As MRI scanners became more widely available and patients began to shop around, or even go abroad, for their scans MRI providers began to compete on price.
I think the first to break ranks was the Cobalt Appeal in Cheltenham, who suddenly found themselves with vast overcapacity for their mobile service as hospitals in the West Midlands installed their own fixed scanners. As a registered charity they have financial advantages over purely commercial organisations and could also rely on charitable donations to provide working capital, rather than have to borrow money at commercial rates.
With little competition and clever marketing to potential referrers and directly to the public they established themselves fairly firmly as a low cost quality provider and drew patients from throughout the UK.
Last year Vistadiagnostics in London entered the market with a variable charging structure depending on the time of day but as low as £250 for one area and actually cheaper than the Cobalt Appeal for multiple areas and for contrast enhanced scans. Their business is based on the EasyJet model and relies on using the scanner 7 days a week for 13 hours each day with aggressive promotion of their service. I think this was quite a risk because rents and radiographers still have to be paid if the scanner is idle and costs in London are high. With such narrow margins they could only survive if they ran the scanner at full capacity.
They had the lucrative London market to themselves for about a year but just before this Christmas, Med-Tel, another private scanning centre in the City, announced a "special deal" matching Vista's prices for MRI. Not to be outdone Vista has taken the classic poker player's route and upped its stake and cut its headline price to £200.
Both companies are haemorrhaging money with Google pay-per-click advertising campaigns and, unlike the Cobalt Appeal, can't rattle tins at village fetes and shopping centres to restore their cash flow. It looks like the town ain't big enough for both of them and I foresee the one who blinks first will be eating dust before the new year is out.
Meanwhile, our private scanning enterprise, UK Radiology, which still offers scans cheaper than all of them, sailed serenely on, gradually taking business off the commercial scanning centres and Cobalt Appeal while spending virtually nothing on advertising. Irritatingly though, after my self-contented last post on this blog, it has disappeared off the first page of Google again for the search term "private MRI scan". I think getting a high Google ranking is a bit like sailing a tanker. Where you are now depends on actions taken weeks or months before and I now realise I had become complacent over the year and took my foot off the throttle (sorry about the mixed metaphor - do tankers have a throttle?). Out of interest I looked into the cost of pay-per-click. To put a company's link in the first four places for the search term "private MRI scan" costs 0.43p every time someone clicks on the link. Google accounts for around 75% of my visitors and if I were in the first four places it would be many more. Based on the number of click-throughs I get from Google, Met-Tel, Vistadiagnostics and Cobalt Appeal must each be spending hundreds of pounds every month on Google. At the margins they are working to now and with unused capacity that must be hurting.
A happy and prosperous New Year to all my fellow bloggers and readers. (Especially Dr Crippen - I hope you decide to come back next year- even if its just the occasional blog).