A multi-physician ophthalmic surgery practice had long made its living from cataract surgery. There was no shortage of elderly patients who required this service, and Medicare readily covered the cost of surgery for its beneficiaries. Over time, however, the reimbursement rate for cataract surgery declined to the point that the surgeons were performing more surgeries, but generating less income. To reverse this trend, the practice decided to expand services to the laser eye surgery business and relegate cataract surgery to a side practice. Thinking it knew the ophthalmic surgery market well, the practice began marketing its laser eye surgery for nearsightedness and farsightedness through its usual approaches. Much to its surprise, the practice generated little business despite the industry-wide boom in laser surgery. The practice brought in a healthcare marketing expert to assess the situation, and the problem quickly became very clear: The target population for laser eye surgery was different than the population for cataract surgery. Cataracts affect people regardless of race, sex, or social class, making every older American a potential customer for cataract surgery. Further, virtually all cataract surgery is paid for by Medicare and, for younger patients, by their private insurance. On the other hand, the market for laser eye surgery is much more narrowly defined. Potential customers for laser eye surgery fall into certain age, income, education, and lifestyle segments. In addition, because laser eye surgery generally is not covered by insurance plans, patients must finance the procedure by some other means. After reviewing this case, address the following points. 1. To what extent had the practice researched the market for laser eye surgery? 2. What are the differences between the marketing messages to be conveyed to the traditional cataract market, and the marketing message to be conveyed to the emerging laser eye surgery market? Please reference your thoughts on the Experian MOSAIC segmentation strategy. ( you can find further information here: http://mast.roadsafetyanalysis.org/wiki/index.php?title=Mosaic Links to an external site.) 3. With an elective procedure such as laser eye surgery, is it feasible to compete on price? What innovative financing approaches might be required for laser eye surgery patients?
A multi-physician ophthalmic surgery practice had long made its living from cataract surgery. There was no shortage of elderly patients who required this service, and Medicare readily covered the cost of surgery for its beneficiaries. Over time, however, the reimbursement rate for cataract surgery declined to the point that the surgeons were performing more surgeries, but generating less income.
To reverse this trend, the practice decided to expand services to the laser eye surgery business and relegate cataract surgery to a side practice. Thinking it knew the ophthalmic surgery market well, the practice began marketing its laser eye surgery for nearsightedness and farsightedness through its usual approaches. Much to its surprise, the practice generated little business despite the industry-wide boom in laser surgery.
The practice brought in a healthcare marketing expert to assess the situation, and the problem quickly became very clear: The target population for laser eye surgery was different than the population for cataract surgery. Cataracts affect people regardless of race, sex, or social class, making every older American a potential customer for cataract surgery. Further, virtually all cataract surgery is paid for by Medicare and, for younger patients, by their private insurance. On the other hand, the market for laser eye surgery is much more narrowly defined. Potential customers for laser eye surgery fall into certain age, income, education, and lifestyle segments. In addition, because laser eye surgery generally is not covered by insurance plans, patients must finance the procedure by some other means.
After reviewing this case, address the following points.
1. To what extent had the practice researched the market for laser eye surgery?
2. What are the differences between the marketing messages to be conveyed to the traditional cataract market, and the marketing message to be conveyed to the emerging laser eye surgery market? Please reference your thoughts on the Experian MOSAIC segmentation strategy. ( you can find further information here: http://mast.roadsafetyanalysis.org/wiki/index.php?title=Mosaic Links to an external site.)
3. With an elective procedure such as laser eye surgery, is it feasible to compete on price? What innovative financing approaches might be required for laser eye surgery patients?
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