Wake up and good morning. A recent Bloomberg News story offers a less than flattering insight into Tampa's apparently super-successful but lawsuit-challenged Laser Spine Institute. The story counts 15 lawsuits filed within the past 18 months against the institute for alleged malpractice and related missteps. Here's one key point of the Bloomberg story:
Laser Spine and its competitors, part of a boom in outpatient clinics operated by entrepreneurial physicians, sell a high-tech version of procedures that have been around for years -- despite a lack of independent research to show that their variations lead to better outcomes. The company commands higher prices than laser-less rivals, driving up the cost of health care. Its number of malpractice claims per 1,000 surgeries is several times the rate for all U.S. outpatient surgery centers, based on insurance industry data.
In its own defense, Laser Spine tells a different story. The institute's in-house surveys show positive outcomes for more than 87 percent of patients, though the institute has had trouble recruiting academics to examine those results, Jimmy St. Louis, the company's chief operations officer, told Bloomberg. Its staff screens those who respond to its ads rigorously, he said, and only 10 percent of them end up getting an operation. The company's standards for safety and quality of care help determine its pricing, said Dotty Bollinger, its chief medical operations officer.
Read the entire story here. There are some interesting highlights:
1. Laser Spine often charges $30,000 for each procedure, twice as much as Aetna Inc., the third- largest U.S. health insurer, will pay for laser-less surgery. It's more than twice the average reimbursement for spine procedures at Regent Surgical Health, a Westchester, Illinois- based company that operates 15 outpatient centers, according to Matt Lau, Regent's corporate controller.
2. Laser Spine's surgeons, some of whom are investors in the 6-year-old company, perform as many as 5,000 operations a year. The institute had sales last year of $109 million.
3. Founder James St. Louis (photo, right. Jimmy St. Louis noted above is his son), 56, was just a year out of personal bankruptcy when he began seeking investors for the company in 2003, court records show. Now he owns multimillion-dollar homes in Pinellas County and Aspen, Colo.
4. Court documents say the company has distributed at least $77 million to a small group of shareholders.
5. Other investors include the private equity unit of Dallas investment firm EFO Holdings LP, managed by William Esping, and two founders of OSI Restaurant Partners LLC, whose properties include Outback Steakhouse. (Those founders and now LSI investors are Chris Sullivan and Bob Basham.)
6. In 2009, Goldman Sachs Group Inc. valued Laser Spine at as much as $428 million, as part of the company's consideration of an initial public offering. But Laser Spine says that's a rough estimate.
7. Aetna won't cover operations at Laser Spine and some of its competitors, citing a lack of research to confirm their safety and effectiveness. Cigna Corp., the seventh largest U.S. insurer, won't pay for the laser portion of the surgery. Other insurers provide less than full coverage.
Bottom line? Says Bloomberg: "Laser Spine and other companies operate outside the traditional model of medicine, in which patients are referred to specialists by other doctors. Instead, the centers reach customers directly via online marketing and seminars conducted in hotel conference rooms. Laser Spine plans 26 such seminars through the end of this month."
As Laser Spine's own corporate blog suggests, the institute markets heavily to older folks who want to play golf again but are suffering back problems. All in all, a notable and sometimes disturbing report on the gray areas where medical services meet the entrepreneurial gusto of success. For all the controversy, Laser Spine Institute employees apparently like working there. It's one of the 2011 Top Workplaces in the Tampa Bay area, as determined by an annual third party survey of area workers done in partnership with the St. Petersburg Times.
-- Robert Trigaux, Business Columnist, St. Petersburg Times
Posted by Robert Trigaux at 6:49:00 am on May 12, 2011