Membership discounting and healthcare are rarely uttered in the same sentence, but a former Los Angeles hospital executive wants to change that.
Starting Jan. 1, the California Group Health Program will sell membership cards to the general public on a sliding scale that begins at $42 a year. The user would present the card to a participating medical office or hospital and receive discounts of 20% to 50% from normal fee-for-service charges.
"It's like a Price Club or (Price) Costco for health services," said Gary Lawson, the CGHP's president.
Lawson was previously chief operating officer of InterCare/CPMS Health Resources, which operated four small hospitals in Southern California. He has financial backing for his new venture from Health Industries of America, which operates two small psychiatric hospitals in Los Angeles and Riverside, Calif.
The CGHP would target the working uninsured or those with high deductibles on their policies, according to Lawson.
"There are 6 million uninsured in the state, mostly working-class people who are not in poverty, but they can't afford insurance," he said.
The membership fees would be used to set up a database for members to help them select the participating providers, Lawson said.
To date, Lawson said he has lined up 3,000 providers in Southern California-including ancillary ones as optometrists and chiropractors-although he would not release a complete list until the CGHP's accreditation process for applicants was completed. He said he expects to expand the service into Northern California, Florida, Missouri, New York and Tennessee by next March.
Lawson has a goal of signing up 1 million members in the first year with the help of mass-mailing advertisements. Eventually, he foresees 5 million members.
"We're a very good match with what he is trying to do nationwide," said C. Robert Jones, regional administrator for EyePA, a group of 300 ophthalmologists and 150 optometrists that is a subsidiary of Dallas-based Physicians Resource Group.
Jones estimated that service discounts for California Group Health members would run about 25% to 30%-roughly equivalent to a standard HMO contract. He projected that utilization rates among members would run about 30%.
However, skeptics of Lawson's plan say that if the discounts are similar to what might be negotiated by an HMO, potential members should consider signing up with a health plan instead.
"You may as well go buy an individual plan with a high deductible and have the same access than have full access with a lot of out-of-pocket expenses," said Jim Lott, senior vice president of the Healthcare Association of Southern California. He added that it is likely the CGHP will also come under regulatory scrutiny from the state departments of insurance or corporations.
"If they're taking a premium dollar and are suggesting they can provide access to healthcare on a discounted basis, then it's insurance, and one of those regulators is going to take an interest," Lott said.
"I think it's a very limited audience. A lot of people who already have jobs get some sort of health benefit. And this makes healthcare a commodity rather than a service," said Barbara Adachi, a San Francisco-based principal in the healthcare practice of Deloitte & Touche. "I'm not sure you can put it on a shelf like that and get a good reaction."
Lawson defended the CGHP by noting it offers access to services that traditional health plans do not, such as plastic surgery and alternative medicines. And because the discounts are determined by the providers, he said his company would not be considered an insurance provider or a third-party intermediary.