Clear vision

Clear vision

Drs. James and Pit Gills work to find the right balance of surgery and non-surgical services to treat their international roster of patients.

People from 77 countries come to Tarpon Springs to see Drs. James and Pit Gills, two physicians trained in treating eye disorders. It wasn't always this way.

Their practice, St. Luke's Cataract and Laser Institute, employs 289 people, has offices in Tarpon Springs, Spring Hill, St. Petersburg and Bayonet Point, and is one of the most successful father-son practices in Florida.

The Tarpon Springs facility is one of the largest freestanding ambulatory eye care centers in the United States The Tarpon office includes a 26,000-square-foot surgical center with six operating rooms and a 20-bed recovery room.

Dr. James Gills, 74, is working with a Harvard professor on Gills' third book on astigmatism, a vision condition that causes blurred vision due to the irregular shape of the front cover of the eye or the curvature of the lens inside the eye.

He and 38-year-old son, Pit, are triathletes with movie star good looks and community icons, and James Gills is asked to speak on eye care issues around the world. Gills is considered one the leading experts in cataract surgery in the world.

But six years ago, their ophthalmology practice was less attractive. It was moving toward financial trouble because of a flat-fee insurance payment program called capitation.

Under capitation, doctors got a fixed amount from insurance companies per month, no matter how many patients they saw. In 2002, capitation accounted for one-third of patient visits, but only 7% of revenue.

The program proved challenging to the Gills team, so they turned over the business operation reins of the clinics to a new employee in January 2003, administrator Brad Houser, who had managed the Center for Sight eye clinic in Sarasota.

In three months, Houser, who acts as a chief operating officer, cancelled the capitation contracts. He closed a couple of marginal-performing offices, in Zephyrhills and downtown Tampa. And eventually, the practice recovered the lost income and improved collection on its receivables.

Even though equipment costs have jumped and reimbursements remain a challenge, the business side of St. Luke's Cataract and Laser Institute is running more smoothly.

It is opening a new clinic in Tampa's Carrollwood suburb in April. It is taking the full range of services in its main office in Tarpon Springs, which now include lucrative skin rejuvenation and laser work, and expanding them to its other offices.

Houser wears the manager hat while the doctors worry about eyesight.

"It is a blessing, because we can now focus more on patient care," says James Gills.

Boosting income

Houser did a number of things to raise revenue and profit at St. Luke's. Besides trimming costs, he worked on getting faster repayments from insurance companies. From and operations standpoint, he cut patient waiting times to retain patients.

He also beefed up the clinic's prepaid, non-insurance income, on items such as premium lenses and Lasik, from about 2% or 3% of revenues to about 15% today. That was key because of the trend of falling reimbursement dollars for doctors since the 1980s.

Meanwhile, St. Luke's held the line on prices and didn't get into the price war on Lasik as some other doctors did. Following 9-11, it did offer discounts to military and police, which it quietly continues today.

Houser also continued a St. Luke's tradition: Nurturing the staff, so it can retain good employees. For example, St. Luke's pays for staff training to allow employees to have diverse skills and do different tasks.

"We're known as a training place," Pit Gills says. As a result of that, some staff leave, but many more stay. Some staff have been with St. Luke's for more than 20 years.

James Gills says one of the most important chief executive lessons he's learned in the health care business is finding a balance and diversity of services.

The clinics used to be known for handling cataracts, a clouding that develops in the lens of the eye, blocking the passage of light. Cataracts typically progress slowly to cause vision loss and are potentially blinding if untreated.

Now, besides cataracts, the clinic does preventative medicine, treats retinal diseases and does non-surgical work.

The other lesson was learning how to run the practice more like a business. The hiring of Houser sped that process.

In recent years, reimbursement revenue has fallen by one-third, while overhead increased threefold. "We must be run like a business," Gills says. "We cannot be quite as loose" as they did in the past.

Running like a business has meant adjusting to the economy as well. Lasik, an elective laser procedure to improve eyesight, freeing the patient from glasses or contact lenses, has seen a decline in demand worldwide.

The reasons: the economy and the arrival of new lenses. In fact, at St. Luke's, Lasik represents 1/20th of the revenue compared to the income from the new, accommodative lenses.

Looking ahead

Future growth at St. Luke's will come from more advancements in types of lenses and refractive cataract surgery, James Gills says.

Pit Gills wants to grow and emphasize the premium side of the business, which sells the higher-end lenses and offers more comprehensive services than other eye clinics.

While some clinics may specialize in Lasik work, St. Luke's approaches each patient individually, and offers an array of surgical and non-surgical services.

"We spend an immense amount of time to squeeze the risk out of surgery," Pit Gills says. "It's a premium experience from top to bottom. Basic is different than premium."

That has helped the clinic retain patients, some of whom remember Pit Gills when he was a little boy.

"We have families as patients, grandfathers, fathers and sons," Pit Gills says. "We're very fortunate."

As the population ages, the clinic will be more interested in taking care of difficult corneal diseases. It will continue to help patients on Flomax, a medication that helps men urinate regularly, but can cause vision complications.

The doctors are optimists, but realistic. They know that challenges will come up, but they are confident St. Luke's can continue to adjust.

"The business of medicine gets harder every year," Pit Gills says.

REVIEW SUMMARY

Business: St. Luke's Cataract and Laser Institute

Industry: Health care

Key: Delegating business tasks to the chief operating officer, expanding carefully and adding popular non-surgical services