Laser spine surgery clinics: Plenty of profits, peeved patients

Topics: Outpatient Care, Service Lines

May 6, 2011

With business booming for physician-owned laser spine surgery clinics, Bloomberg this week examined the industry's high profit margins and the numerous complaints lodged against it.

Clinics operate 'outside the traditional model of medicine,' frequently sued for malpractice

Outpatient clinics that offer laser spine surgery generally employ techniques that "have been in use for years" and contend that the use of lasers and endoscopes reduces the size of incisions, Bloomberg reports. Many of the clinics "operate outside the traditional model of medicine," marketing directly to patients rather than receiving referrals from physicians. For example, most clinics use online marketing and seminars in hotel conference rooms to reach customers, many of whom are "desperate for pain relief."

However, many laser spine surgery patients report only temporary relief from pain following surgery. The amount of malpractice claims filed per 1,000 surgeries at a laser spine surgery clinic is several times the U.S. outpatient surgery center average, which is about six claims per 20,000 surgeries.

For example, at least 15 former patients have filed claims against Tampa, Fla.-based Laser Spine Institute LLC since October 2009, which is about six claims per 3,000 surgeries, according to Bloomberg. One patient was sent home following surgery with a dangerous spinal fluid leak. Another patient was discharged with internal bleeding from two lacerated arteries. The company has paid at least $2.8 million since July 2009 in settlement deals to seven patients.

Clinics benefit from lack of federal, state oversight

Unlike medical devices and medication, there is "virtually no federal oversight" of surgical techniques, Bloomberg notes. According to Aetna's head of clinical policy research and development, "surgeons can introduce new procedures that might be significantly different from established ones with no oversight of the claims they make." Similarly, ads for surgical techniques are not required to follow similar rules as those regulating ads for drugs and medical devices.

Although state regulators can enforce standards of care, they have proven to be slow to act, Bloomberg reports. In Florida, Laser Spine has been cited four times since September 2007 but, according to state records, the deficiencies were corrected and the state did not take further action.

Business model generates profits margins larger than Google

The profit margins for laser spine surgery clinics are significant. From 2006 to 2009, Laser Spine generated a 34.3% net profit; in comparison, high-flying Internet company Google maintained a 24.8% profit margin during that period. Overall, the Florida-based clinic made $98.9 million on $288 million in revenue. It generally charges $30,000 per procedure, twice as much as Aetna pays for laser-free spine surgery. According to many Laser Spine patients, paying the premium seems worthwhile because they are promised a "quick and easy fix for their back or neck pain" (Armstrong, Bloomberg, 5/4).