Health Care: Unique Arrangement Makes Technology Accessible
For eight years, Andreas Dreher and his team of scientists had been working to perfect a machine to be on the leading edge of glaucoma detection.
Now the president of San Diego-based Laser Diagnostic Technologies is applying his ingenuity to what he hopes will catapult the firm into the nation’s estimated $3 billion glaucoma-detection market.
Dreher is using a unique payment plan similar to a prepaid calling card to make the otherwise expensive technology affordable and accessible to both doctors and their patients.
At a recent annual American Academy of Ophthalmology meeting, doctors praised LDT’s nerve fiber analyzer, which measures the amount of retinal nerve fibers in the eye for early detection of the potentially blinding disease glaucoma.
This week’s launch of the second-generation analyzer is specifically aimed at some 70,000 ophthalmologists and optometrists worldwide, Dreher said.
The firm’s recent move from a 9,000-square-foot space in Sorrento Mesa into a 38,000-square-foot building in Rancho Bernardo to allow for increased production, speaks for Dreher’s confidence.
Dreher estimated his company received an estimated $10 million in revenues in 1998. LDT chief financial officer David Voris said 1998 marked LDT’s first year of profitability.
Dreher said the company is doing so well, he plans to add 60 employees this year. There is a need for optical scientists, software engineers and technicians.
So far, LDT nearly doubled its total staff from 36 in 1998 to 71 today.
Behind the success of LDT are three products already on the market: the first-generation GDx Nerve Fiber Analyzer; a topographic scanning system to evaluate glaucoma; and a laser to keep track of age-related macular degeneration.
This week, LDT will launch its fourth product.
“The machine is about the size of a Macintosh and includes a computer, printer, and liquid crystal display to show data,” Dreher said.
With a price tag of $69,900, LDT’s first nerve fiber analyzer, introduced in 1996, has been a viable clinical tool for research institutions, but it was too costly for private eye doctors, he admitted.
Dreher now believes he’s found a way to get his foot into the doctor’s office.
His plan is to place the machine into individual doctor’s offices for an initiation fee of $6,000 and charge them per test.
A “smart card,” which works similar to a prepaid calling card, keeps track of individual tests.
The card is programmed to charge for a fixed amount of tests that need to be used within one month. Once the card is empty, doctors need to order a new one from LDT, Dreher said.
The cost is between $30 and $50 per test, depending on the packages doctors choose to buy, Dreher said.
It’s a good deal for doctors and LDT, he said.
“It’s a very expensive instrument,” he said. “With any new technology, especially high technology, the fear of obsolesce is great. With this new concept (doctors) have no service or maintenance issues and (always get) the latest test.” Maintenance and software upgrades are included in the initiation fee, Dreher said.
LDT recently obtained governmental approval for Medicare reimbursement, which makes the machine even more attractive for doctors, Dreher added.
Dr. Gordon Montgomery, an ophthalmologist in private practice in National City, said he previously couldn’t afford the price tag. Now he is considering Dreher’s proposal.
“Putting this test into offices sounds very exciting and financially feasible,” Montgomery said. “The information from the test is helpful in following patients in terms of the disease process.”
But it shouldn’t replace conventional testing, he said.
To diagnose and treat glaucoma properly, doctors need to consider other factors, including the person’s family history and health status and conduct multiple tests to evaluate a person’s risk, Montgomery said.
Dreher finds conventional glaucoma tests, such as the pressure test and visual fields test, remain the analyzer’s largest rivals.
Rival companies include German-based Heidelberg Engineering in Heidelberg and Rodenstock Instrumente in Munich. There also is Ophthalmic Imaging Systems, based in Sacramento.
Nevertheless, the competition hasn’t kept financial backers away from LDT, which Dreher founded in 1992.
Last October, LDT raised $8.75 million, its largest investment so far, he said.
Vector Fund Management, a private equity fund that invests in life sciences and health care firms, put up $5 million. Newtek Ventures in San Francisco, Sigma Partners in Menlo Park, and Sorrento Ventures in San Diego raised the rest.
Dreher said most of the firm’s total funding of $15 million has been spent on developing, conducting clinical trials and launching its second-generation analyzer.
But he said incoming revenues will support future projects.
He predicts the nerve fiber analyzer eventually can be used to detect several kinds of neurological disorders, including Alzheimer’s disease and multiple sclerosis, and diseases that affect the eye, such as diabetes and AIDS.
“Our ultimate goal is to have all these machines (one analyzer with different software packages) that can acquire data from patients’ retinas,” he said. “It’s similar to a blood test where you send blood to a lab and examine it for white cell counts or cholesterol levels.”
Dreher said he plans to take LDT to the stock exchange in 2001 or 2002.
