Changing the Capital Equipment Model – A Patient Imperative!

by Guy M. Kezirian, MD, MBA, FACS

September 2014


Surgeons should always put patient interests above all other considerations. This is not only good for patients, it is the best way to build a great reputation grow your refractive practice.

Yet financial considerations can sometimes overshadow patient interests. This is especially true when it comes to accessing expensive capital equipment like refractive lasers and advanced diagnostic equipment, particularly when the equipment is purchased.

When surgeons buy expensive equipment, the incentive is to keep it as long as possible, since the per-use cost of equipment goes down the longer it is in service. But doing this can conflict with patient interests. Patients expect surgeons to always have the latest technologies!

Having the latest equipment is important because refractive surgery is technology dependent. Surgeon skills are very important too, of course. But in refractive surgery the surgeon’s skills are mostly applied to making decisions and ensuring that the technology is properly applied. The ultimate result—improved vision—is largely dependent on the technology. Technology improvements occur frequently so having new equipment matters.

In fact, current state-of-the-art technology is a key reason why refractive surgery has become so successful. Modern lasers often provide vision that is as good as, and often better than, vision with contact lenses and glasses. For example, the FDA study of the WaveLight laser for myopic LASIK showed that a whopping 86% of patients saw as well or better 6 months after surgery without glasses as they did before surgery with glasses (see, page 21). This is remarkable.

But not all lasers can deliver these results. Older technologies, while good, were not as good as modern platforms. This is not unique to refractive lasers—the same applies to cell phones, computers, cars and most technology platforms. Many surgeons continue to use older technologies and their patients do not achieve the results that they should. The same can be said for diagnostic equipment. Modern imaging devices make surgery safer, and allow surgeons to identify patients who should not undergo a procedure. Yet not all surgeons have access to this technology. The reason is economics, because surgeons buy, rather than lease, their equipment.

Some surgeons feel that that the older technologies work “well enough”, especially considering the costs of upgrading. The definition of well-enough often depends on price. Refractive lasers often cost half a million dollars, and a laser suite can cost more than a million dollars. This is a lot of money. But “well-enough” may not be good enough—most people want the best when it comes to their vision.

There are two common alternative to purchasing lasers and other expensive equipment: pay-per-use and leasing. Pay-per-use programs, sometimes referred to as “subscription” programs, charge a fee each time the laser is used. Fees generally are all-inclusive—service, click fees, etc.—and are often quite high. Typical fees run around $400 per eye. Subscriptions are one of the most expensive way to access technologies, but they can limit risk and therefore provide access to low volume surgeons.

Leases are different than subscriptions. Similar to leasing a car, an operating lease for a laser sets a fixed payment for the laser. Similar to the purchase model, leases incent the surgeon to use the laser, as the more it is used, the less it costs per use. But unlike the purchase model, leases allow the surgeon to change out the equipment every few years for the latest technology. Instead of having to depreciate the equipment over time, leases allow surgeons to write off the costs for technology as an expense.

The resistance to the leasing model comes from the price tag – over time, it can be more expensive to lease equipment than to buy it. So leasing appeals mostly to higher volume surgeons who can justify investing more in their practices. This benefits patients.

Why does this benefit patients? Because higher volume surgeons tend to have a great deal of experience and specialize in refractive surgery. As a rule, a system that ensures high-volume surgeons have the latest technology will be good for patients. Higher volume surgeons certainly treat most of the patients, so ensuring they have the best equipment available makes sense.

Another benefit to the leasing model is that it encourages manufacturers to invest in research and development (R&D), which drives progress. In the purchase model, manufacturers have to wait for surgeons to trade in their old equipment. This makes it difficult for manufacturers to sell new technology, even when it is better. Equipment in a leasing model is traded out every 3 or 4 years so manufacturers have a ready market for model upgrades. This encourages innovation, which is certainly good for the patient.

Today, the prevailing capital equipment model is to purchase-and-hold. This model can pit surgeon economics against patient interests. Moving to leasing model will align surgeon economics with what is good for patients – innovation, assurance that they will be treated with state-of-the-art technology, safer treatments, and ultimately better outcomes.

It is time for surgeons to move to leasing programs and time for the industry to provide affordable leasing options. Doing so will put patient interests first and will grow refractive surgery. It is a patient imperative.


Purchase Model
Also known as … Capex, Capital Expenditure Operator’s Lease Most equipment is sold today rather than leased
Current status Most equipment is purchased Leasing has not been popular Several factors are responsible, none put the patient’s interest first
Incentives Keep as long as possible Replace every 3 or 4 years Patients benefit from leasing
Impact on surgeons Goes down the longer it is in use Constant, does not decrease over time Leasing favors higher volume surgeons, which is good for patients — experience matters.
Impact on patients At risk for suboptimal outcomes with older technologies Assures state-of-the-art technology Costs may be slightly higher with leasing model, but the results are better with new technologies.
Impact on manufacturers Difficult to sell new equipment, discouraging investment in R&D Assures new equipment will be placed, encouraging R&D Patients benefit from leasing!