Michael Lewis: The Big Short

Excerpt from Michael Lewis' bestseller The Big Short: Inside The Doomsday Machine. Financial motives of eye doctors which led to the introduction of LASIK eye surgery.

"Even in life or death situations, doctors, nurses, and patients all responded to bad incentives. In hospitals in which the reimbursement rates for appendectomies ran higher, for instance, the surgeons removed more appendixes. The evolution of eye surgery was another great example. In the 1990s, the ophthalmologists were building careers on performing cataract procedures. They'd take half an hour or less, and yet Medicare would reimburse them $1,700 a pop. In the late 1990s, Medicare slashed reimbursement levels to around $450 per procedure, and the incomes of the surgically minded ophthalmologists fell. Across America, ophthalmologists rediscovered an obscure and risky procedure called radial keratotomy, and there was a boom in surgery to correct small impairments of vision. The inadequately studied procedure was marketed as a cure for the suffering of contact lens wearers. 'In reality,' says Burry, 'the incentive was to maintain their high, often one- to two-million dollar incomes, and the justification followed. The industry rushed to come up with something less dangerous than radial keratomy, and Lasik was eventually born.'"


Michael Lewis. The Big Short: Inside the Doomsday Machine. (2010, WW Norton). pp. 43-44.