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Bargain Health Care?

Reviewed by Annie Finnegan

WebMD Health News

Aug. 30, 2000 -- There is a new trend developing in American health care. Allured by the promise of bargain prices on everything from prescription drugs to dental and eye care, a growing number of Americans are turning to companies that provide access to drug stores and health care providers at below-market prices through "discount clubs."

These discount clubs are often based on the Internet and attract individuals that either have no insurance or whose insurance does not cover the treatments they want. Drug stores and health care providers in turn accept these discounted prices, largely comparable to managed care fees, because of the opportunity to reach a larger customer base while avoiding the payment delays and treatment restrictions usually associated with managed care.

HealthAllies of Glendale, Calif., operates a web site that began offering discounted prices for health care services in September 1999.

In essence, the business model is based on negotiating discount fees with specific health care professionals, Michael Eaton, director of marketing at HealthAllies, tells WebMD. Health care professionals agree to these lower fees in part because of the company's intimate knowledge of their actual costs, but also because of the company's ability to continue attracting new customers, he says.

While there is no way to determine exactly how many people have signed up for these clubs, there is good evidence that people are spending more of their personal funds on health care, a good indicator that these companies do have a potentially large customer base. In fact, personal spending on health care in the U.S. has jumped about 38% since 1990 to more than $199 billion in 1998, according to the latest federal figures.

The discount clubs, however, are likely to be of almost no benefit to people with limited means. Although offering services at discounted prices, these services and products tend to be geared to people looking for treatments generally not covered by managed care plans, including cosmetic surgery and heavily marketed brand name drugs such as (Viagra).

"Our program works for all kinds of folks," says Eaton, whose company offers discount prices on everything from regular check-ups to LASIK surgeries, the laser surgery used to improve eyesight. However, this is a service for people that can pay cash, and the majority of takers are from the middle class, who seem more interested in ancillary products and services not covered by their existing insurance plan, he tells WebMD.

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