Economy takes toll on Lasik eye surgeries

Consumers spending money on food rather than pricey elective treatments

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updated 11:45 a.m. ET Nov. 4, 2008

CINCINNATI - The number of vision correction surgeries performed by one of the nation's largest Lasik providers continues to plummet, mostly because money is tight and people are buying bread and milk rather than expensive cosmetic or elective surgery, analysts say.

At LCA-Vision Inc., which operates 77 LasikPlus vision correction centers in 33 states, the number of procedures is down by half from a year ago.

"It's 99 percent the economy," said analyst Peter Bye, who follows the industry for Jefferies & Co. in New York.

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"It's very substitutable," he said of Lasik. "Take the typical customer, a 30-year-old or 35-year-old who has been wearing contacts for 15 years. If money's tight, he says 'I'll do it next year.'"

The Food and Drug Administration heard testimony in April from patients who said they experienced dryness, severe eye pain or blurred vision following Lasik surgery. But Bye didn't think those hearings affected the industry much.

"In the spring, we heard a little bit of a blip, but it didn't escalate," he said.

Lasik was one of the optional expenses that people started to forgo about a year ago, Bye said. And like vision correction, other cosmetic procedures such as botox injections and breast implants have fallen off.

Those industries will revive when the economy rebounds, he predicted, but vision correction "is probably not the first discretionary item that comes back."

"Usually the first to go is last to come back," he said.

Although surgeries at LCA-Vision centers have declined more than the industry overall, the company's balance sheet is sound and the company should be able to wait out the downturn, Bye said.

LCA-Vision said last week its LasikPlus procedures in the past three months were less than half the number during the same period a year ago — 21,484 compared with 44,547.

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Kevin Ellich, a health services analyst with RBC Capital Markets in Minneapolis, said many people are holding off on all types of surgery.

"People are delaying or forgoing needed medical procedures, not just elective stuff," Ellich said.

"The first things to go are high, out-of-pocket discretionary procedures," he said. "Not many people have $3,000 to $4,000-plus to put into Lasik these days. The cost of consumer staples — milk, eggs — adds up over time."