The Future of Ophthalmology

Prescribing Patterns and Costs Associated With Postoperative Eye Drop Use in Medicare Beneficiaries Undergoing Cataract Surgery

Zafar S, Wang P, Schein OD, Srikumaran D, Makary M, Woreta FA¹

Industry support: No

ABSTRACT SUMMARY

In a retrospective cross-sectional study, Zafar and colleagues analyzed the total cost of postoperative topical drops for Medicare beneficiaries with continuous Medicare Part D coverage who were 65 years of age or older and undergoing cataract surgery (based on current procedural terminology codes) on one or both eyes in 2016. The investigators also looked for physician and patient factors associated with increased cost. Patient demographics included age, sex, race, and zip code. Physician demographics included sex, years after medical school, region, density of region, and surgical volume. A hierarchical linear regression model was used to evaluate patient and physician characteristics associated with the cost of postoperative eye drop prescriptions.

Of the 591,733 Medicare beneficiaries who underwent cataract surgery, 88% received postoperative drops, amounting to a total cost of more than $167 million (mean cost of medications to patients was $228 and $324 for unilateral and bilateral surgery, respectively). Branded medications accounted for 57.5% of prescription volume and 76.5% of the cost. The use of therapeutic and generic alternatives could have saved as much as $118 million or 70% of the total cost of postoperative eye drops. Using lower-cost therapeutic substitutions for antibiotics, steroids, and NSAIDs could have reduced spending by $29 million, $23 million, and $47 million, respectively.

In an adjusted analysis, the investigators found the following patient characteristics to be associated with increased eye drop cost: older age, female sex, Black and Asian race, and Hispanic ethnicity. The researchers found the following physician characteristics to be associated with increased eye drop cost: female sex, greater number of years in practice, practicing in a metropolitan versus a nonmetropolitan area, and practicing in the Northeast versus the South and in the South versus the Midwest. A physician’s cataract surgery volume was not associated with eye drop cost.

The researchers conclude that multiple areas offer opportunities to improve the value of care provided to Medicare beneficiaries.

DISCUSSION

What is the evidence for the efficacy of branded versus less costly medications?

Zafar and colleagues describe some studies that compare different medications. For example, in terms of NSAID use, a meta-analysis of 16 randomized controlled trials found nepafenac and ketorolac to be equally efficacious for controlling postoperative inflammation, reducing cystoid macular edema, and achieving visual rehabilitation.² Similar efficacy was noted for bromfenac and ketorolac in another randomized study.³ Findings were also similar at 30 days in a multicenter randomized controlled fellow-eye trial of prednisolone acetate 1% and difluprednate 0.05%⁴ and in a study comparing the efficacy of prednisolone acetate 1% and loteprednol etabonate 0.5%.⁵

As Zafar and colleagues note, there is no solid evidence suggesting that higher-cost prescription medications offer greater efficacy after cataract surgery. Given that high cost and increased medication use are barriers to patient adherence,⁶ this study suggests potential areas for cost-saving measures to reduce the economic burdens on patients and the US health care system.

Which factors may play a role in the use of more expensive medications as opposed to less costly alternatives?

The study by Zafar and colleagues identifies multiple factors associated with the use of higher-cost medications. Older age and a practice in a densely populated area were physician factors associated with an increased use of more expensive medications. These associations may reflect physicians’ beliefs about the efficacy of branded medications.

Generic medications may differ from their branded counterparts in terms of the size and material composition of the bottle, preservative choice, pH, and dosing frequency as well as associated industry advertisements and payments. Of note, this study did not find an association between surgical volume and increased drop cost. Additional research is required to evaluate factors that may be contributing to the use of more expensive medications after cataract surgery.

Private Equity in Ophthalmology and Optometry: Analysis of Acquisitions From 2012 Through 2019 in the United States

Chen EM, Cox JT, Begaj T, Armstrong GW, Khurana RN, Parikh R⁷

ABSTRACT SUMMARY

In a retrospective cross-sectional study, Chen and colleagues used financial databases, industry news outlets, and publicly available press releases to determine trends in private equity acquisitions of and investments in US ophthalmology and optometry practices from January 1, 2012, through October 20, 2019. The investigators identified 228 acquisitions of practices by 29 private equity–backed platform companies during this period. Of the practices, 127 were comprehensive or multispecialty, nine were retina, and 92 were optometry. These practices involved a total of 1,466 clinical locations and 2,146 ophthalmologists and optometrists, with 53% of acquisitions including about one to five providers and the other acquisitions including more providers.

Forty-two practices were acquired between 2012 and 2016, and 186 between 2017 and 2019. The peak of acquisition was in 2018. Three platform companies, representing 60% of the platforms formed before 2016, were subsequently sold or recapitalized to new private equity investors by the end of the study period, with a median holding time of 3.5 years. The term platform company refers to the initial acquisition made by a private equity group. The acquisition acts as the starting point for other acquisitions in the same industry.

The investigators also looked at the geographic footprint of each platform company. Acquisitions occurred in 40 states, and most of the private equity firms developed multistate platform companies. The states where the most acquisitions occurred were New York (n = 22) and California (n = 19).

DISCUSSION

Which factors are driving the recent increase in private equity acquisitions?

Multiple factors likely underlie the current interest in eye care among private equity firms. In 2018, eye care was second only to dermatology as a specialty acquired by private equity.⁸ Chen and colleagues note several similarities between dermatology and eye care, including high outpatient volume, ancillary service opportunities such as skin care products and optical shops, and cash-pay procedures such as cosmetic injections, premium IOL implantation, and refractive surgery. In addition, private equity firms have had increasing capital, and health care is a relatively recession-resistant field, making it particularly appealing.

Furthermore, ophthalmology has traditionally been undercapitalized and fragmented across small private practices, making it an ideal target for private equity acquisition. Ophthalmology is also predicted to experience the greatest shortage in provider supply over the next decade, in part because of growing demand from an aging population. Retina practices may be particularly appealing given high reimbursement for retinal injections and imaging; one study of Medicare reimbursements in 2013 highlighted that ranibizumab and aflibercept accounted for almost 95% of all ophthalmology drug reimbursements.⁹

How will the COVID-19 pandemic affect the acquisition climate?

Ophthalmology has been one of the subspecialties hit hardest during the COVID-19 pandemic, with as much as a 97% reduction in the volume of outpatient cataract procedures in March and April 2020 compared with the same period in 2019.¹⁰ Given the decline in outpatient visits and surgeries, many small private practices may look to private equity acquisition groups for buyouts. Furthermore, the retirement of older physicians and a reduction in the number of private practices will amplify the need for ophthalmic services, making eye care practices increasingly attractive to private equity groups.

In the immediate aftermath of the current pandemic, however, private equity groups may hesitate to purchase practices, especially if office volume and return on investment are reduced. These firms may focus instead on maintaining and building their current portfolios. Time will tell.

1. Zafar S, Wang P, Schein OD, Srikumaran D, Makary M, Woreta FA. Prescribing patterns and costs associated with postoperative eye drop use in Medicare beneficiaries undergoing cataract surgery. Ophthalmology. 2020;127(5):573-581.

2. Zhao X, Xia S, Wang E, Chen Y. Comparison of the efficacy and patients’ tolerability of nepafenac and ketorolac in the treatment of ocular inflammation following cataract surgery: a meta-analysis of randomized controlled trials. PLoS One. 2017;12(3):e0173254.

3. Jung JW, Chung BH, Kim EK, Seo KY, Kim TI. The effects of two non-steroidal anti-inflammatory drugs, bromfenac 0.1% and ketorolac 0.45%, on cataract surgery. Yonsei Med J. 2015;56(6):1671-1677.

4. Donnenfeld ED, Holland EJ, Solomon KD, et al. A multicenter randomized controlled fellow eye trial of pulse-dosed difluprednate 0.05% versus prednisolone acetate 1% in cataract surgery. Am J Ophthalmol. 2011;152(4):609-617.e1.

5. Lane SS, Holland EJ. Loteprednol etabonate 0.5% versus prednisolone acetate 1.0% for the treatment of inflammation after cataract surgery. J Cataract Refract Surg. 2013;39(2):168-173.

6. Stein JD, Shekhawat N, Talwar N, Balkrishnan R. Impact of the introduction of generic latanoprost on glaucoma medication adherence. Ophthalmology. 2015;122(4):738-747.

7. Chen EM, Cox JT, Begaj T, Armstrong GW, Khurana RN, Parikh R. Private equity in ophthalmology and optometry: analysis of acquisitions from 2012 through 2019 in the United States. Ophthalmology. 2020;127(4):445-455.

8. Patel SN, Groth S, Sternberg P Jr. The emergence of private equity in ophthalmology. JAMA Ophthalmol. 2019;137(6):601-602.

9. Han E, Baisiwala S, Jain A, Bundorf MK, Pershing S. An analysis of Medicare reimbursement to ophthalmologists: years 2012 to 2013. Am J Ophthalmol. 2017;182:133-140.

10. The National Patient and Procedure Volume Tracker. Strata Decision Technology. Accessed December 21, 2020. www.stratadecision.com/National-Patient-and-Procedure-Volume-Tracker.