Gift cards turn health care into stocking stuffer
■ Highmark's entry into the market is seen as either a sign of growth in consumer-directed health or patients' struggle to afford care.
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Your patients may soon come for post-holiday visits not wearing new reindeer sweaters, but carrying gift cards that can help pay your fees.
Pittsburgh-based insurer Highmark says it has made giving the gift of good health possible with the introduction of its Healthcare Gift Card. While hospitals and some practices already are in the gift-card market, analysts consider Highmark's entry a watershed moment for the health care and gift card industries. Highmark is believed to be the first to issue a gift card that can be used nationally while also intended mostly for everyday health expenses.
Analysts agree this trend is reflective of patients shouldering more financial responsibility for their health care. Where they disagree is whether health gift cards are a positive or negative development.
"It speaks to the fact that the current reimbursement system and insurance system is inadequate, that there's a market for these cards," said Mark Rukavina, executive director of the Access Project, a Boston-based group that promotes access to health care. "If we have insurance that was more comprehensive and paid more of the bills, then the need for a card like this wouldn't be as great."
But Kim Bellard, Highmark's vice president for e-marketing and consumer relationship management, said the card is one more way health care is becoming more consumer-oriented.
"Consumers are paying for more health care expenses out of their own pockets, whether higher deductibles and co-pays or people without insurance, or things more people are choosing to buy, like LASIK or cosmetic dentistry," he said. "People are more likely to either need to or want to look at health care as another consumer good, and they want more of the conveniences they can buy other retail items with."
For a fee of $4.95 plus shipping, Highmark's card can be pre-loaded and used for anything health-related: a co-pay for a visit to a cardiologist, a blood pressure monitor or a gym membership. The recipient can use the card to pay any merchant that accepts Visa -- the credit-card issuer is a partner in Highmark's gift-card project -- and sells health-related products. Neither the giver nor recipient needs to be a Highmark member.
The target audience
The Highmark gift card Web site www.givewell.com/ features an animation of a woman who Bellard said represents Highmark's targeted market: a woman from 35 to 55 years old whose responsibilities include both aging relatives and children.
In the animation, she hands a gift box to an elderly man, then eyeglasses, a stethoscope and a prescription bottle pop out. The Web site reads, "Most gifts promote happiness, but the new Healthcare Gift Card also promotes health! From elderly parents and college students to expectant mothers, the Healthcare Gift Card is a unique way to let loved ones know just how much you care."
Since their introduction about a dozen years ago, gift cards have grown to become an estimated $80 billion-a-year business.
"Our society is so obsessed with gift cards right now," said Abby Brookover, director of sales and marketing at DoctorDirect, a Lakewood, Colo.-based direct mail and marketing company for physicians. Among the company's products are gift cards that can be customized and sold by physician practices.
Brookover sees target recipients as young people who are uninsured or underinsured. Not only can it give them backup in paying for health expenses, she said, but it also comes in the form of a familiar currency.
When Scott & White Memorial Hospital and Clinic began offering gift cards in March 2004, it envisioned seniors as well as younger people as the target recipients, said cash manager Brenda Sirny. "It's a great thing to give your parents so they don't have to worry about co-pays. ... It's a great thing for students because they can get their medical care, but they can't buy beer with it."
So far, health care gift cards are a tiny sliver of the overall gift-card market. Even those selling gift cards don't see that changing any time soon.
Despite its introduction in time for the holidays, Bellard said he doesn't see Healthcare Gift Card sales as a must-have Christmas gift this year. Market research showed that people were more likely to buy the card during the year as needs come up.
He said Highmark will use its home base of Pittsburgh as a test market, then branch out to other places around the country. But even now, the gift card can be used at any practice, hospital or pharmacy, even overseas, where Visa is accepted.
Highmark said the card, for now, doesn't recognize whether an actual health-care service or product is being bought, leaving open the possibility that a gift card could be used at a pharmacy, but for cigarettes and potato chips.
Scott & White -- whose physicians include cardiologist and AMA Board of Trustees member J. James Rohack, MD -- has sold about $65,000 in gift cards, with about $10,000 in unredeemed cards outstanding. Sirny said the cards most commonly are used in the cafeteria and for cosmetic surgery. For now, Sirny said the hospital has put marketing the gift cards "on the back burner" behind other projects.
Angie Dickman, vice president at Reid Hospital in Richmond, Ind., said that in 2002, the hospital introduced gift cards that could be used to pay bills or anywhere in the hospital. "Generally, what we have found is it's a lot of internal use," she said. Hospital staff give the cards as incentive gifts or for birthdays, and they're often used in the cafeteria, she said.
Church congregations have pooled money to help pay a hospital bill for a needy person, and people bought gift cards to be used for mammograms at Mother's Day, Dickman said. "It's not a high volume [of sales], but those who have found it ... really like it."
Jennifer Offenberg, PhD, an assistant professor of economics at Loyola Marymount University in Los Angeles, said retailers like selling gift cards. Not only are they are a guaranteed sale, but about 55% of gift card holders spend more than the card's value, and somewhere between 5% and 10% of cards go unredeemed.
Merchants also can subtract value from the card if they are not used in a specific time. After nine months, Highmark deducts a $1.50-per-month fee from any remaining value.
Dr. Offenberg said that although people do buy cards that are good for multiple merchants and are purchased for more than their cash value, such as Highmark's card, "it's a little mysterious why they would pay $105 for $100. I don't understand it."
Rukavina, of the Access Project, said he can think of a present that tops a health care gift card: "A far better gift would be comprehensive insurance."