Professional Documents
Culture Documents
BSBAMMOUMN 2-A
Service Culture
Activity No. 4
Setting Prices and Implementing Revenue Management
Case Study
1. Discuss the value provided by the MDVIP business model. Do you believe that MDVIP offers a good
value to patients?
MDVIP will provide a good service worth to clients since it changes the common business model offered by
physicians. Dr. Ray struggle making an attempt to follow the common model employed by another physician.
He wasn’t able to offer the number of services he needed to his patients, he wasn’t earning enough, he had
to several purchasers and not enough time for all of them. On the opposite hand, customer had to schedule
a meeting day before and wait up to ten days to satisfy with the doctor. this is often a particularly valuable
offers to customers since they need less time value since they will schedule a gathering with a doctor next
day or perhaps constant day, decreasing the time spent within the clinic. Patient’s saves energy cost since it
reduces the time spent in the lounge or on the phone making an attempt to succeed in the doctor. Reduces
psychic cost since it reduces the strain of planning a meeting and looking ahead to the services. within the
case of financial cost, customers might even see the services as an expensive choice however at the same
time they can save time and energy and target obtaining well faster therefore for several this advantage could
be price additional than what they're truly paying bucks wise.
2. Based on the 10 factors that influence price sensitivity described in the text, select five of these
factors and discuss whether patient demand for health care is elastic (patients are typically price
sensitive) or inelastic (patients are typically less price sensitive).
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 a specific part of the body you
have to see a 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 to 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.