I couldn't think of a better title.
As I have mentioned earlier in another thread, I have a knee problem. So I visited a physiotherapy center and they proposed a treatment course and how much it would cost.

Lets forget the medical part, and see the math in the medical bill. They told me it would cost around U.S.$ 1,000. However, if I have the card of XYZ company, they will give me a 30% discount. OK. I called the company and the card was delivered to my home next day. It cost me around U.S.$ 60, and it covers me and my family for one year. Their website lists the clinics, pharmacies, dental centers ..etc. that they cover. The list is not bad. And most of their discounts are between 20-30%, and some 50%

So, someone please help me with the math
I buy their card for $60. Their card tells clinic to drop 30% of their fee, which is , in my case, more than $300 !!!

How does this work ??
What is in it for the clinic or dental center ??
Am I missing something here ???

For the sake of simple math, let's say it costs a clinic $700 to do a procedure plus the cost of overhead to keep their doors open. Health insurance companies only pay 70%, $490. The clinic loses money per procedure. To get the full $700 from the insurance company, the clinic has to state that their service costs $1,000.

If a patient comes in with $700 in cash and a "discount card," the clinic goes though a song in dance where they will perform this "$1,000 procedure" for only $700.

Jeanette Isabelle

I think there is more than just the math. You are dealing with the most expensive health care system in the world, which produces rather mediocre results.

When I retired, my employer related health insurance remained with me. My typical co-payment is roughly 20% of the bill (which is subject to negotiation between the health provider and my insurer. Let's not go there. I have too many horror stories)

Simple enough
The not-so-simple part is the insurance (or discount) company lists several dozen health care providers in many cities who "accept their discount card", not to mention their other card which gives you discount at makeup and perfume stores. They are by the dozens.

Now suppose I am a clinic or pharmacy owner. I give 20% discount ONLY for people carrying that card. Isn't it against business wisdom to charge other people 20% more ??? Customers will run to the competition.

There is something I am not really getting there.

Perfume is the most marked-up product there is. Chanel spends less than a dollar to make a bottle of their perfume which they then sell for $135.

Jeanette Isabelle

I agree with you right there. Many times I have thought why we don't just grow some nice smelling plants around us and reduce the use of perfumes. And gardening is a great hobby too.

If you do not pay with money you pay with your data. Using the card leaves a trace for marketing studies with actual consumer data. The card company may compensate the clinic.

The 20% discount actually means that other customers pay 25% more. The idea is to encourage other customers to carry the card too. Many customers will fold and get the card. There are studies that indicate that shops with loyalty programs are more expensive even with the discount.