Looking for a value-added program to increase retention and revenues?
Consider a health discount solution.

DALLAS, Texas, August 25, 2005-

When considering value-added programs, organizations look for products that are scalable, applicable, priced below retail, and non-disruptive to their core business. The perception of health benefits among organizations is that they are complicated, not scalable, and require a great deal of attention. This is true of health insurance-- however it is not true of all affinity health benefits. There are non-insurance solutions that are scalable, applicable, non-disruptive, and, lest we forget, excellent revenue opportunities. These products are health discount benefits.

For over a century, corporations and associations have been leveraging their members’ and customers’ collective buying power to provide products and services at discount rates. Through these programs (defined as affinity solutions), organizations are able to offer their members/customers special discounts on products that are not, necessarily, a part of their core offering. The most common of these benefits include internet access, shipping services, travel assistance, and entertainment. The reason companies choose to implement affinity programs is to increase the value of their services, for differentiation, and to create new and unique revenue sources.

First brought to the market in the late 1980s, the health discount benefits business was created to meet a growing demand in America for a cost-effective alternative to traditional health insurance. This trend continues today with an estimated 45 million Americans unable to maintain any type of health plan (US Census, 2004) and average insurance premiums representing 21% of the national median household income of $42,409 (USA Today, 17 March 2004) . The health discount benefit industry offers uninsured Americans low-cost health plans that offer savings of 10-60% on health care products and services. While this is not insurance, it is significantly cheaper on a monthly basis and enables those that are not currently participating in the health system to do so.

In that a health discount benefit offers discounts on health products and services, the benefits can be offered to a nationwide audience without much of the red tape associated with state regulation. The benefits can be offered “a la carte” (i.e. one or two benefits) or as a full health solution (i.e. vision, dental, prescription, physician/hospital, and nurse hotline). This allows companies to customize an offering to best suit the needs and price sensitivities of their consumer segment, making the benefit applicable to any company whose customers are in need of just two benefits or a full suite.

One benefit, in particular, that is getting a great deal of attention is the free prescription discount card. This benefit is offered free to companies that have the capability of distributing it to 5,000 or more customers. The prescription discount card offers 10-60% discounts at over 48,000 pharmacy locations nationwide. The implementation of this prescription benefit requires a company to add the necessary artwork to an existing card or to distribute a separate card as an insert. Commissions are paid through the use of the benefit at the pharmacy. This is a great example of how a value-added health discount benefit can be non-disruptive and profitable at the same time.

So, the scalability to allow for nationwide distribution and the ability to form a suitable mix of benefits is great. What about the commitment of resources required in offering a value-added health program? Most of the distribution for health discount plans is acquired through relationship marketing, meaning that administrators rely heavily on independent sales organizations. For this reason, health discount companies assume all of the costs associated with private-label product fulfillment, billing, customer support, and compliance. For those who offer a health discount service to their customers/members the only cost is the communication of the availability of benefit(s) and the enrollment of members.

The typical price to the consumer for a health discount plan (i.e. physician/hospital, dental, vision, prescription, nurse hotline, and travel assistance) is between $30 and $70. When a similar product mix is offered through a group of moderate size the retail price will drop to below $30 and, many times, it can reach $17 depending on the size of the group. The revenue sharing is often up to 50% and is paid out every month on a residual basis.

When looking into these health discount plans as an affinity solution it is important to consider the demographic breakdown of those groups your company serves. However, if you identify a segment within your group that has a hard time maintaining partial or full health protection, a health discount solution might be what your company and its customers need.

Author:
John Henry Seale
bluesky Affinity Health Solutions
www.blueskyamerica.net

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