Scan Lab has identified two customer segments that they will target: medical insurance carriers and physicians. For many patients the insurance company mandates who can provide scanning services. Therefore, the driving force to getting customers is attracting the large insurance carriers. Scan Lab has been in negotiations with the three largest carriers in the state and all have informally accepted Scan Lab's bid proposal.
The second customer group is the physicians. While the insurance company will mandate what labs are acceptable for their insurance plan, it is the doctor's choice where they recommend their patients goes.
Scan Lab will target the three largest medical insurance carriers: Aetna, Cigna, and Prudential. Smaller ones will also be targeted later.
Scan Lab has been involved in negotiations with these three insurance carriers to develop an arrangement for Scan Lab to be an approved facility. The next step is the submission of a bid, which is primarily based on price. The lab must agree to rates that the insurance companies have set forth. A secondary consideration is the ability of the lab to adhere to specific filing and billing procedures.
The second target market segment is physicians. Physicians make referrals based on numerous factors including:
The insurance companies decide what scanning facilities are acceptable relative to their insurance plan. Once the facility has been approved, the approval is typically good for one to two years at which point a new bid must be submitted.
Physicians direct the patient to where they must go for a scan. Because Scan Lab is located within a professional building with many doctors, this level of convenience with often prompt the doctor to immediately recommend Scan Lab.
The medical imaging industry operates under two models: a large clinic or practice that purchases the equipment for the use of their physicians, and outside service providers.
Only large clinics and practices can justify buying their own scanning equipment. For a small clinic or practice, the high equipment cost with low use rate makes cost per use expensive.
Scan Lab's direct competitors offer their services to all physicians and accept a wide range of insurance plans. These competitors rarely offer services beyond medical imagine test and radiologist analysis. The medical scanning industry can be profitable if there is not over capacity of the scanning machines in the area. A profitable capacity is to have approximately five MRIs for every 100,000 people. Currently, New Bedford, with a population of 300,000 has 12.
There are nine direct competitors in the area. The large ones are detailed below:
Scan Lab also has indirect competition from clinics and large practices with their own scanning equipment. This group does not serve outside physicians so it is only a threat if they recruit doctors, that use Scan Lab, away from private practice.