Walmart Moves Health Care Forward Again

Walmart Moves Health Care Forward Again

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Walmart’s sheer size makes almost any of their initiatives newsworthy. That said, despite being a lightning rod for criticism on employee benefits and health care, they have introduced initiatives with far-reaching impacts. Their generic drug program began in September 2006 – more than 300 prescription drugs for $4/month or $10 for a 90-day supply – and was widely emulated, disrupting retail drug markets and generating immense social benefit. Imagine the difference it made to a lower middle class diabetic who had been paying more than $120 per month for medications, and suddenly could get them for about $24.

Yesterday Walmart announced that “enrolled associates” – covered workers and their family members – needing heart, spine or transplant surgeries could receive care with no out-of-pocket cost at 6 prominent health systems around the country: Mayo Clinics (Rochester, MN and Jacksonville, FL); Cleveland Clinic (Cleveland, OH); Geisinger Clinic (Danville, PA); Mercy Hospital Springfield (Springfield, MO); Scott & White Memorial Hospital (Temple, TX); and Virginia Mason Medical Center (Seattle, WA).

Walmart’s Center of Excellence (COE) program builds on its own and other organizations’ pioneering efforts with similar programs. Walmart developed a relationship with Mayo Clinics in 2007 for transplant and lung volume reduction surgeries. In March 2010, Lowes reached a similar arrangement with Cleveland Clinic for heart surgeries and, last December, Pepsico announced a global pricing deal with Johns Hopkins for cardiac and joint replacement surgeries.

It’s worth asking why these large firms would bother to do these deals for expensive care, and what this means for health care in the future. What’s different about the health systems that have been involved? Could these arrangements catch on and influence care elsewhere around the country?

The procedures involved are typically complex and high cost. Because they provide health coverage for more than a million people, Walmart has accumulated tremendous data and experience, and they are famous for their analytical acumen. They know that these kinds of treatments, though relatively infrequent, consume disproportionately high resources.

All of the organizations contracted in these arrangements have developed reputations for high quality. It’s worth noting that the unit pricing of their services can be high, but their episodic costs tend to be low. Their specialists are salaried, and therefore have no financial stake in ordering unnecessary services. And, in the words of a colleague knowledgeable about these efforts, “because they use evidence-based vs. money-driven care, they tend to get the diagnoses on complex cases right the first time. They also coordinate care and are more likely to be accountable than other systems.”

The press release also noted that Walmart’s COE program is “working with all the health care organizations to collectively share best practices that will allow collaboration around best measures of service and new industry findings in comparison to industry practices.” Think about that. Absent a health care environment that, as a practical matter, actively shares and translates evidence into practice, the purchaser, out of enlightened self-interest, has incorporated this process as a cornerstone element of its program.

One of my correspondents, a physician practicing at an academic medical center, commented on yesterday’s news:

“I recently reviewed … Texas hospital data. It is quite striking how Scott & White has markedly lower costs than most other equally sized Texas hospital systems while also hitting high marks for quality. I’d love, personally, to be able to take this press release to the head of our clinical practice and ask how we plan to compete in the future.”

He’s right. Health systems and specialty groups in the US have operated completely outside conventional market forces for decades, a fact that largely explains US health care’s egregious cost, highly variable quality and rock-bottom value relative to health care in other industrialized nations. As the market becomes more cost-weary and price-sensitive, purchasers will follow the leads set by Walmart, Lowes and Pepsico. They’ll align with organizations that can measurably demonstrate better care at lower cost.

As market forces take hold, success will be associated with driving appropriateness, and with accepting lower per patient revenues in exchange for more market share and greater patient volumes. Growth will come at the expense of entrenched, less agile competitors.

The big winners here will be patients, who will be subjected to significantly less unnecessary risk associated with overtreatment, and purchasers, who will receive far better value at lower cost.

Health care organizations should not underestimate the significance of Walmart’s COE program. It is one of many signs suggesting that, after 40 years of being impervious to market forces, the health care bubble could burst. All it would take to change health care as we have come to know it is for more employers to collaborate and follow Walmart’s, Lowes’ and Pepsico’s leads. They would stop doing business with health care organizations that are unaccountable and don’t provide measurable value, and transfer that business to those that do.

Brian Klepper, PhD is an independent health care analyst and Chief Development Officer for WeCare TLC Onsite Clinics. His website, Replace the RUC, provides extensive background on the role that the AMA’s RVS Update Committee has had on America’s health care cost crisis.

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64 Comments on "Walmart Moves Health Care Forward Again"


Guest
Oct 18, 2012

Who are “enrolled associates”?

Why do I suspect that they do not include the low-income employees who most need good health care (because they are sicker than the rest of us.)

Is Wal-Mart is self-insured (like many large corporations.) ?

If it were, then it could not legally offer one kind of health insurance for exectuives, another (lesser) type of health insurance for folks in the mail room.

When it comes to how it treats its employees, Wal-Mart will never change its stripes.

Guest
civisisus
Oct 20, 2012

Maggie,

Your remarks indicate that you don’t know enough about self-funding of health benefits to comment authoritatively. Plan designs can and do vary across employee types, fully in accord with ERISA and other statutes pertinent to self-funded group health plans, though probably less frequently than you imagine (surprise! there’s not all that much value in varying by employee class).

Guest
julieklooz
Jul 17, 2014

They do include us low income employees. I have my knee replacement set for 9/10/214

Guest
Oct 18, 2012

As I thought about it, it seemed odd to see a post headlined ‘WalMart Moves
Health Care Forward AGain”
just when WalMart employees have launched a historic, nation-wide strike, protesting low wages, brutal working conditions and lack of benefits.

In my first comment I asked: “Who are these enrolled associates”?

It turns out that, as I suspected, they are not WalMart’s lowest-paid employees.
Those employees work for WalMart through sub-contractors–a clever way for WalMart to avoid paying them a decent wage– or benefits.

First, some news on the strike:

“Walmart stores and critical parts of its distribution chain have been hit by a series of strikes in recent weeks. These strikes are remarkable for three reasons. First, the workers involved have no union protection. While their strikes are technically legal, they are taking huge risks by walking out. Second, many are not technically employed by Walmart. Rather, they work for a variety of sub-contractors that Walmart can replace at will.

” Third, despite items one and two, these workers are winning, and the strikes seem to be spreading.. .

“Walmart’s distribution centers represent the logical outcome of this approach to employment. Workers in these distribution centers spend all day handling goods destined for Walmart stores. But they are not Walmart employees, and usually the facilities themselves are not Walmart facilities.

“Rather, they are operated by contractors, and staffed by “temp” agencies, even though the operations run fairly permanently—year round, around the clock. For example, the Elwood, Illinois distribution center is operated by Schneider Logistics and staffed by Roadlink Workforce Solutions, and the Mira Loma, California distribution center is operated by NFI and staffed by Warestaff.”

In these warehouses, employees doing back-breaking work earn $9.20 an hour–doing a job that normally fetches $15.00. These employees truly need healthcare.

“Unsurprisingly, low pay and low to no benefits are the norm at these centers, as are long hours and unsafe working conditions. The web of warehouse and staffing contractors allows Walmart to evade responsibility for working conditions, while giving it the flexibility to swap out contractors if one group of workers poses a potential threat.

“In this, the new world of work in Walmart’s warehouses today bears a strong resemblance to that of a bygone era, a time before the NLRA. It resembles the “shape-up” system used on the docks in the early 20th century. Then, longshore workers would line up every morning to see who would be lucky enough to get picked to work the ships that day. Then as now, those who did get picked toiled for long hours for meager wages, with no guarantee that they would have work the next day. Similarly, dockworkers back then had little idea of who their real boss was, beyond the foreman who would or would not pick them in the morning.

“What got rid of the shape-up on the docks was workers organizing a legally questionable, incredibly risky strike, one that shut down ports up and down the West Coast, and much of the city of San Francisco for several days in July 1934. It wasn’t legal compulsion that brought the shipping magnates to the bargaining table; it was the disruptive threat to their bottom line that the workers’ risky gamble represented that did the trick.”

Today, WalMart workers across the nation are taking this huge risk– at a time when unemployment remains close to a historic high.

I’m all in favor of using centers of medical excellence to provide better care for workers– as Atul Gawande described in his most recent New Yorker piece
(Big Med).

For WalMart this is clearly good PR. .But it woudl be nice if corporations could go beyond showy PR to actually create jobs that pay a living wage plus reasonable benefits.

Guest
Peter1
Oct 18, 2012

Obviously Walmart is using it’s size to negotiate lower prices, but how will those institutions with Walmart contracts now price their services to individuals, uninsured and smaller groups to regain profit levels – more so called cost shifting?

Another aspect to this is do employees have to take Walmart’s choice of surgeons in any given institution? I wonder how the Republicans “patient centered and driven” health care fits into the corporate – use our’s or nothing trend? I bet freedom ends at the workplace door.

Guest
Oct 19, 2012

Maggi:

I honestly don’t know whether the assertions presented in your diatribe against Walmart’s employment practices are true. I haven’t researched them, nor do I think they are directly relevant – at least for the purposes of my post – to Walmart’s benefits team making efforts to introduce market forces into health care. As much as this might astound you, I was interested in the implications of Walmart’s health care maneuvers, and was unaware of the “historic, nation-wide strike, protesting low wages, brutal working conditions and lack of benefits.”

I do know, though, that quoting unnamed sources is not journalism. If Walmart is treating its employees in an egregious fashion, that’s terrible. Please do the hard work required to make the case, and then I’ll stand with you.

But I described a positive thing (in my view) that Walmart did for health care, and you responded by arguing that they’re an inhumane, awful organization, and therefore any good is really bad. Could be true. Or not. But we certainly don’t know as a result of your long-winded comment. Maybe you could add a little documented fact to your position.

An alternative would be to take what I said at face value, and to address Walmart’s employment practices separately.

don’t see them as directly relevant – at least for the purposes of my post – to the important steps that Walmart has taken on behalf of their employees (associates).

Guest
Rob
Oct 19, 2012

Brian, I guess your post is not exactly journalism either. You write that “enrolled associates” are entitled to this magnificent health care coverage. I guess if you had done the due diligence you would have researched what percentage of Walmart employees are eligible for such munificence. I guess I wasn’t born yesterday, and realize that the majority of Walmart workers are part time or simply ineligible for any or even “bare bones” health care coverage. I think you dont do very much to engender your own credibility and demonstrate a championship level of naivete if you hold Walmart up as being a paradigm of virtue when it comes to the well being of its employees. Before lashing out at others maybe you should look at the one sidedness and deficiencies inherent in your own article.

Guest
Oct 19, 2012

Rob,

I have never laid claim to being a professional journalist, While Walmart’s human resource management practices are a legitimate point of inquiry – and I provide a link in my 2nd sentence to a Wikipedia article summarizing criticism of Walmart in this area – my article had nothing to do with whether Walmart’s health coverage extended to the majority of their employees or whether they are socially progressive employer. Instead, it was about Walmart’s development of a benefits strategy that leverages market forces in a new way, encouraging better quality care at lower cost, and potentially opening the door for similar actions by employer purchasers around the country.

As readers of this blog know, I have a long record of writing and speaking about social injustice. I have never held Walmart up as “being a paradigm [I guess you were born yesterday, and meant “paragon”] of virtue when it comes to the well-being of its employees,” nor do I think that their employee benefit practices are unique. Little is black and white in the real world. As this article describes, Walmart has been been a leader in important ways that deserve attention and praise, just as their flaws and some of their practices may justify criticism.

BTW, a 2011 NY Times article – see http://www.nytimes.com/2011/10/21/business/wal-mart-cuts-some-health-care-benefits.html – reported that, in 2009, 52 percent of Walmart’s employees received coverage, up from about 44% in 2005, but the number has presumably declined again as health care costs continued to rise and they tightened their eligibility requirements.

Finally, individuals who insist that corporations should be beacons of social progress are bound to be disappointed, especially in a nation with a shameful policy history on health care coverage. In this country, businesses are dedicated to market success and making money, not social welfare. We can hardly hold them to a higher standard than the law of the land which, presumably, we’re all responsible for.

Guest
Oct 20, 2012

“Finally, individuals who insist that corporations should be beacons of social progress are bound to be disappointed”
__

Straw man.

The aggregate moral purpose of markets should properly be to advance the human condition, net (which includes not fouling the nest)– maddeningly difficult to achieve ongoing as it may be. Markets properly exist to serve humanity, not the other way around. That this requires rational regulation ought be self-evident. That such is a never-ending pain in the ass ought also be self-evident.

If you disavow that, you are disavowing our system of law. It has been a long, painful climb up out of the Tooth and Claw muck.

See Gresham’s Dynamic, for one thing. A Winners vs Losers economy will not sustain. How many times must we re-learn that lesson?

Corollary: Not all markets are equally morally consequential. Markets for cheap trinkets and crass entertainments can come and go without appreciable socioeconomic/moral impact. The “markets” in health care or other life necessities are quite another matter at core.

We continue to live through the adverse upshot of an inadequately regulated financial sector.

http://bgladd.blogspot.com/2008/12/tranche-warfare.html

Short memories are a bane. They simply re-enable the rapacious.

I, for one, will continue to insist that corporations be beacons of social progress, notwithstanding that I will be guaranteed of my numerous disappointments. Settling for a net win/win would suffice for me. Declaring “stymie” in the face of the difficulties of the requisite hard work ahead is no excuse for making excuses.

Guest
Oct 19, 2012

Brian,
Your last paragraph is exactly why corporations should have nothing to do with health care. People should not be forced to buy health care from the “company store” and corporations should certainly not be empowered to forge a new paradigm :-) of excellent health care for the usual suspects and bleak prospects for the other half (or perhaps 47%). We cannot, we should not, solve the health care puzzle for some but not others, and/or create qualitatively diverging solutions.

Guest
Oct 19, 2012

Margalit,

You get no argument from me. I don’t think anyone would accuse me of having designed or advocated for the system we currently have, and I don’t labor under the delusion that it is the best model. My interest is trying to produce the best result within the system we have been saddled with, with the knowledge that it is driven through influence by and for the special interest. In this environment, then, the question is how to mobilize employers’ enlightened self-interest in ways that serve the common interest.

My argument is that Walmart’s leveraging of its own position to encourage health care market forces is a positive step for us all. Objections based on a distaste for Walmart’s larger business model strike me as unpragmatic, indulgent and, worse, missing the point.

B

Guest
Peter1
Oct 20, 2012

“Instead, it was about Walmart’s development of a benefits strategy that leverages market forces in a new way, encouraging better quality care at lower cost, and potentially opening the door for similar actions by employer purchasers around the country.”

Brian, what do you attribute this “leverage” from – providing these health institutions higher volumes? Or, filling in surgery gaps that otherwise would go unfilled? Why does Walmart have this extra leverage over large insurance companies who are, as part of their purpose/benefit to insured, supposed to negotiate the lowest price?

Guest
civisisus
Oct 20, 2012

Peter,

Walmart couldn’t give a fig about leveraging insurers. WMT self-funds their health benefits. That is, they’re paying the bills, and (probably) simply hiring an insurer’s health paperwork-processing genies to handle their administrative processes. Every health insurer could go out of business tomorrow, and WMT’s health benefits could go on practically without a hitch.

What they are doing (as Brian has already clearly summarized for you) is evaluating data on the health and financial consequences of the employee health services they pay some or all of the bills for, and concluding that they should probably do what they can where appropriate to encourage employees to obtain services from the clinicians and institutions whose results are superior.

These determinations are not made by their accountants. If their accountants were in charge of their health benefits decisions, WMT might well decide not to offer any health benefits at all. Accounting conventions are hostile to intelligent health benefits strategy and execution.

The activities of all institutions – not merely large profitmaking institutions – impinge on their members’ behavior, and are frequently roughest on their most vulnerable people.

I’m troubled when thoughtful people insinuate that there now exists some other, presumably eternally beneficent forms of social organization that would magically resolve the tensions inherent between individuals and institutions on matters pertaining to their health, or any other issues for that matter. That sort of conviction is as deleterious for productive dialogue as the belief that Earth was formed just a few thousand years ago. Organizations formed by humans will always – always – pinch, and too frequently squash, some numbers of their constituents. We can always do better (pinching and squashing fewer people), and should strive to do that. But to proceed from an unsubstantiated belief that some forms are dependably superior to others in most if not all instances quells useful conversation about the subject at hand.

Guest
Peter1
Oct 20, 2012

civisisus, I know Walmart is self funded, I was asking what gives them supposedly greater market power than large insurers who are supposed to be negotiating for their members – or at least that’s what they try to sell?

“These determinations are not made by their accountants.”

Really! You think Walmart doesn’t consult their bottom line in these decisions?

http://www.nytimes.com/2011/10/21/business/wal-mart-cuts-some-health-care-benefits.html?pagewanted=all

I wonder how this decision was based on “superior results”?

I don’t accept Walmart’s actions at face value or from their press releases. I’ll suspend my awe until I get more information to get to the real story.

Guest
Oct 20, 2012

Brian–

You say that you are only interested in this one aspect of WalMart’s policy on health care, but even this seemingly benign policy is, in fact, designed primarily to save WalMart money. As Modern HealthCare points out WalMart is :betting” in many cases patients who think they need heart surgery, spine surgery or transplant surgery (because their doctor told them they did)
will discover once they get to Mayo that in fact, they don’t need surgery after all
“http://www.modernhealthcare.com/article/20121020/MAGAZINE/310209974#ixzz29qr9iNFa
?trk=tyn
.
Why isin’t WalMart sending patients with brain tumors to Centers of Excellence? How about patients who need neurosurgery? How about mothers
facing a difficult, potentially dangerous delivery? How about infants who need complicated operations to correct birth defects? None of them are being sent to Mayo, all expenses paid, because WalMart knows that it’s very unlikely that Mayo will tell them they don’t need the surgery.
But I’m getting ahead of myself. (For more on this aspect of WalMart’s new program, scroll down in this comment. )

First let me address your criticism of my original comment. You suggest that what I wrote was a personal “diatribe” and indicate that you didn’t have time to verify what I said about the nationwide strike.

Note the quotations marks around what I wrote;
They indicates that I was quoting newspaper sources. This was not my
personal “diatribe.”

I assumed that you were aware of the WalMar workerst strike. It has been widely reproted. (See links below.)

And the strike is not just about pay , but the whole package, including benefits.
As Daily Finance puts it: “Walmart (WMT) employees across the country are picketing their employer right now, asking to be paid living wages and to be given decent health care coverage.” http://www.dailyfinance.com/2012/10/17/walmart-strike-henry-ford-wages/
“as many as 80% of workers in Wal-Mart stores use food stamps,” according to Daily Kos. All told, according to Daily Kos, “Wal-Mart’s employees receive $2.66 billion in government help every year.” (same source)

: For years, Walmart has been accused of: underpaying employees, exposing them to horrible working conditions, and failiing to provide decent heatlhcare benefits.

On health benefits, many Wal-Mart employees cannot afford the health care benefits that WalMart offers. Last October, the New York Times reported:
“In 2009, Wal-Mart said 52 percent of its employees obtained health coverage through it, but on Thursday it declined to give the percentage.
URL http://www.nytimes.com/2011/10/21/business/wal-mart-cuts-some-health-care-benefits.html?_r=3&pagewanted=1&hp
Meanwhile, the Times reported, “is substantially rolling back coverage for part-time workers and significantly raising premiums for many full-time staff.. . .

“In Wal-Mart’s 2012 health offerings, premiums will increase for some plans by more than 40 percent, although many of their workers pay relatively low premiums in comparison to more generous plans offered by other employers. But many Wal-Mart employees complain that their low premiums are accompanied by high deductibles that sometimes exceed 20 percent of their annual pay.” (*NYT story)
Barbara Collins, a sales associate at the Wal-Mart in Placerville, Calif., said he big concern, she said, was that her deductible would jump to $5,000 a year, from $1,000 — a daunting amount considering she earns $19,000 a year.” (NYT story)
“About 42 percent of large employers offer benefits to part-time employers, according to the 2011 survey by the Kaiser Family Foundation, which tracks changes in benefits” But as of October 2011:
“Wal-Mart, the nation’s largest private employer, told its employees this week that all future part-time employees who work less than 24 hours a week on average will no longer qualify for any of the company’s health insurance plans.
In addition, any new employees who average 24 hours to 33 hours a week will no longer be able to include a spouse as part of their health care plan. (NYT)
http://www.nytimes.com/2011/10/21/business/wal-mart-cuts-some-health-care-benefits.html?_r=4&pagewanted=1&hp&

Given WalMart’s profits, it is not at all clear why it can’t do what 42% of large corporations do. . .
“WalMart Moves Health Care Forward Again” doesn’t seem to fit the WalMart the Times is describing.

On the strike– Brian,I am sorry that I didn’t provide links to all of the evidence in my comment .
Here is the documentation you were looking for:
— New York Times ” Protests against Wal-Mart expanded on Tuesday, spreading to 28 stores in 12 states . . . Colby Harris, who earns $8.90 an hour after three years at a Walmart in Lancaster, Tex., said, “We’re protesting because we want better working conditions and better wages and because we want them to stop retaliating against associates who exercise their right to talk about what’s going on in their stores.”
http://www.nytimes.com/2012/10/10/business/organizers-say-wal-mart-labor-protests-spread.html?_r=1&

— ABC News: http://abcnews.go.com/blogs/business/2012/10/ca-walmart-employees-strike-to-protest-treatment-working-conditions/
Another ABC News story “Wal-Mart Workers Threaten to Walk Off the Job ON Black Friday” (day after Thanksgiving, biggest shopping day of the year) http://www.abc57.com/video/Wal-Mart-employees-threatening-to-walk-off-the-job-on-Black-Friday-173944621.html

–Forbes (The first-ever strike by Walmart workers took place October 9, as workers in 12 cities walked off their jobs”) http://www.forbes.com/sites/lauraheller/2012/10/12/walmart-workers-threaten-black-friday-walkout/
–CNBC WalMart Workers Strike http://www.cnbc.com/id/49302978

–Huffington Post “Workers Threaten To ‘Take Action’ On Retailer’s Busiest Day’ (Black Friday, the day after Thanksgiving )
http://www.huffingtonpost.com/2012/10/10/walmart-workers-black-friday-strike_n_1954782.html?utm_hp_ref=business”’
–The Nation “Walmart workers Walk Out” http://www.thenation.com/article/170653/walmart-workers-walk-out#
“In October, for the first time in Walmart’s five-decade history, workers walked out of stores in Dallas, Miami, Washington, greater Los Angeles and elsewhere.
Also Hundreds of people gathered at a major Walmart distribution center Monday in Elwood, Illinois, to stand in solidarity with workers who have been on strike since mid-September in response to unsafe working conditions and unfair wages.

“No one should come to work and endure extreme temperatures, inhale dust and chemical residue, and lift thousands of boxes weighing up to 250 lbs with no support. Workers never know how long the work day will be—sometimes its two hours, sometimes its 16 hours. Injuries are common, as is discrimination against women and illegal retaliation against workers who speak up for better treatment,” Warehouse Workers for Justice states on its official website.” http://www.thenation.com/blog/170274/riot-police-arrest-peaceful-protesters-rally-striking-walmart-workers

Brian, I don’t know how you could have been unaware of the strike.

Also,one wonders why is WalMart sending patients to Centers of Excellence for heart surgery, spine surgery and transplants, but not for brain surgery if they have a brain tumor, or a masectomy if they have breast cancer?

According to Modern HealthCare, WalMart offering free surgery to some wokerrs because it is ” betting that some workers who qualify to travel at the company’s expense for heart and spine surgery may not need it after all. “http://www.modernhealthcare.com/article/20121020/MAGAZINE/310209974#ixzz29qr9iNFa
?trk=tyn
We know that about half of all angioplastiesare not effective and .
“”A January Archives of Internal Medicine review reported multiple studies that found overuse of coronary artery bypass surgery, a procedure included in the Wal-Mart program”– Modern Healthcare) In addition, spine surgeries for lower back pain also often do no good–and may do harm.
Finally, WalMart sends patients who need transplants to Mayo , where again, they may be told they don’t need the procedure. Modern Healthcare explains:
“Surgeons at the Mayo Clinic find that some patients can avoid or delay transplants, which can be less invasive and less expensive, said Dr. Charles Rosen, a transplant surgeon and chair of the division of transplant surgery for the Mayo Clinic. Rosen is also Mayo’s associate medical director for contracting and payer relations.”

So no doubt, Modern HealthCare is right, many of these patients will be sent home. I once talked to a former insurance executive who told me that his company also sent wokers to top medical centers around the country, including Mayo, at the insurers’ expense where they knew the patient would be told that he didn’t need the operation. Paying their travel expenses was cheaper than letting them go through with the operation at a local hospital.

We all agree that eliminating unnecessary surgeries is a good thing. But if WalMart is interested in promoting more efficient medicine– higher quality at a lower cost– why not send them to Centers of Excellence for neurosurgery–also “complex and high cost”? The answer is that it is much less likely that the patient will be told that he doesn’t ‘t need the operation. So for WalMart the savings would not be as great.

This is all about getting a “second opinion at the selected hospitals that may rule out the need for surgery, officials said.
http://www.modernhealthcare.com/article/20121020/MAGAZINE/310209974#ixzz29oYwJCWd
?trk=tynt

Finally, Peter 1 asks a very good question: If an employee wants to have his heart surgery at a local hospital will WalMart pay for it? Or is he forced to go to
one of the large medical centers of excellence who have made an argreement with WalMart to offer second opinions, and weed out surgeries they think
are unnecessary. (No doubt many are, but there are also many grey areas–particuarly when it comes to transplants.)

Guest
Oct 20, 2012

Civisius:

You write:
“Your remarks indicate that you don’t know enough about self-funding of health benefits to comment authoritatively.”
Evidence? Or is this just an attempt to undermine my credibility?

Just the other day I discussed the rules about health insurance with Professort Timothy Jost, a highly regarded law professor who specializes in health care law and constitutional law. (See his regular columns on HealthAffairs.com)

He confimed what I already knew: when a corporation self-insures, it cannot
offer better (richer) health benefits to executives than it offers to the rest of its employees. If memory serves, this law was passed in the 1990s. I was at Dow Jones at the time. They self-insured. They were no longer able to offer
special health benefits to execs.

Guest
Oct 20, 2012

Peter 1-

You raise some very good questions.
I plan to write a post about WalMart’s iniiative on HealthBeatblog.com (www.healthbeatblog.com) and will pursue some of them. .

I think you would find the Modern HealthCare article that I cite in my reply to Brian interesting. (At the moment that comment is still awaiting moderation. I wrote it earlier today.)

It suggests that WalMart is focusing on these particular procedures (heart surgery, spine surgery and transplants) because it knows that in many cases,
the large medical center will tell the patient he doesn’t reallly need the surgery.
Paying for his plane ticket and hotel is much less expensive than paying for the surgery at a local hospital.

Meanwhile Mayo, et. al. are paid for rendering a second opinion– and they get good publicity as “Centers of Excellence” in all of the newspaper stories about Wal-Mart’s new intiative. (Also very good PR for WalMart, especially given its labor problems.)

The Centers of Excellence understand that WalMart is sending this employees for a second opinoin, and that it hopes that the hosptails will tell the employees “Your doctor was mistaken. You don’t need this operation.It won’t help you-“-or “the risks outweigh the potential benefits.”

Often, this is no doubt true. But, especially in the case of organ transplants, there arer many grey areas. Because they are being paid by WalMart do these Centers of Excellence tend to lean toward giving the opinoin WalMart wants to hear? I hope not. Very, very few doctors would knowingly do that. But in these grey areas of medicine, decisions are very difficult.

If I was one of these employees, and had been told an organ transplant could save my life, I would be inclined to want a thrid opinion from a medical center that is not being paid by WalMart.

Guest
Oct 20, 2012

Peter 1,

I believe that if you talked to Walmart’s benefits team, you would find that they want their patients to receive better care and less overtreatment at lower cost than they’re likely to get at a community hospital. Walmart didn’t get to be who they are by being shrinking violets. Health benefits are a major expense for them as they are for every firm, and so they have mounted an aggressive effort to orchestrate better value.

I don’t subscribe to the idea that most insurance companies want health care to cost less. Fully insured plans make a percentage of total cost, and so have every incentive for health care to cost more. You can see this in practices like continuing to pay primary care physicians less and less for office visits, which increases the incentive to refer any patient presenting with complexity. My firm routinely buys products/services – e.g., generic drugs advanced images, dialysis, pain management, physical therapy – at a fraction of what my clients pay through the health plan, which wouldn’t be possible if the health plans were aggressively managing cost.

Maggie’s assertion that the Centers of Excellence that are paid by Walmart may be willing to spin diagnoses and treatment away from appropriateness and toward reduced cost not only borders on preposterous, but it is impractical. Organizations like Cleveland and Mayo are not about to take on unnecessary liability and risk their reputations for Walmart’s business, and the Walmart benefits team members that I’ve known are ethical, top flight professionals. My experience in this arena is that things are as they appear to be, and not the basis for conspiracy theories.

Guest
Peter1
Oct 20, 2012

“I don’t subscribe to the idea that most insurance companies want health care to cost less.”

Certainly history and our present position tells us that, but “death panels” doesn’t push the conversation forward either, even though it could be used in the Walmart situation where a third party is trying to add an element of sanity.

Maggie, I might believe that Walmart would want a die-sooner opinion, but it’s a long stretch for me to believe that these institutions would play that game, and risk sure exposure – on this I’m with Brian.

Guest
Oct 20, 2012

BobbyG,

You have presented an optimistic perspective, not a truth. While I wish that it were true, the discipline of lobbying, in which public policy is shaped to benefit special interests at the expense of the common interest, is an institutional betrayal of your point of view. Jared Diamond’s Collapse is a particularly poignant explication of this problem.

Guest
Oct 20, 2012

It’s a moral assertion based on logic. What is “truth” if not that? Should we just give up on all “oughts” in deference to what “is”?

Is it the case that there are no “self-evident” truths? That the Founders got that one wrong?

That we should simply accept the rule of the ethos of asymmetric power relations.

Not that I disagree with your points about the way things work.

Yeah, “Collapse.” Read that long ago. See also “Debt: the first 5,000 years,” and “This Time is Different,” to cite just two more.

http://BoilTheFrogsSlowly.blogspot.com

Guest
Oct 20, 2012

CODA:

“You have presented an optimistic perspective, not a truth.”

You’ve mistaken me for one of those “libertarians.” Y’know, e.g.,

http://www.youtube.com/watch?v=gR-w9LLpieM

Guest
Oct 20, 2012

Brian,
Are you certain that your following statement is correct?

“My argument is that Walmart’s leveraging of its own position to encourage health care market forces is a positive step for us all.”

Are those market forces really a good thing for us? So let’s say I’m one of the few fortunate “associates” that are covered by this Walmart initiative, and let’s say I live in St. Louis and let’s say I have heart disease and my cardiologist of many years, who practices at the local center of excellence (quite excellent by all national measures), says that we are at a point where surgery is needed. Now I’d have to go to rural Springfield to get my surgery from a bunch of strangers? Being a Walmart “associate” chances are I can’t afford the copay (which will probably experience a sudden growth spurt in the near future), so there goes all my “empowerment/engagement/centeredness/continuity/choice” you name it, down the drain.
Is this really and truly a good solution? Or does it just look like a good solution, with unintended consequences to be considered later? And I can think of a handful of those right now, and I’m sure you can too.

Guest
Oct 20, 2012

Margalit,

You laid out a narrowly defined scenario that is, in general, more unlikely than likely. What are the odds that the local interventional cardiologist is likely to be a far better surgeon than is available at Mayo or Cleveland, and that is on the plan. But if that’s the case, as you say, the patient can still access him/her by paying the co-pay, though I agree that this is an onerous option financially for most Walmart employees.

Health plan benefits, like laws, are developed as policy rather than for anecdotal circumstances. We can always concoct hypothetical situations in which the patient would be better served by local physicians. But the fact remains that COE organizations like Mayo, Geisinger and Scott & White have stellar reputations for quality and lower cost. Having institutions like this as your default is hardly a hardship.

Walmart has made a calculated decision here that if it steers patients in this direction, they will get generally excellent care and the overall costs will be less. In a system where employers DO, like it or not, call the shots on health care options, this seems like a pretty good one to me.

And it suddenly creates serious incentives for health systems around the country to wake up, reconsider their egregious unit pricing and generally spotty quality efforts, and know that health care has become a market in which they have to compete or fail.

To my mind, this is why the Walmart maneuver is important.

Hope this helps.

That said,