VSP Vision Care and Johnson & Johnson Vision Care’s Vistakon division recently announced that they are partnering to offer VSP “members” (your patients) what the two firms call “an enhanced additional rebate program,” which kicked off Oct. 1.
According to the announcement, members who purchase an annual supply of Acuvue CLs from one of VSP’s 27,000 network providers will receive an additional $25 rebate in addition to Vistakon’s current national rebate program. “This program will assist us in our continuing efforts to provide VSP members with access to high quality eyecare at more competitive prices,” said Gary Brooks, VSP Vision Care’s president.
Vistakon says it’s supporting the program with a marketing campaign “focusing on educating VSP members about the program and the value available from their eyecare professional,” the announcement said.
Let’s think more seriously about what consumers’ value.
There’s an old marketing saying, “in the absence of anything else, price prevails.” Is this not just one more example of lazy marketing that’s destroying our industry? Is not this program right up there with all the BOGO programs that have taught consumers that our industry is overpriced and they should expect 50%+ discounting? Does this not continue the branding message that our industry is at about the level of the proverbial used car dealer; if you don’t like the deal, wait a minute? Why is it that, when studies show that price is the number six most important element in eyecare delivery (behind such items as doctor communication, knowledge of staff, etc.), all that our industry seems to be able to deliver is marketing based on price?
I think Gary Brooks and his VSP team should focus their attention on delivering VSP providers with an increase in their reimbursements. VSP “members” and the employers who fund their benefits already receive an outrageously amazing deal…pricing for eyecare and eyewear services at operating profit margins (based on our research) fully 10% points less than those of only five years ago. Indeed, in a recent study, we identified that our clients in California are being reimbursed by VSP at an average of 62% of their U&C exam fees. Worse, their last reimbursement increase from VSP came, on average, three years ago (and amounted to pennies). I wonder if VSP employees received their last raise three years ago.
How can VSP providers continue to invest in providing the very best care at these levels of reimbursement?
What is particularly offensive about this strategy is that VSP providers have no direct say in this matter. VSP is touting that they have provided this as a “service” to their members (VSP Providers’ patients). What about the 27,000 optometrists, many of whom, thanks to VSP's dominance in their practice, are effectively employed by VSP? VSP employees receive annual raises and vote VSP in the top 100 of “The Best Places to Work.” What about VSP’s other “employees?” VSP providers are effectively commandeered to accept this rebate program and continue the slippery slope of brand destruction based on price, price, price. Vistakon and VSP, of course, will likely say that rebate programs cost the provider nothing. Certainly, rebates are better than direct discounts. But it's time to start communicating at a level other than price.
I ask whether these and other similar programs end up costing providers their most valued asset...their brand?
Assuming that each VSP provider has five patients claim the rebate, that has the investment in this program at $3.375 million. Add the cost of administration, and you're easily at the $4 million mark.
What might Vistakon do with $4 million that would better support the desired brand of the independent optometrist as well as that of Vistakon? I encourage Vistakon and other industry marketers to more deeply consider the implications of price oriented marketing. You can do better.
For an interesting and enlightening education on the impact of discounting, I encourage you to pick up Cheap: The High Cost of Discount Culture by Ellen Ruppel Shell, professor of science journalism at Boston University.
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