If you don’t have the time to read this all, I’ll provide my conclusion here: JR is right. “Healthcare gift cards” fall only a few centimeters short of being an out-and-out scam, imo.
Here’s the story. Highmark Healthplan (BCBS from PA) introduced a new product, the Healthcare gift card. The idea was to produce a vehicle for folks who want to help an individual with healthcare expenses, but don’t want to give cash.
You can read Highmark’s press release here. You can read more about one of the cards here. I swear, if PCC had the marketing money to make a fancy WWW page like that one, we’d add 100 practices a day. Yeesh.
In our card and credit driven economy, this sounds like a marketable idea, certainly, and perhaps even a helpful one. After all, think of all those college (or post-college) kids whose parents don’t want to provide with large amounts of cash, but want to make sure they get their healthcare.
A couple of our clients exchanged email and JR Vought wrote the following and got me CC’d:
Excellent concept, but also need to consider how transactions fees for such will cut into revenue. The more we charge, the less applied to bottom line. Increased payment at time of service would have to cancel out the increased trans fees to process card payments. Lynn Cramer from Eden Park is already monitoring the effect of increased ‘card’ usage, including high deductible plans and HSA’s. I wonder what Chip Hart thinks and would/could he address it on his blog?
First, appealing to my vanity always works. I am shallow that way. Second, it helps when you do all the work for me, as JR did here.
The problems occur in two places. First, it’s still a credit card as far as I can tell. It’s a VISA. So, you lose your typical % fee off the top. Second, Highmark makes an extra $4.95 plus shipping and handling on each card. With one of the dozens of VPs stating that “…Highmark within the next year expects to sell ‘several hundred thousand’ of the cards, with most valued at $75 to $100…” you can see that Highmark has already knocked 4.95-6.6% off the bill from everyone who uses it. Actually, it’s worse – they receive the money from the purchasers in advance and not via discount. Think about that – if they sell 300K of these at $100ea, that’s $30m they get to bank before you get a dime. They also know some of those cards will never, ever be used. Or used in their entirety.
So…your fees are knocked off by your typical VISA rate (at least) and the insurance company gets pre-paid about 5% for services that may never even be rendered.
How does the benefit the patients and physicians, again?