Scan Lab

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Medical Scanning Lab Business Plan

Market Analysis Summary

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.

4.1 Market Segmentation

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:

  • Who they know.
  • Who the patient's insurance company is.
  • What type of scan the patient is receiving.
  • Convenience of location relative to their office or to the patient's home.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Insurance companies 1% 21 21 21 21 21 0.00%
Physicians 4% 235 244 254 264 275 4.01%
Total 3.70% 256 265 275 285 296 3.70%

4.2 Target Market Segment Strategy

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.

4.3 Service Business Analysis

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.

4.3.1 Competition and Buying Patterns

There are nine direct competitors in the area. The large ones are detailed below:

  • Massachusetts Imaging Center: This company operates three centers of imaging equipment. This company is large, while they offer competent radiologist analysis, the setting is somewhat factory like where patients become numbers who are shuffled through.

  • Bedford Scanning: This is a small facility with one part time radiologist on staff. They only have an MRI and CAT scan, they do not offer any other types of imaging services.

  • Radiologist Imaging: This facility is similar to Scan Lab but is located on the far side of town, a 25 minute drive away, therefore this facility seems to serve a more regional customer base due to their non-centralized location.

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.