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HomeminewsVSP Medibank Deal: No ‘Silver Bullet’

VSP Medibank Deal: No ‘Silver Bullet’

The US-based VSP says its recently launched Australian VSP Eyecare Network is a not a “silver bullet” for retail optical outlets expecting an increase in Medibank customers taking advantage of its new preferred supplier status.

Rather, Peter Lewis, CEO of General Optical (GenOp) which is owned by VSP, said the new network would provide independent optical outlets –who were essentially now “cottage industry businesses” – with the business solutions necessary to “compete against the integrated global giants” of Luxottica and Specsavers.

GenOp and VSP have signed more than 350 independent practices to the VSP Eyecare Network, which from 1 January, joined Luxottica and Specsavers as Medibank’s preferred suppliers.

The Optometry Association Australia has expressed concerns that the obligation on VSP network members to offer significant discounts to Medibank customers could wipe out already slim profit margins.

VSP’s Senior Vice President of Global Business Development, Ric Steere, speaking to mivision during a brief visit to Australia, said he could understand the initial lukewarm reception from the local optical industry. But he said there are about 28,000 VSP network optometrists in the highly competitive US environment, and that number was increasing annually.

“I can understand the Australians saying ‘Okay, we’ll sign up, we’ll watch to see what happens’. Americans have had 50 years to look at this and evaluate. And if they continue to join and continue to thrive… I think that it is a successful model,” Mr. Steere said.

“People need to look at the total solutions. It’s not the silver bullet but it helps them (independent optical retailers) maintain those (Medibank) patients, it can help them get new patients and because of the rebate, because of the marketing through Medibank, it can give them the opportunities to sell more (product) that has margins available that will allow them to make money, even with discounts.

Mr. Steere said VSP would not match the multi-million dollar advertising budgets of Luxottica and Specsavers to build brand recognition in Australia, initially saying VSP would primarily rely on commitments from Medibank to publicise the network, through its website and information to its members.

Mr. Lewis later revealed this would be supplemented by a print advertising campaign, which started on Saturday, with half page ads in a range of capital city newspapers.

In addition, Mr. Lewis said, the VSP network was planning a “grassroots communication strategy”, beginning in late February/early March.

“There are a lot of other drivers but, for commercial reasons, I’m not going to be able to divulge any of those…there is going to be a lot of communication. The communication is more direct to the patients, it is not overt, cluster bomb marketing… it is direct marketing; personalised marketing; communication from doctor to patient,” Mr. Lewis said.

Mr. Lewis said early feedback from VSP network members about Medibank customer numbers was “positive”.