1. Using the buyer’s perception of value presented in figure 6. 1 discuss the value provided by the MDVIP business model. Do you believe that MDVIP offers a good value to patients? MDVIP does offer a great service value to customers since it changes the common business model offered by physicians. Dr. Ray struggle trying to follow the common model used by other physician. He wasn’t able to provide the level of services he wanted to his patients, he wasn’t earning enough, he had to many clients and not enough time for all of them.
On the other hand customer had to schedule an appointment days in advance and wait up to 10 days to meet with the doctor. This is an extremely valuable offers to customers since they have less time cost since they can schedule a meeting with a doctor next day or even the same day, decreasing the time spent in the clinic. Patient’s saves energy cost since it reduces the time spent in the waiting room or on the phone trying to reach the doctor. Reduces psychic cost since it reduces the stress of scheduling an appointment and waiting for the services.
In the case of monetary cost, customers may see the services as an expensive options but at the same time they can save time and energy and focus on getting well quicker so for many this advantage might be worth more than what they are actually paying dollars wise. 2. Based on the 10 factors that influence price sensitivity described in the text, select 5 of these factors and discuss weather patient demand for health care is elastic or inelastic? Perceived substituted effect is low on medicine.
There are not many options to choose you might go to natural medicine acupuncture or any other type of alternative medicine but still for severe cases you will have to end up at a physician. Since substituted are low price sensitivity low making medicine inelastic demand won’t change in case of a change in price. Unique value effect, if you have pain in an specific part of the body you have to see an specialist which offers unique services and treatments. As it is a unique necessity demand is inelastic.
Switching cost, if a person feels comfortable with that doctor and trusts that doctor switching cost are higher and they will do their best to stay with that doctor even if they have to pay more making demand for health care inelastic. End-Benefit, the benefit at the end of the row is to improve the health of the patient or treat some symptoms or cure a sickness. People will pay or will do whatever is in their hands to take care of their health and get better. Making patient demand for health care inelastic.
Shared cost, people have to share the cost of medicine with insurance companies making people a little bit less sensitive to price and allowing them to look for help when they need it. In conclusion health care medicine is demand inelastic. 3. If Dr. Ray reduces his practice to 600 patients, discuss the pros and cons of three possible strategies for making arrangements for his 2,400 patients that will no longer be his responsibility. The first possibility that Dr. Ray has is to referee his clients to other physicians.
The advantage is that it is quick and it is less trouble. The disadvantage is that he is losing customers and that many will look at him in a negative way. His second possibility is too expand the business and look for another doctor who will like to develop a partnership. In this way Dr. Ray can highly suggest his partner and provide them with an easy switch system so they can be confident about this new doctor. The advantage is that he will have more control about what happens with his clients.
He will be able to still earn some money from the partnership. The disadvantage is that maybe people will still see him as their main doctor and will try to reach him anyway. Other disadvantage is that they need to find a way to make the transition as smooth as possible so they don’t lose customers. His final option is to actually just tell them that he is moving into this new business model. There many more negative consequences to this model than any other but it is still an option. People may lose all confidence on him.
He might leave people with any other option and obligate them to look for a new doctor. The advantage is that is less work. 4. Discuss the ethical or social responsibility issues that Dr. Ray faces as he considers signing on with MDVIP. The biggest ethical and social responsibility Dr. Ray faces is the fact that he is going to leave 2,400 patients without a primary care doctor. Many might be clients of many years which might complicate even more the problem since they might not want to change. The other factor is that many might trust Dr.
Ray and like having him as doctor but might not be able to afford MDVIP. As doctor one of his main considerations should be the health of his patients and he will be leaving many of them in search for a new doctor. The other important problem is what might happen if he has more than 600 customers willing to join MDVIP. How can he choose who will join and who will not join? Is he going to choose by first come first serve, is going to choose by who needs it more etc. He will really have to think about how to manage the extra demand of the service he might get.