VSP: A Successful Affiliate Strategy
In any competition, if the game changes, the strategy must also change for continued success.
Such is the case with VSP® Vision Care in the managed vision care market. The needs and requirements of the client have changed. To remain competitive, VSP must also change to be able to meet clients’ needs.
Historically, VSP has been successful in directing 94% of patients to private-practice doctors when it has the contract—a much higher percentage than what happens when a retail-biased managed vision care plan has the contract. In the past, VSP has been able to point out the out-of-network option as an answer to a client’s need for a retail offering. Recently, however, the game has changed and clients are increasingly requiring a formal retail affiliation to even be considered as their managed vision care provider.
The affiliate provider category was born out of the clients’ requirement that VSP have a retail answer. Costco was the very first affiliate provider. Costco is NOT on the VSP panel. Instead, it is listed as an affiliate provider ONLY for those contracts in which the client required a formal retail solution.
Twelve major strategic contracts were won during 2010 by offering Costco as an affiliate provider, representing more than 623,000 potential members for private practice. Although it's still early on in the program, the claims data from these 12 contracts shows that 82,000 of these patients have gone to private practice compared to only 1,600 that have gone to Costco. In other words, patients are still overwhelmingly choosing private-practice VSP Doctors over Costco.
While Costco has worked with some clients, it doesn’t work for all—especially clients in states without Costco locations. I think it is fair to expect other affiliate relationships with a handful of other, smaller, regional retail groups—like Eye Care Centers of America—to provide coverage in areas of the country where Costco is not represented. In all cases, VSP will keep a close eye on the out-of-network percentage to be sure that VSP is still able to direct the vast majority of patients into private practices like ours.
As I see it, when VSP wins a contract, far more patients are directed to private practice than when retail-biased competitors win. To win, VSP must meet the requirements of the client, including having an answer for their demand for a retail component. The early returns of the program indicate a successful strategic adjustment by VSP, wherein, an affiliate relationship has been developed to satisfy the client without materially affecting the ability of VSP to direct patients to private practice.
To learn more, view this video message from Tim Jankowski, OD, FAAO, chairman of the VSP Board of Directors.