Lasik Surgery - How consumer driven healthcare delivers more for less

Sometimes people have a hard time taking Singapore seriously as an example of how healthcare could be far cheaper and better than in the United States. For those who suffer from parochialism I offer a US based example: Lasik Surgery. In 1998 the average price of Lasik per eye in the US was $2,200. By 2004 this had fallen to $1,350. Today, you can get Lasik in St. Louis for as little as $699 per eye

Why?

1. Lasik is not a third party paid procedure – the people who get the benefit pay for it and as a consequence shop around.
2. This means that the sellers of Lasik have incentives to drive down the cost – lower prices at a given standard of care deliver more patients
3. Knowing this, the equipment makers had strong incentives to reengineer their solutions to deliver the two things that deliver lower costs:
   a. Automation, reducing the amount of skilled labor in the assessment, procedure and follow up and,
   b. Minimizing complications – more automation, more process control, means fewer problems and less cost in follow up
4. Lasik is a ‘bundled’ price – the Lasik provider is accountable for ALL the costs of the procedure and for delivering it at a FIXED price. Therefore they manage it as a system.
5. The Lasik market has rapidly shaken out with a number of specialty providers dominating each market. By specializing they get better at delivering the results in 3.

Note that virtually everything described as a reason why Lasik prices are falling is exactly the opposite of the way mainstream ‘third party paid’ healthcare is done in America. And with the opposite result.