Services Marketing - Pacific Cataract and Laser Institute (pcli)

Background

Pacific Cataract and Laser Institute (PCLI) was founded in 1985 by Dr. Robert Ford and specialized in medical and eye treatment. With headquarters in Chehalis, Washington it operated clinics in Washington, Oregon, Idaho and Alaska. Apart from laser vision correction, PCLI also provided various other medical treatment including cataract surgery, glaucoma consultation and surgery, corneal transplants, retinal care and surgery, and eyelid surgery.

The entire organization was founded on the principle of bringing human touch to the art of healing and eight different core values were defined around this principle. PCLI’s vision was to deliver quality care and skilled service, maintain mutual trust, respect every individual, and provide ‘comanagement.’

Overview

PCLI used to work closely with patient’s optometrists who were the primary eye care doctors for the patients. When a surgery was needed, OD (doctor of optometry) referred patients to PCLI’s eye surgeons for specialized treatment. This had instituted a network of 150 family OD’s for PCLI in Spokane region. PCLI operated its eleven clinics in a harmonized manner with seven surgeons, several surgical assistants, patient’s counselors and a resident optometric physician at every clinic. But recently, with significant market potential and growth in the industry, competition was turning out to be a major barrier for PCLI. The clinic was facing stiff competition from other laser eye surgery centers located in Canada, as well as other larger, publicly traded laser eye care centers in the United States, who were charging less for Lasik eye surgery. As Lasik surgery was rapidly expanding, PCLI realized that it was losing potential U.S. patients to lower-priced clinics, and in order to be competitive and maintain a strong market share, it had to reevaluate its market efforts and its services operations process.

Issues

Several major issues need to be addressed for PCLI to survive in the competitive landscape. These issues include large operating cost which translates into high prices, limited number of resources such as Lasik surgeons which results in high transportation costs, and an enhanced market strategy to advertise and promote their business. Currently, the most critical issue is to compete with the competition on pricing. But with factors such as high inflation rate, royalty fees for surgery equipment, higher salaries and OD’s additional fees in play, PCLI is unable to do so. Also the issue of self-importance and pride in PCLI management has made them conservative in their efforts to advertise and market their business. All these issues would eventually result in diminishing revenues and losing market share for PCLI and, therefore it is imperative for them to focus on a new management strategy, capacity utilization, cost control and marketing approach.

Analysis:

PEST Analysis:

Below are the findings from conducting a PESTLE analysis in order to understand the industry for eye surgeries in the US:

Political: The nationalized health system in Canada limited what doctors could earn compared their peers in US. So US clinics had to pay higher salaries to surgeons and support staff which increased their operating cost and limited their ability to match competitive prices offered by Canadian clinics

Economic: Weakened Canadian dollar along with high inflation rate in the United States provided a significant exchange rate advantage to the Canadian counterparts of the US LASIK surgery providers.

Social: The society in general might perceive that the Canadian clinics which offered cheap eye surgeries actually compromised on the quality of care received by the patient.

Technological: Differences in approval process of medical equipment and procedures enabled clinics in Canada to have laser eye surgery technologies before they became readily available in US. It also meant Canadian surgeons had more experience handling new technology than their counterparts in US.

Legal: Laser surgery equipment manufacturers charged $250 patent royalty for each surgery but the legal system in Canada prevented them to do so which reduced a significant chunk of cost for Canadian clinics. Also getting an FDA approval before implementing any new technology in US delayed availability of new technology in US that was being used by clinics across the border.

SWOT

Company Positioning

PCLI positions itself in the high service quality and high price quadrant (Figure 1). PCLI operates under the philosophy of providing patients with the most compassionated care and highest service quality. Whereas most of PCLI’s competitors act as average quality clinics, and they try to attract more patients for lower costs. Especially the Canadian competitors, they took advantage of the loose regulations and lower operation costs to provide cheap deals to attract more patients. As result, many U.S. patients would fly to Canada for LASIK. PCLI is positioning as a high quality and high price clinic even in comparison with many of the U.S. competitors such as Empire Eye. Empire Eye is one of the local competitors of PCLI that operates under the similar strategy; however, the doctors in Empire Eye are less experienced than those in PCLI. Therefore, PCLI’s positioning is on the top right quadrant compare to both Canadian and U.S. competitors.