When Bonnie Balch's online search for a back surgeon led her to the Laser Spine Institute, it was no accident. The day surgery company has become a master of grabbing patients' eyes on the Web, using search optimization consultants and a strategy that often gains the company top billing in Google (GOOG) listings at a cost that rivals estimate at a minimum of $100,000 a month. Balch, however, wishes her surfing had taken her elsewhere. Her October 2008 surgery at Laser Spine's Tampa clinic left her incontinent, with a dangerous spinal fluid leak. Still in pain after care costing $90,176 at Laser Spine, she needed a second surgery elsewhere to get relief. "They are in it to make money," says Balch, 63, a Longmont (Colo.) flight attendant who is suing Laser Spine for malpractice in Florida.
Laser Spine is part of a boom in ambulatory care centers with physicians in residence as owner-practitioners. There are 5,000-plus such centers in the U.S., 90 percent with doctors as investors. Back surgery is a prominent part of the trend.
Tampa-based Laser Spine and rivals in California, Texas, and New York promise no overnight stays and quick pain relief. Laser Spine's surgical technique uses lasers to burn off, or ablate, sensitive nerve endings followed by a disc "decompression" that removes material or bone that presses on nerves.
Laser Spine routinely charges patients $30,000 for its procedure, more than double the typical price for a decompression elsewhere. Balch and other patients have brought 15 malpractice lawsuits since October 2009, a period in which the company performed about 7,500 procedures based on its 2010 estimates. Nationally, outpatient surgery centers received about six malpractice claims for every 20,000 surgeries, according to insurer Zurich North America. Aetna (AET) won't cover operations at Laser Spine, citing a lack of research confirming safety and efficacy. Cigna (CI) won't pay for the laser part of surgeries done there. Laser Spine says UnitedHealthcare (UNH) covers its procedure.
Nine surgeons told Bloomberg Businessweek the company is doing surgery that is often unnecessary or inappropriate. The evidence that ablation helps patients is "pretty weak," says Dr. Roger Chou, a physician at the Oregon Health & Science University and director of the American Pain Society's clinical guidelines program. "Even in studies showing some benefit, the benefit is small and doesn't last," Chou says.
Officials at Laser Spine, which also operates centers in Scottsdale, Ariz., Philadelphia, and Oklahoma City, say in-house surveys show positive outcomes for more than 87 percent of patients. "We know it works," says Dotty J. Bollinger, Laser Spine's chief medical operations officer. "We see it every day." The company declined to comment on all pending patient lawsuits.
Laser Spine logged a 34 percent profit margin for the period from 2006 to 2009 and hit $109 million in revenues in 2010.
Founder James St. Louis, 56, was a year out of personal bankruptcy when he began seeking investors for the company in 2003, records show. Now he owns seven cars, a $10.3 million Florida mansion, and an $8.3 million house in Aspen. He declined an interview request. Court documents indicate St. Louis was slated to receive a 25 percent stake in the firm, which would have entitled him to about $19 million of $77 million in distributions the company has made. Laser Spine spokeswoman Bollinger says the 25 percent figure is not accurate; she wouldn't discuss individuals' stakes. Other investors in the firm include Dallas investment firm EFO Holdings, managed by William P. Esping, and two founders of Outback Steakhouse operator OSI Restaurant Partners.
Some patients say they've tapped retirement accounts or taken out second mortgages to pay Laser Spine's premium prices. The insurer for Hulon Taylor, 61, paid $36,940 for his surgery, payment records show. Taylor says he met his surgeon, Dr. Craig Wolff, less than an hour before he went into the operating room in 2009. Laser Spine staff told him it would take 45 minutes and he'd be back at his hotel that evening.
Taylor never made it. After the surgery, his stomach was "really hurting." He says Wolff told him it was just gas and nurses told him to get dressed and go. As he put his clothes on, he fainted. He woke up at Tampa General Hospital. He lost so much blood from internal bleeding from two cut arteries that he suffered a heart attack, medical records show. Taylor was unable to return to his job at a utility company near his home in Bonifay, Fla. He sued Laser Spine and recently settled.
The bottom line: Since late 2009, 15 malpractice suits have been filed against Laser Spine, a surgery center promising quick and effective spinal treatment.