1. Closing the Gap in Refractive Surgery:
How Financing is Perceived by LASIK Patients and Providers
Shareef Mahdavi • SM2 Consulting • Pleasanton, CA
In its first decade, LASIK eye surgery has emerged as a Key Findings
viable alternative to corrective lenses for 5 million people Overall, there is a clear gap between what consumers believe
(8% penetration as of Q1 2006). With over 700,000 adults regarding the use of patient financing and what doctors perceive
having refractive surgery in 2005, one would expect that about the role of patient financing in the practice.
“word-of-mouth” marketing by itself would spur the market
to grow rapidly in consumer acceptance. What the industry The consumer surveys showed:
has seen, however, is a flattening of consumer demand over 1. Patient financing has a definite impact on willingness to
the past 5 years, a phenomenon which coincided with lower schedule a consultation. Of those told over the phone that
prices being offered by select providers in a attempt to stim- financing was available, 80% indicated that this factor affected
ulate market growth. While low price (eg, prices advertised their decision to schedule a consultation.
as low as $299 per eye) failed to stimulate demand, money 2. Without financing, a significant percentage of consumers
continues to be an obstacle to procedure acceptance. would have delayed having the procedure. In the survey of
The issue with money is not one of absolute price but LASIK patients who financed, 45% indicated they would have
relative affordability. delayed treatment.
3. A very high percentage (91%) of those who don’t show for
Methodology: their consultation are still interested in LASIK, and the majority
SM2 Consulting (Pleasanton, CA) was asked by CareCredit indicated that money was a key reason for not showing up.
(Costa Mesa, CA) to conduct a series of interviews with LASIK 4. After the procedure, patient financing becomes part of the
providers who are among the top one-third in terms of average patient’s story. 86% of patients who financed said they mention
monthly procedure volume in the United States. These interviews how they paid for the procedure when talking with friends or
were held with the key marketing or administrative person family about their LASIK.
within the practice to assess attitudes towards patient finance 5. Patient finance enhances the brand image of the practice.
and understand how financing fits within the overall marketing On a series of statements regarding consumer perceptions, over
activities of a high-performing LASIK practice. Twenty unique 80% agreed or strongly agreed with statements that reflect posi-
LASIK providers (some with multiple centers) were interviewed tively on the practice’s brand image.
and also provided six consecutive months of data on the number Results from the interviews and practice data collected
of inquiries, consultations, no shows and procedures as well as reflect a mixed view, with a few understanding the consumer
marketing spending by the practice. 80% of the participating attitudes described above but many more providers whose atti-
practices regularly perform over 100 LASIK procedures per tudes and practice patterns reflect a lack of understanding of the
month; all use patient financing, and just over half (55%) used role that financing can play to help boost revenue, referral and
CareCredit predominantly. overall image of the practice.
Data from two consumer surveys conducted by GE Below, we will examine each of these major findings and
Consumer Finance were also analyzed. One was sent “after the describe in greater detail the differences between consumer percep-
fact” to 7,000 LASIK patients (2,062 respondents) who had tion and provider perception on the role of financing in LASIK.
financed their LASIK procedure and sought opinions on the
consumer’s decision making process. The other was sent to 500 Patient Finance Has a Definite Impact on
consumers (137 responses) who had scheduled and then can- Willingness to Schedule a Consultation
celled or did not show up to their LASIK consultation. As shown in Figure 1, 80% of phone inquirers who were
This report brings together these bodies of market research told that financing was available indicated that this fact influ-
to help LASIK providers better understand the affordability enced them to move forward in the decision process and sched-
dynamics that influence procedure volume and of the role of ule a consultation. A further breakdown of this question reveals
patient financing. a roughly equal split among how much this affected their deci-
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2. initial phone call), while the opposite is true at small centers,
Figure 1: How did the availability of financing influence
you to schedule an in-person consultation? where first awareness comes during the consultation.
The conclusion here is that when it comes to making poten-
tial LASIK candidates aware of financing, “the sooner the bet-
ter.” In fact, in practices that had monthly marketing budgets
Affected Affected a
Somewhat Great Deal below $20,000 per month, the use of patient financing and a
25% 28%
Significant
specific “offer” (eg, no interest financing available for a limited
Affect time) was correlated with higher revenue from LASIK than
54%
Would Not those with similar budgets that did not incorporate patient
Did Not Have
Affect Proceeded financing into their marketing and advertising campaigns.
20% 26%
(Note: LASIK revenue is defined as procedure volume multi-
plied times average collected fee per eye).
Asked of those who indicated that they were aware of financing from Lack of Financing Would Have
advertising or the Initial phone contact (80% of survey respondents) Delayed Decision-Making
When patients who financed their LASIK procedure were
sion: one-third would not have proceeded, one-third said it had asked what they would have done had financing not been avail-
a great deal of influence, and one-third said it had some influ- able, nearly half (45%) indicated they would have delayed treat-
ence on their decision. ment, postponing their decision to move forward with LASIK.
Doctors on the other hand, are more reticent to use patient Another 38% would have used their credit card. The fact
financing as part of their promotional efforts. While all practices that they used financing indicates that the attractiveness of the
interviewed believe patient finance is a key component of their financing offer (eg, No Interest) serves as a positive stimulus in
LASIK offering, less than half (45%) use it in their advertising the decision process and is a better source of LASIK funds than
messages. Reasons for this include a lack of belief that financing alternative credit lines. However, this finding is likely limited to
truly influences the decision process. When patients who had the segment of the population that can access additional credit
financed their LASIK were asked to recall when they first and should not be generalized across the population, which is
became aware of financing, there is a significant difference relatively much more cash and credit constrained.
between those who were treated at large centers (volume above
150 eyes per month) and those treated at small centers (volume Conversion Ratios and Reasons for No-Shows
below 150 eyes per month). As shown in Figure 2, the majority Longitudinal data collected over 6 months from 20 unique
of patients treated at large centers recalled first learning about practices yielded an average of 69 scheduled consultations for
financing much earlier in the process (from advertising or the every 100 incoming phone inquiries, representing a 69% conver-
sion rate from interest on the phone into consideration via an
Figure 2: When did you first become aware of financing in-office consultation. However, 15 of those 69 scheduled con-
as an alternative payment method for your procedure?
sults were either no-shows or cancellations, reducing the effec-
Awareness Interest Consideration Purchase tive call-to-consult conversion rate to 54%. (See Figure 3).
To better understand why people are failing to keep their
Had LASIK consultations, a survey of 500 prospective patients (137
LASIK at responses) that scheduled an initial exam but failed to follow
27% 25% 35%
Large
Center through cited “financial concerns” as the number one reason for
Majority learned before consultation their lack of action. As shown in Figure 4, it doesn’t appear that
these no-shows were seeking a lower priced provider but had
Had simply failed to move forward in the process. 91% were still
LASIK at
12% 20% 59%
Small interested in LASIK surgery and 70% of respondents wanted
Center
more information on patient financing.
Majority learned at consultation
The conclusion here is that patients who don’t show up are
0% 20% 40% 60% 80% 100%
not seeking a lower-priced provider. It is apparent that during
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3. that initial phone call they were not given sufficient information The conclusion here is that an untapped opportunity exists
and/or motivation that overcomes their inertia to move forward to better leverage the availability of financing and help stimulate
in the process. The root problem lies in that most practices more action by those who encounter friends who are thrilled
with their LASIK procedure. Practices should change their tune
Figure 3: Typical Conversion Ratios in Leading from, “please tell your friends and family about our LASIK
Refractive Practices practice” to “please let your friends and family know that our
practice offers No Interest financing!”
Total Inquiries 100%
Scheduled Consultations 69% Figure 5: Because my eye care provider offers CareCredit:
Rated from 1 (strongly disagree) to 5 (strongly agree)
No shows 8%
“I feel that the practice is looking out for 4.3
Cancellations 7% my best interests”
“I left the clinic feeling that I received a 4.4
Net Consultations 54% good value”
“I am more likely to return to that eye care 4.4
professional for additional services”
believe that if they simply don’t address cost and the patient
“I am more likely to recommend this
doesn’t ask, it’s not a concern. This is a false belief, as every practice to friends and family”
4.5
patient is concerned about money. Practices should strive to
“CareCredit had a positive effect on my
4.8
proactively promote the availability of financing so each patient impression of the practice”
is well aware that the cost of the procedure should not be a bar- 1 2 3 4 5
SD D Neither A SA
rier to procedure acceptance.
Figure 4: Survey of “No Shows” to Consultation Patient Finance Has a Positive Impact
Top Reasons for Level of Continued on the Practice’s Brand Image
Not Showing Up Interest LASIK patients who financed their procedure were asked
100%
how strongly they agree or disagree with a series of statements
90%
regarding their view of the LASIK provider that offered
80%
70%
CareCredit. As shown in Figure 5, patients were far from neu-
60% tral on this subject. All 5 questions asked yielded responses
50% where the mean score on a 5-point scale fell between “agree”
91%
40% and “strongly agree.” 80% of these patients felt the practice was
70%
30%
42% 37% looking out for their best interests, 89% are more likely to rec-
20%
ommend the practice to others, and 96% indicated that the
10%
16% financing provided by CareCredit has a positive effect on their
Financial Appt time not Still Still Want more impression of the practice.
convenient researching Interested in info on
LVC financing Contrast these results with the findings from the interviews
with practices, where doctors generally don’t want to get
Financing Becomes Part of the Patient’s LASIK Story involved with patient finance, and practice administrators are
Far from being some type of stigma or an element of the evenly divided about getting involved with the finance process.
process that is not discussed, 86% of those who financed their Half don’t want to get involved except to refer patients to a
LASIK procedure mentioned this fact when telling others about website or toll-free number. They take a more traditional view
their procedure. This was evenly divided by those who always towards patient finance and believe that using such in their mes-
mention it (42%) and sometimes mention it (44%). Only 10% sage would hurt their image and/or the credibility of the doctor.
of patients indicated they never mention that they used financing. They cited concerns around privacy, HIPAA regulations, and a
In the survey of practices, word-of-mouth referral typically fear of being perceived as intrusive into a patient’s personal
accounts for 44% of all incoming inquiries about LASIK (range finances. As a result, staff do not get involved and patients are
of 20% to 80%). left to apply on their own if financing is needed. The other half
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4. take a more progressive view Figure 6: Divergent Views Regarding Patient Discussion
and get heavily involved, Financing in the Refractive Practice Some providers tried
wanting to control as much of Traditional View Progressive View to stimulate demand for
the process as possible. By tak- LASIK by lowering their
ing control, they view this as Both ends have a core belief that patient finance is important to the refractive practice
procedure fees, a move
increased convenience for the that failed to stimulate
“This is medicine” “This is business”
patient and less likelihood of any growth in consumer
inaction and failure to move Putting PF message in ad would hurt image Proactively promote/use PF as a means of demand. That amounted
and credibility of the doctor removing money as an issue right from the start
ahead in the decision process. Staff does not get involved; want patients to Staff heavily involved; want to control process
to addressing the correct
Figure 6 summarizes these apply on their own as much as possible
problem (money) with
divergent attitudes among Privacy concerns take priority Patient conversion takes priority the wrong solution
LASIK providers. (lower prices). Providers
What patients think about the doctor and his making financ- now have an opportunity to address the money issue through a
ing available is much more positive and in direct opposition to much more intensive approach to patient financing as a means
the concerns expressed by those LASIK providers who have a of opening up demand to a wider audience of consumers. The
more traditional view of patient financing. Although I agree data clearly show that patients who finance LASIK are glad that
with Walt Whitman’s call to “resist what insults your soul,” it it is available and view providers favorably in this regard. In
is reasonable for providers to take a more patient-centric view contrast to the failed low-price strategy, those practices in this
of financing and re-visit whether their attitude towards patient survey that advertise and heavily promote patient finance had
financing is grounded in their own biases rather than what average fees that were slightly higher (by $47 per eye) than
today’s patients want and need in order to move forward and those that did not promote financing. This finding should allevi-
have the LASIK procedure. ate concerns that aggressive promotion of financing would lead
to lower collected fees from consumers. Financing also serves as
Summary a buffer from the temptation to discount fees.
As the data indicate, there is a wide gap in the attitudes There is clear evidence that patients and providers both ben-
toward financing between what patients say and what providers efit when patient finance is brought up early in the decision
perceive to be the issues at hand. A potential criticism of the process. It helps overcome one of the early concerns (“This is
patient survey was that it only included those who financed and more money that I expected, I guess I’ll just wait for a better
does not address the 80 to 90% of patients that pay for their pro- time.”) and helps the consumer come to the consultation better
cedure via a credit card or cash. This can be addressed by looking prepared emotionally to make a decision because the financial
at the bigger picture surrounding LASIK and refractive surgery: question has been resolved.
• At 5 million US patients thus far, LASIK penetration is still The cost of LASIK competes with other similarly priced
less than 10% of likely candidates. goods and services. Practices that put themselves in the shoes of
their patients will realize that the big screen TV or Hawaii
• Only 25% of adults can write a check for more than $500.
vacation are equally attractive uses of discretionary income or
• Average household debt (excluding mortgages) has tripled in the available credit.
past 15 years and now approaches $10,000, limiting the size of The surveys referenced in this report validate the signifi-
the population that is able to put the procedure on the credit card. cance of financing to increase the pool of prospective patients.
• The typical patient who finances LASIK has an annual income Increasingly advanced technologies such as refractive IOLs are
of $82,000. Among all LASIK patients, the average income is going to be marketed to a population which is increasingly
nearly identical at $83,000. This similarity demonstrates that strapped for cash. Patient financing – when properly and con-
financing is used by all income levels, not only by those who sistently promoted early in the process – can go a long way to
cannot afford to pay cash. closing the gap in consumer demand for refractive surgery.
• At 15% to 20% of revenue that is financed, refractive surgery
lags behind typical retail consumer categories, such as consumer
electronics (28%) and furniture (30%).
© Copyright 2006, SM2 Consulting. All rights reserved. 4