Three laser chain providers—Optical Express, Ultralase, and Optimax—dominate the refractive surgical market in the United Kingdom. Combined, these centers are responsible for more than 80% of all laser vision correction procedures annually (personal research estimate, 2008). At the time of this writing, these three chains operate 60 excimer laser treatment centers in the United Kingdom and have planned further expansion geographically, with Optical Express already expanding within several other European countries.
During the past 2 years, Optical Express has advertised laser eye surgery starting at £395 (€494) per eye.1 Using a strategy likely adopted from retail optical experience, and attainable because of nearly 200 referring optical stores, Optical Express has captured a major UK market share (personal estimate, 50% of all laser eye treatments carried out in the United Kingdom last year).
The up-selling pricing strategy is nothing new in the retail sector but is a fairly recent addition to the laser eye surgery market. Consider booking a flight on Expedia.com (Expedia, Inc., Bellevue, Washington): You are offered amenities, including travel insurance, car rental, hotel bookings, and sightseeing excursion, prior to checkout. Similarly, purchase a computer from Dell (Round Rock, Texas), and you are asked to consider upgrading several options, including memory, storage, processor speed, and monitor size. However, many refractive clinics have, and still do, operate a one-price-for-all laser eye surgery service that does not vary according to prescription or treatment type. Others offer one fixed price for surface correction and another for LASIK treatments.
RESPONDING TO THE MARKET
Optical Express. The arrival of wavefront-based treatments allowed providers to implement up-selling their competition by offering two price points: (1) standard nonwavefront LASIK and (2) a more expensive wavefront-based correction. Optical Express revised this strategy, introducing three stages of incremental revenue. First, it based pricing upon the patient's prescription, increasing the surgical fee according to the magnitude of sphere and cylinder. Second, patients are offered an upgrade to a wavefront-based CustomVue treatment on a Visx S4 excimer laser (Advanced Medical Optics, Inc., Santa Ana, California). Third, customers may again pay an additional fee for all-laser LASIK with the IntraLase femtosecond laser (Advanced Medical Optics, Inc.) instead of using a microkeratome to create the LASIK flap. Optical Express offers non-CustomVue LASIK using a microkeratome, wavefront-based LASIK, and IntraLase wavefront LASIK.
Optimax. This LASIK chain has responded to the marketing challenge by dropping and/or matching headline prices for nonwavefront surface laser correction; however, it increases other price points, including costs for wavefront-based LASIK and femtosecond flap creation. Cheaper nonwavefront and tissue-saving options are also available.
Ultralase. Jockeying for a more premium position within the UK laser eye surgery market, Ultralase also uses the price point strategy. The chain was acquired by the private equity group 3i (London) at the start of 2008 in a well-publicized £174.5 million (€238 million) purchase. Prior to the switch, Spanish owners Corporación Dermoestetica controlled the company after a 2005 purchase at the comparatively bargain price of approximately £29 million.
LASIK prices at Ultralase have recently increased because the option for LASIK with a microkeratome was replaced with all-laser LASIK (IntraLase) and wavefront-based corrections. Zyoptix (Bausch & Lomb, Rochester, New York) femtosecond LASIK is now available as well as cheaper nonwavefront and tissue-saving options.
PRICE RANGES
Irrespective of headline prices showcased by Optical Express, Optimax, Ultralase, or other refractive clinics, consumers in the United Kingdom face a range of costs when considering premium laser vision correction with the femtosecond laser and wavefront-based LASIK procedures.
My clinic, Focus Laser Vision, is a specialist center for the correction of presbyopia. Because expansion of our myopia business was limited in the presence of lower cost sources for laser vision correction, we adopted a prescription-based pricing policy for myopes and hyperopes. All treatments are either wavefront-optimized or wavefront-guided using the Allegretto 400 Hz Eye-Q platform (WaveLight AG, Erlangen, Germany). Myopic wavefront with a microkeratome and femtosecond LASIK (Ziemer LDV FS laser; Ziemer Group, Port, Switzerland) start from £295 and £595 per eye, respectively.2
The challenge for us, and similarly all independent clinics, is learning how to compete for attention in the marketplace. Convincing the average patient of the superiority of your technology over that of your competitors has always been a challenge to any laser vision correction provider. The average patient, who does not normally distinguish between differing technologies, is faced with multiple providers making claims to have the latest and greatest devices.
Although technology does not distinguish one provider from another in the mind of the average consumer, price is a different story. According to a survey by VisionWatch (Jobson Medical Information LLC, New York, New York), 61% of respondents in the US market stated that price was the most important factor in their decision to have laser vision correction. Not surprisingly, low-price strategies can have a significant impact on marketing response; however, scalable pricing means acceptable margins. The remaining 39% of patients for whom price is not the deciding factor give opportunity to the premium refractive practices.
PRESBYOPIA VERSUS MYOPIA
The delivery of effective presbyopia vision correction led us to divide our refractive target market into two main groups: (1) myopes aged between 20 and 43 years, and (2) presbyopes aged 44 years and older. We construct our marketing communications and pricing strategy based upon these demographics because the wealthier presbyopic patients are less price-sensitive and less interested in financing options than their younger myopic counterparts.
Presbyopia correction, especially using laser eye surgery, places some demands on a clinic, including high levels of clinical skill and experience, more chair time with patients, and an increased enhancement rate in the correction and maintenance of satisfactory presbyopia treatment. In our strategy, such demands require higher fees for the 44 and older age group. Despite increased utilization of resources, higher prices lead to greater operating profits.
CONCLUSION
Our business model allows us to effectively subsidize margins from younger myopic patients by charging more for procedures typically required in our older presbyopic customers. In this way, we might be thought of as the Robin Hood within laser eye centers. In fact, it is just good business sense by following market demographics and facilitating competition with much bigger organizations.
David Allamby, MD, FRCS, FRCOphth, is the Medical Director and CEO of Focus Laser Vision, London, UK, and is listed in the Who's Who of Britain's Business Elite 2008, Owners of Britain's Most Successful Companies. Dr. Allamby states that he has no financial interest in the products or companies mentioned. He may be reached at allamby@mac.com.
