By RHONDA L. RUNDLE
Staff Reporter of THE WALL STREET JOURNAL
October 26, 2004; Page A1
LOS ANGELES -- Robert K. Maloney, seated on a low stool, peered through a microscope as he operated on a man's left eye. "Chris, I'm just working to get it into position," Dr. Maloney gently reassured his patient.
This wasn't an effort to save Christopher Robin's sight, or even to improve his vision. Dr. Maloney was implanting a tiny platinum jewel, shaped like a star, into the corner of the white of his patient's eye.
For Mr. Robin, a 30-year-old rock musician with tattoos and a braided ponytail, the payoff was a radical new glint in his eye. For Dr. Maloney, who didn't charge for the procedure and has yet to interest anyone in paying for it, the 20-minute operation yielded another precious dose of public attention. Thanks to Dr. Maloney's publicist, a television crew was on hand to film the surgery for a local Fox news show.
The hunt for patients willing to pay thousands of dollars for surgery not covered by medical insurance is thrusting more doctors into a new world of hype and promotion. Plastic surgeons pioneered this terrain. Now, like upscale hoteliers and retailers, eye doctors are also depending heavily on marketing and word-of-mouth. As they jockey to keep their names in public view, they are promoting unusual new procedures like the JewelEye cosmetic implant, along with more practical new ones like corrective lens implants.
The transformation of ophthalmology into a business requiring acute consumer-marketing savvy was sparked by a single surgical innovation. Nearly a decade ago, eye surgeons received regulatory approval to use lasers to reshape the cornea so that patients would no longer need their glasses. Since then, laser-assisted in situ keratomileusis (Lasik), has become the most popular form of vision correction, or refractive, surgery. Although insurance almost never pays for it, more Lasik surgeries are performed every year than nose jobs, face lifts or tummy tucks. More than eight million laser eye procedures have been performed in the U.S. since 1995, including 1.2 million last year. Partly as a result, the median compensation for ophthalmologists jumped last year by nearly 18% to $300,020, the largest year-over-year increase for any medical specialty, according to the trade group Medical Group Management Association.
The 3,900 eye doctors who specialize in Lasik surgery, about 25% of all ophthalmologists, have discovered that their practices behave more like luxury-goods businesses than traditional medical practices. Because insurers won't reimburse them, doctors must persuade consumers to reach into their pockets for eye surgery instead of some other discretionary purchase. And when U.S. consumer confidence plummets, doctors have learned, so does the number of refractive surgical procedures. Volume dropped sharply a few years ago, and many laser-surgery chains went bankrupt. This year, volume has risen 18%, according to Market Scope, a Manchester, Mo., market-research firm.
In coming years, as health insurers continue to press for more medical costs of all types to be shifted to patients, more and more doctors may need to learn how to sell their services as aggressively as Dr. Maloney does.
Dr. Maloney, a 46-year-old eye surgeon who practices in the affluent Los Angeles neighborhood of Westwood Village, graduated summa cum laude from Harvard University and attended the University of California at San Francisco's medical school after a Rhodes scholarship. But then, he says, he came to a disquieting conclusion: "I really didn't like sick people." He wondered whether he should even become a doctor. Then he discovered the budding field of corrective eye surgery, where he could treat healthy people willing to pay a lot of money to see and feel better.
Even as a young faculty member at the University of California at Los Angeles, Dr. Maloney had a knack for translating medical jargon into snappy sound bites. After going into private practice in 1998, he hired a publicist to get media exposure. Two years ago, he was invited to join the cast of a new ABC television show, "Extreme Makeover," on which cosmetic surgeons operate on volunteers.
At first, he says, he was concerned that a show devoted to glamorizing plastic surgery would be "appalling." But after talking to the other doctors who had signed on, including a cosmetic dentist whose spouse Dr. Maloney had treated, he decided that participating might be fun.
He isn't paid for his cameos on the show. But in the first half of this year, about 12% of his new patients reported choosing him because of the show. "Extreme Makeover," says Shareef Mahdavi, an ophthalmic-device consultant in Pleasanton, Calif., "is a one-hour infomercial in prime time every week."
Dr. Maloney has concluded that it also pays to pamper his customers. At one time, patients walked away from a trip to the eye doctor with little more than oversized plastic sunglasses to protect their dilated eyes. Today, Dr. Maloney's 25-person staff includes a suit-and-tie clad concierge who serves pastries and coffee in the waiting room. After his patients return home from surgery, Dr. Maloney sends a gift box packed with gourmet chocolate chip cookies and a mug bearing the invitation: "Wake up and see the coffee."
He is not the only eye surgeon vying for attention. Andrew Caster, a refractive surgeon in nearby Beverly Hills, signed on with another television makeover show, Fox's "The Swan." And Kerry Assil, who practices a few miles away in Santa Monica, recently performed a new surgical procedure on "Good Morning America," helped by his own Hollywood agent.
Thirty years ago, doctors and lawyers who advertised were viewed with disdain. But ethical standards have changed, and advertising and public relations are widely accepted now in both professions. "Promotion is OK," says Bradley Straatsma, chairman emeritus of UCLA's Jules Stein Eye Institute. "Part of our American medical system is to inform the public of their options and to try to get information to them that is valid and accurate."
When Dr. Maloney was training as an eye surgeon, many eye doctors considered it barbaric to operate on a healthy eye merely to free someone from glasses or contact lenses. But Dr. Straatsma, then director of the Jules Stein Eye Institute, says he recognized that the emerging technology was certain to become important. He hired Dr. Maloney, who became one of the first full-time refractive surgeons at a major university.
The university's public-relations people loved him. When they paged him, he responded quickly, and he was always eager to talk to the press. "I saw the effect of the stories," Dr. Maloney says. They attracted patients, generated revenue for the department, and ensured a flow of candidates for clinical research.
In 1995, the Food and Drug Administration approved laser vision-correction surgery. Refractive surgery quickly became a huge profit center at the UCLA hospital. To accommodate all of Dr. Maloney's patients, the Jules Stein Eye Institute set up a new laser surgical center. Patients coming in for corrective eye surgery would no longer have to share waiting areas with patients suffering from cancer, corneal ulcers and other eye maladies.
By 1997, the refractive surgery center was generating 40% of the institute's revenue. But Dr. Maloney was chafing under the university system. Unpolished medical students, he says, didn't provide good enough service to his affluent customers. Dr. Maloney grew frustrated by long waits for the approvals needed to launch research studies or to print marketing brochures.
"Ophthalmologists weren't used to marketing," says Bartly Mondino, Dr. Maloney's former boss and now the director of the Jules Stein Institute. The university insisted that marketing materials be fact-based and tasteful, and promote university services rather than individual physicians. "We didn't want anything that might be considered sexist," or that showed "beautiful people walking on the beach," Dr. Mondino says.
Fed up with the hassles and eager to make more money, Dr. Maloney says, he left UCLA in mid-1998 to launch the Maloney Vision Institute. He says he now earns more than the $1.2 million in salary and bonuses he made during his last year at UCLA, but he won't say how much more.
After hanging his shingle, one of his first moves was to retain a part-time publicist. "When I started working with him, I didn't know any other independent doctor who had their own PR person," says Gemma Cunningham. She arranged interviews with trade publications, newspapers and television reporters. Dr. Maloney had the resulting articles framed and hung throughout his office alongside glowing letters from celebrity patients like model Cindy Crawford, comedian Drew Carey, and former Secretary of Defense William S. Cohen.
Dr. Maloney makes no apologies for such self-promotion. Along with word-of-mouth referrals, it keeps patients and dollars streaming in the door, he says. "To be a great surgeon, you have to do a lot of it," he says. He doesn't do any advertising, because he says it attracts customers who care more about price than performance.
Over the years, he has conducted clinical testing on a variety of new products, including the implantable corrective lenses that recently won FDA approval for treatment of nearsightedness.
He has also promoted devices that turned out to be disappointing. In 1999, shortly after the FDA approved a new ring-like device designed to change the curvature of the cornea without surgery, he invited reporters to watch him implant the new product, called KeraVision Intacs. The procedure, he claimed, had "the potential to help the more than 22 million adult Americans that have mild to moderate nearsightedness."
But the technology never took off, and Dr. Maloney stopped implanting the devices because he didn't think the results were as good as Lasik. Then, he says, he turned a profit by shorting, or betting against, the stock of the manufacturer, which eventually sought bankruptcy protection. Dr. Maloney says because he was not working as an investigator or consultant to the manufacturer, and because his financial interests were aligned with his responsibilities to patients, the investment was proper. The technology was subsequently acquired by another company for treatment of a different condition.
In 2001, he and another surgeon established a second office in Irvine, about 40 miles south of Los Angeles. Several other corporations were rushing to open Lasik centers. Price wars erupted, with some chains advertising prices of as low as $499 per eye, far below the $2,400 that Dr. Maloney was then charging. To make matters worse, complaints began surfacing about troubling side-effects to Lasik surgery, including night glare and halo vision.
Then the economy tanked. More consumers faced hard choices about their discretionary income. "Will I have Lasik, or take a trip to Hawaii, or remodel the bathroom?" says Mr. Mahdavi, the ophthalmic-device consultant, describing consumers' dilemmas. More people opted to skip the eye surgery, sending many Lasik specialists into the doldrums.
Dr. Maloney's patient volume dropped by 42% between 2000 and 2002. His dream of managing a chain of upscale, research-oriented centers died. Many laser-surgery chains went bankrupt. A notable survivor was TLC Laser Eye Centers, the company that employs golfer Tiger Woods as its spokesman.
Despite the tough times, Dr. Maloney never cut his Lasik prices. He now charges $2,800 per eye, a price at the highest end of the industry range. Many people are willing to pay top dollar for surgeons with "star quality," says David Harmon, president of Market Scope, the market-research firm.
Today, with industry volume recovering, Dr. Maloney is excited about the prospects for the new implants for correcting nearsightedness. Among the other new technologies are surgical treatments to eliminate the need for reading glasses and bifocals.
Dr. Maloney started offering JewelEye implants earlier this year after talking to the Dutch eye surgeon who invented the procedure and is selling the cosmetic implants. The thin platinum hearts, stars and half-moon crescents are safe and don't threaten the structure of the eye, Dr. Maloney asserts. He decided to get involved, he says, because the jewels are "neat" and "I love innovating." He has set the price at $3,900.
The American Academy of Ophthalmology issued a statement in April warning that the JewelEye wasn't proven to be safe. "We can't really say it's bad, because there aren't any studies," says Academy spokeswoman Michelle Stephens.
It's a ticklish situation. Dr. Maloney is a member of the academy and one of its designated spokespeople. He has performed surgery on many colleagues, including Ms. Stephens. "Refractive surgeons definitely know the value of publicity," she says.