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Managers Drive Down IOL Costs
Our latest survey finds four strategies that facilities are using to pay less for intraocular lenses.
Yasmine Iqbal
Publish Date: June 9, 2008   |  Tags:   Ophthalmology
Facing cataract surgery reimbursement cuts, surgery facility managers are focusing on intraocular lens costs. Virtually all facility managers rate the cost of IOLs as either "very" or "somewhat" important and two thirds say the importance of IOL cost has increased over the past five years. Managers are working hard to bring costs down, and many of them are succeeding; more than a third say they are paying less for IOLs than they were five years ago, and some facilities are paying very low prices for the IOLs they buy-sometimes less than half of the nationwide average. So indicates a survey of 700 Outpatient Surgery readers. Seventy-eight, or 11 percent, responded; respondents perform an average of 73 cases a month.

Our survey reveals four strategies that managers are using to bring costs down: They are driving harder bargains with manufacturers, consolidating the number of suppliers they deal with, employing various techniques to convince surgeons to consider less expensive IOL brands, and in some cases foregoing manufacturer financing deals in order to get better prices on IOLs. For more insight into how facilities are implementing these strategies and how well they are working, read on.

Driving a hard bargain
One strategy facility managers are using is negotiation. The average prices for silicone plate haptic lenses is $110, for silicone three-piece lenses it's $86, for acrylic IOLs it's $132 for one-piece designs and $113 for three-piece designs. But what facilities are paying varies significantly, based in part on volume and perhaps on negotiating skill. One Iowa hospital that implants only silicone plate-haptic lenses pays $300 for them; meanwhile, an Oregon center that implants mostly this kind of lens pays $51 (this facility does more than 400 cases a month).

Not surprisingly, facilities that do higher volumes of cases definitely get better deals. The facilities that pay less than $100 for silicone plate haptic spherical lenses, for example, do an average of 115 cases a month. Facilities that pay more than $100 do an average of 44. Similarly, facilities that pay more than $100 for silicone three-piece spherical lenses do an average of 103 cases a month; facilities that pay more than that do an average of 59.

Consolidating suppliers and convincing surgeons to switch
Twenty-eight percent of our respondents say they've consolidated their suppliers, often with their surgeons' blessings. Less than 10 percent of those who consolidated found convincing their surgeons to do so "very difficult," while 41 percent say it was "easy." Sixty-seven percent of our respondents use no more than two suppliers; only 12 percent deal with four or more.Readers employ a variety of strategies for getting surgeons to consolidate or change lenses for economic reasons. Here are a few:

Showing them the bottom line: A number of respondents let numbers do the talking for them. "I show the surgeons what it costs us per case now, along with the reimbursement. Then I show them how much money we will save over a one year time period [if we change IOLs]," says the medical director of an Oregon surgicenter. The director of surgical services at an Illinois facility presents her surgeons with an average cost per year of all IOLs they are considering and then lets them decide. The decision has been easy, she says: "We have always tried to use one primary IOL and surgeons have always been receptive to this."

Quoting outcomes studies: A few respondents say that their physicians are most interested in knowing about outcomes before they decide; one respondent says she presents her doctors with FDA outcomes studies. Malcom Moore, MD, Medical Director of Medical Eye Associates facility in Macon, Ga., reports that in his case, the facility's surgical outcomes has convinced him that a higher-priced lens is worth the cost. He has switched to acrylic lenses and says that "although IOL expense is now greater, our total cost per case has decreased and our surgical outcomes have improved (less post-op inflammation with acrylic compared to silicone)."

Offering a trial run: Many respondents emphasize the importance of first convincing the surgeons to take a trial run with new IOLs. "We have [the surgeons] trial the IOLs first to assure that they will like them," says an Illinois director of surgical services. "They make the decision after the trial and decide the ?one best product'." Respondents hold out hope that a trial may make even the most stubborn surgeon change his or her mind. "I always have samples for them to try before they just say no," says an Indiana director of surgical services.

Showing where else the money could be used: The administrator of an Oregon eye surgery facility says she emphasizes that cutting IOL costs will enable the facility to "free up funds to be used elsewhere."

Employing peer pressure: The administrator of a Texas-based facility prepares cost analysis reports informing surgeons of the cost of all the supplies necessary to do their cataract surgeries and shows them how they compare to the other surgeons in the group.

In many cases, respondents note that surgeons themselves are seeing the benefit in standardizing and cost-cutting, and sometimes they even bring up these issues on their own.

"Our surgeons are very cost conscious; many times they come up with ideas to cut costs," notes the director of surgical services at a Pennsylvania hospital. "Doctors know the financial constraints we face-they must make adjustments in their private practice as well," notes Debbie Weiss, director of surgical services at St. Joseph's Hospital in Highland, Ill.

Some readers are having a difficult time convincing surgeons to change for the good of the facility. "The doctors have their own preferences, and they are not likely to accept anything else," says Judi Nelson, the director of surgical services at Madison Hospital in Madison, Minn. A medical director of an Oregon surgicenter laments, "We have four doctors who come here and belong to different groups. They each want their own things and are not interested in using what another doctor wants."

It's clear that no matter what tactics they employ, the decision-making process can be a tense one. One Virginia ASC administrator, for example, says she lets the surgeons "fight it out among themselves and make a unified decision." The executive director of a Pennsylvania ASC says she has to resort to "begging."

"New Technology" lenses: How nifty is $50?

Re-examining contracts
Most of our respondents, 63 percent, say they do not participate in "bundling" arrangements, where the facility pays for all or part of the cost of a phaco machine by purchasing lenses and other supplies from the phaco machine manufacturer.

Some respondents commented that they find these arrangements to be superfluous: "Most of the time I don't need what they are bundling," claims the administrator of a Texas facility. One Iowa-based administrator feels trapped by her bundling arrangement and complains, "I feel we are in a contract and paying extra. I know we are paying for the unit also, but I would like the flexibility to find cheaper priced items (with the same quality)." The medical director of a Tennessee eye surgery center who does not bundle supports these suspicions: "You can just as easily negotiate each item separately," he says.

Marlene Brunswick, director of nursing at the Findlay Surgery Center, in Findlay, Ohio, says bundling has its advantages if volume is high enough, but admits that "once items are bundled, it is more difficult to institute any changes in vendors with competitive pricing."

One Minnesota respondent keeps the cost of her phaco machine down by buying refurbished; by doing so, she also retains the flexibility to purchase the IOLs she wants.

Thirty one percent of our respondents do use bundling arrangements, however, and nearly nine of 10 find the arrangements "very" or "somewhat" cost-effective. One benefit cited by many readers was the ability to keep the initial capital outlay for a phaco machine to a minimum. "It keeps the initial cost down since we don't pay a single payment up front," says a medical director of a Sacramento eye surgicenter. "Interest rates are typically low, so spreading payments over time does not cost that much." Malcolm Moore, MD, the medical director of Medical Eye Associates in Macon, Ga., admits there's a trade-off, but bundling still works out to his advantage: "Although [we are] now paying more for IOLs, the overall cost per case, including machine costs, is less."

The author wishes to thank Yvonne Bley, Lanny Woodhull, and Kristin McKee for their help with this article.