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Doctors Target Laser Procedures As New Revenue Source

Posted on: Friday, 30 September 2005, 15:02 CDT

By Christopher Rowland, The Boston Globe

Sep. 30--Dr. Kathleen Gilson and her husband, Dr. Geoffrey Gilson, set up their medical practice to care for generations of Brockton families. But feeling squeezed by low insurance reimbursements, they are expanding their definition of family care.

The Gilsons plan to invest in an expensive laser machine so they can charge patients $100 to $500 a treatment to zap varicose veins and remove unwanted hair.

It is part of a rapidly evolving shift in business practices by many primary care doctors and obstetricians/gynecologists who are seeking to supplement their incomes with cosmetic laser procedures that fall outside the constraints of insurance coverage.

Kathleen Gilson said she looks forward to improving patients' self-esteem and appearance. But she never thought her University of Massachusetts Medical School education would one day be applied to making minor cosmetic fixes.

"I went into medicine to help people and make them feel better, not to do laser hair removal," Gilson said, but "we need to do something to get some cash flow."

Statistics about the proliferation of lasers are not available because government agencies do not track who has the equipment. But doctors and consultants say they see evidence of a trend.

"It's accelerating, particularly for primary care physicians," said Elizabeth Woodcock of Woodcock & Associates, a consulting firm in Atlanta that advises doctors on the business aspects of a medical practice.

As health insurance companies have limited office visit fees, and as malpractice insurance rates have escalated, some doctors have sought alternate sources of revenue. "They've got to expand the pie," Woodcock said.

Nationally, specialists in cardiac care and radiology make an average of more than $400,000 a year, but primary care doctors earn $141,000 to $160,000 after practice expenses -- about $45 per patient visit, according to survey data compiled by physicians' organizations and a trade magazine, Physicians Practice. Family doctors in New England fare worse than the rest of the country, with an average individual income of $120,000.

The lower pay makes them ripe for sales pitches from laser device manufacturers. Because cosmetic procedures are not covered by insurance, doctors can set whatever fees they like.

"It's cash, check, or charge," said Dr. John Raftery, who this year quit working as a primary care physician in Sudbury to concentrate on laser procedures at Boston Electrology and Skin Therapies in downtown Boston. "You don't have to deal with the hassle of third-party payers."

The machines cost $40,000 to $120,000, so doctors could be under considerable pressure to recover costs by selling laser treatments to patients who come into the office seeking treatment for everyday maladies.

Dan Brock, director of the division of medical ethics at the Harvard Department of Social Medicine, said aggressive sales tactics could be a breach of ethics.

"The only worry would be whether this gets pushed on patients who may feel vulnerable, or somewhat coerced to accept the service, because they feel in some way dependent on the physician for the other healthcare they are getting," he said.

Gilson said she would never pressure patients to undergo laser treatment. Signs and brochures in the office will describe the service, but the procedures will be performed in a separate office nearby, she said. "It's purely up to them. It's a voluntary thing," she said.

Brock also questioned the widespread contention among primary care physicians that they are not paid enough. "In some cases they are not making what they used to, but overall medicine remains a well-paid profession," he said.

The Massachusetts Board of Registration in Medicine has taken note of the increase in lasers and supports legislation pending on Beacon Hill that would establish a task force to study their use, as well as cosmetic procedures such as Botox treatments offered by salons and spas, said Russell Aims, board spokesman.

The Board of Registration in July adopted a policy that said physicians should not seek to profit from the sale of retail products such as cosmetic wrinkle creams to their patients. The policy did not address cosmetic procedures, Aims said.

Meanwhile, the technology is spreading. Companies that make and sell the machines, including publicly traded firms Candela Corp., of Wayland, and Palomar Medical Technologies Inc., in Burlington, report strong sales among doctors in suburban markets.

"The physician market is really where they are seeing most of their growth," said Danielle Saginor, an analyst at Independence Investments, a subsidiary of Manulife Financial, which manages about $8 billion in institutional assets and is the second-largest shareholder of Candela.

The Gilsons' Bethel Medical Group will have to play catch-up to another family physician practice in Brockton that already has purchased a laser and is marketing its services through a website. And doctors at primary care practices in Arlington and Marblehead say they are ordering lasers.

After physicians at Gyn-Ob Associates in Fall River installed a pair of lasers in an adjacent medical suite, two other physician groups in the city did the same, said Susan Perry, a nurse-practitioner who performs the Gyn-Ob Associates laser procedures, about 12 to 20 a week.

Nurses and technicians can operate laser machines, as long as they are under the general supervision of a doctor, but there are no state training standards. Typical fees are $150 for a minor hair removal procedure, and $550 for a full skin rejuvenation and wrinkle reduction treatment.

Any stigma among doctors about cosmetic procedures seems to be quickly fading. The practice has been embraced as a legitimate, income-generating sideline by the American Academy of Family Physicians. For the second year, the academy is offering instruction in the use of lasers, including advice on business models, at its annual Scientific Assembly.

On the program for this year's assembly, which is being held this week in San Francisco, laser instruction sessions were sandwiched between lectures on treating teen depression and new approaches to arthritis care.

More than a dozen laser device manufacturers hawked their wares to family doctors in the trade-show hall.

"The main reason docs are doing this is that over the last five to 10 years we have been persistently drained by the insurance companies," said Dr. Donald Brideau, a family physician who teaches the academy's laser course. "I can potentially offer it safer than what they can get elsewhere in the marketplace."

Manufacturers are also making strong claims about the money-making potential. "This can be the biggest profit generator in their practice," said Joseph P. Caruso, chief executive of Palomar Medical Technologies.

Until this year, Palomar sold most of its machines to dermatologists and plastic surgeons, Caruso said. But in the second quarter of this year, more equipment was sold to primary care physicians and obstetricians/gynecologists than specialists, he said. He declined to provide details.

The business model is a natural, Caruso said. Because family doctors already have long-standing relationships with their patients, they are more likely to convince them to try the new cosmetic technology, he said.

"They are the primary gatekeeper," he said. "They have built up a tremendous amount of trust."

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Source: The Boston Globe

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