediate concern is to assist all Lasik Vision patients who require postoperative care or who are awaiting surgery. Care for these patients will be arranged through Icon’s facilities," he said.

However, The Los Angeles Times and San Francisco Chronicle note that this would mean patients in their area heading to San Diego for care.

Glenn Hagele, executive director of the Council for Refractive Surgery Quality Assurance, a nonprofit consumer center in Sacramento, CA, said he has received about 50 calls from stranded patients.

The 1_ year-old organization is a patient advocate and educational source that certifies refractive surgeons according to stringent guidelines. About 50 surgeons are certified or are in the process of becoming certified with the organization.
The Lasik Vision situation "opens up a whole new issue for the field" he said.

"No one has ever bailed on patients like this before, and it might severely and irreparably damage the level of trust between patients and physicians. Patients are angry and upset," he added, advising prospective patients to look not just at price and quality, but also at practice stability when choosing a refractive surgeon.

Doctors rush to help

On a more positive note, Hagele said many doctors are offering to help these abandoned patients. "These surgeons are serving as good corporate neighbors as well as making good marketing decisions," he said.

One example is the Cincinnati-based LCA Vision, which has expanded its call center to help patients get through to its 33 U.S. LasikPlus laser surgery centers and one LCA Vision center in Canada.

The company is offering one free follow-up visit to patients who were affected by the Lasik Vision shutdown. Patients not near a LCA Vision/LasikPlus center can be referred to one of LVA Vision’s network of independent providers. "Proper postoperative care is as important as proper preoperative care and the surgery itself," said Vincent Marino, MD, a member of LVA-Visions’s Medical Advisory Board. "We are taking the bold step to help ensure that patients affected by a competitor’s closing will have the opportunity to experience the tremendous benefits of laser vision correction without unnecessary complications."

Dan Reinstein, MD, former Lasik Vision chief medical officer with offices in Garden City, NY, is fulfilling his obligations to former Lasik Vision patients at his own expense. "When they leave off, I pick up," he told The New York Times. "However, I am very confused about why things were done this way."

Some former Lasik Vision practitioners hope to open new practices. Patients who received services at Lasik Vision in Anchorage, AK, where the firm had been in business for about a year, were informed by Icon that the center was closed and advised to call a toll-free number for guidance, but the clinic plans to continue to operate under a new name.

Eric Coulter, MD, a physician at the clinic, is still scheduling surgery and follow-up care. He noted in the Anchorage Daily News that "while corporate gymnastics go on, my ethical and medical judgement dictate that I keep my door open for the benefit of patients.

Dr. Reinstein planned to present a study summarizing the outcomes of 21,000 randomly selected Lasik Vision surgeries at the annual meeting of the American Society of Cataract and Refractive Surgery in San Diego in late April.

"Only one in 1,000 procedures resulted in complications that mildly diminished a patient’s "best corrected" vision," he told The New York Times. "We are very proud of ourselves from a medical standpoint. I only wish my counterparts in business knew as much about business as I do about LASIK."