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the Groupon bubble

Originally published at Faith Seeking Understanding. You can comment here or there.

Every year or two I try to get my eyes examined and buy a new pair of glasses. That’s about how long it takes me to go through them before I step on it and break a lens or sleep in them too many times so the hinges get hyperextended. My health insurance doesn’t cover eye care or dental, so out of pocket this can run me $200-$300, which can be a tough nut to swallow on a student budget.

When I first came to Fordham, I mentioned this to a nurse practitioner at my school’s infirmary and she suggested I check out Groupon. It’s a cool site if you haven’t discovered it, kind of the internet age’s equivalent of coupon-clipping. I’d heard of it and used it for restaurants and discount movie tickets, but never would have thought of using it for healthcare, but apparently dentists and eyeglass shops use it quite a bit. So I just bought my second Groupon package for an eye exam + glasses, and it’s much cheaper than I have any right to expect. Probably cheaper than I could manage with insurance.

I’m really loving it, but it also leaves me a little worried for the company’s sake. Groupons involve major discounts. My package cost me $35 for an exam and $200 toward frames + lenses. The only way it seems to make sense is if this is a “get-you-in-the-door” move, like the ridiculously cheap items stores advertise on Black Friday. But we’re talking health care here. I doubt they’ll be able to up-sale me on more expensive lenses, and I’m definitely not going to come back for a long while, because I don’t need to. I mean, it’s one thing to give discount movie tickets with the expectation that once people know where you are, once they had a good experience, they’re more likely to come back and pay full price. But if that applies at all to eye doctors, it will be at least a year before they get another visit.

And most likely there will be a another Groupon waiting for me to take advantage of. From my perspective, it just doesn’t make sense to pay full-price, but from the doctor’s I can’t see how it makes sense for them to do Groupon’s without it leading to something more profitable. It seems like a bubble that’s just waiting to burst, at least to me. I’m happy to ride the wave as long as it lasts, of course.

Interestingly, there is a business model I can see working for healthcare: Priceline. As I understand it, companies offer lower fares when they think the thickets will be harder to sale – like at bad times or days when people don’t want to fly. I’d be surprised if doctors have perfect supply, so there have to be some appointment slots where they are open but don’t have patients. They also have people who cancel a day or two before the appointment. Imagine if there was some kind of a clearinghouse where you could see vacant appointments, either at hard-to-fill times or moments in the next day or two where someone cancelled, and you could take the appointment at a reduced rate. I imagine that between not having to file insurance and this basically replacing no income with some income, docs could offer appointments at a significant cost break this way.

Anyway, it makes more sense than the GroupOn model, at least to me.

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