Bargain Health Care?

From the WebMD Archives

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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The participating, uninsured members usually are self-employed individuals or people that prefer to pay for health care services as needed, Eaton says.

Still, a number of people may stand to benefit. A growing number of U.S. employees already are paying for a larger portion of their health care costs under managed care, according to a recent Center for National Policy survey. The survey, funded by the nonprofit research organization and conducted by Harvard University researchers, found that less than 30% of Americans had full insurance coverage in 1998 compared to more than 45% in 1983.

In the future, discount clubs also will become a mainstream for employer-based health plans, predicts Steve Scheidt, director of marketing at MedAdvantage, a Detroit-based discount club whose web page went up almost 2 years ago. "That is the target," he tells WebMD, while noting that discount clubs can help employers develop fuller health care packages for their employees at almost no cost to themselves.

The downside for consumers is that these discount clubs do not always offer reliable information about the health care providers participating in their programs, reviewers say. The information varies from lists including the doctors' board certifications to ratings compiled by third party organizations, whose resources and motivations remain undisclosed, they say.

"We are not in the business of recommending doctors," Eaton admits. "What we are trying to do is bring people together with health care providers that meet their needs."

One recourse for consumers is that discount clubs usually deal with network providers who are required to undergo a certification process, Scheidt says. However, "our business is to negotiate discounts, not recommend doctors."

When all is said and done, these companies at least deliver on that promise. On average, consumers can enjoy discounts of anywhere between 10-50% on prescription drugs and other health care services based on the prices listed at various clubs.

"It's a great deal," Eaton assures WebMD. "Everybody gets what they want without the hassles of managed care."

WebMD Health News Reviewed by Annie Finnegan
© 2000 WebMD, Inc. All rights reserved.

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