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Medical Price War Erupts Over Controversial Eye Surgery : The Competition for Radial Keratotomy Business in Phoenix Drops the Cost From $1,500 to $495

February 09, 1986|ALLAN PARACHINI | Times Staff Writer

PHOENIX — In what many doctors see as an inevitable result of growing entrepreneurial pressures on medicine, a price war has broken out here over one of the most controversial surgeries currently in use--radial keratotomy to reduce nearsightedness.

It has already provoked chuckles and raised eyebrows, as well as bringing agreement and criticism from doctors and health economists.

Something New

Competitive pressures have been building in medicine for at least a decade, and doctors for at least five years have been talking about previously taboo subjects like marketing. But the idea of a price war is something new.

And, depending on their points of view, the doctors involved here and those observing it from the sidelines say the question is whether the local situation is more reminiscent of the techniques of Earl Scheib or Henry Ford.

Auto painting magnate Scheib made a successful career of offering, through blitz advertising, cut-rate car refinishing. Ford's refinement of the assembly line and mass production techniques between 1908 and 1914 brought down the price of autos so they became affordable for the masses, beginning a personal transportation revolution.

What has happened here is also a bit reminiscent of what used to occur among service stations competing to sell gasoline.

On Jan. 12, Dr. David Dulaney, who operates eye surgery offices in Phoenix and nearby Mesa and Sun City, started advertising he was taking the scalpel to his price for radial keratotomy, cutting from about $1,500 per eye to a flat rate of $500 each, with no additional charges. Dulaney's advertising capitalizes on the fact that he, himself, has had the surgery.

Ten days later, the gauntlet was picked up by Drs. Lorin Swagel and James Wootton, of Mesa, who met--and beat--Dulaney's price with ads promising no ups/no extras surgery at $495 per eye.

Reduction Made

A third surgeon, Dr. Ronald Barnet--also with a three-office chain--has reduced his price to $950 an eye and says he is watching the situation and may jump into the price war if he sees significant cuts in his radial keratotomy business.

But the situation here differs from the economics of gasoline price wars or lower-priced automobiles in one significant respect: The Phoenix price war is being fought over a procedure that, while it produces at least temporary vision improvements in about 80% of the patients who have it, is prompting growing doubts about its long-term effectiveness and risks.

First developed in the Soviet Union in 1974, radial keratotomy consists of cutting a series of incisions into the cornea--or lens of the eye--to flatten it and correct nearsightedness. Originally offered in the United States in 1979 for people--like fire and police personnel--who were required to have perfect vision without wearing glasses, radial keratotomy has spawned a lucrative, highly popular industry, with more than 200,000 patients treated already. It has become one of the most widely and hotly marketed items of medical care today.

Radial keratotomy's advocates laud it as a safe, effective way for nearsighted patients--mostly young people--to see well enough that they no longer have to grope for their glasses just to see what time it is.

The Phoenix doctor who emphasizes that he has had the surgery himself said he wants to convince potential patients of the procedure's safety and effectiveness.

But a national study monitoring the long-term effects and risks of the surgery last fall reported unexpectedly pessimistic results for patients two years after the surgery. And critics have begun to publish reports of complications ranging from healing of the eyeball that takes as long as four years, to serious infections, perforated corneas, cataracts, retinal detachment, blindness and at least one case in which an eye weakened by the surgery ruptured in an automobile collision.

Marked Change Alleged

For many patients, these critics say, the vision correction achieved by radial keratotomy changes markedly over time, and many people who have the operation find they still must wear glasses afterwards--even though the lens prescriptions are not as strong as before.

In the immediate instance, however, the Phoenix price war has also brought to the surface another, lingering question in medicine that has nothing to do with eye care: How do doctors put a money value on specific services they offer?

Disposable supplies used in radial keratotomy cost the doctor about $100, surgeons here agreed, and a surgeon starting to offer it must make a one-time equipment investment of about $20,000. But for an ophthalmologist who already has an office equipped with an operating microscope and staffed by skilled nurses, the direct costs of doing the operation add little to total overhead, the doctors agreed.

Similar price-value questions have been raised about a variety of plastic surgery procedures, elective sterilization and even hernia repair as well as about such operations as coronary artery bypass.

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