Can Wal-Mart provide us with health care as efficiently as it furnishes us with paper towels?
According to a Kaiser Health News report:
Wal-Mart — the nation’s largest retailer and biggest private employer — now wants to dominate a growing part of the health care market, offering a range of medical services from basic prevention to management of chronic conditions like diabetes and heart disease, according to a document obtained by NPR and Kaiser Health News.
But then the next day, according to Kaiser, the company started backtracking:
The only thing the company would say for certain is: “we are not building a national, integrated, low-cost primary care health care platform,” according to the statement from to John Agwunobi, senior vice president and president of Wal-Mart U.S. Health & Wellness.
I’ll get to what Wal-Mart might be thinking in a minute. First questions first: Can Wal-Mart provide care that is of higher quality and lower cost than conventional provision? If so, how?
My answer: Wal-Mart can indeed improve on the current system. But here’s the catch. It can do so only if it continues doing what it and other retail medical outlets are already doing: ignore the third-party payers. Almost everything that’s wrong with our health care system is the direct result of third-party payment; and some of the most striking examples of efficient care are emerging in those parts of the market where third-party payment is either nonexistent or of marginal importance.
So as not to be misunderstood, I am not saying that our problems are being created by health insurance. There is nothing in principle wrong with insurance. The source of our problems is using insurance companies to pay medical bills. It’s insurance companies acting pro emptore — in place of the buyer.
Life insurance, for example, plays a useful social function. But we don’t use life insurance to pay for coffins, caskets and funeral services. There is a lot wrong with the funeral industry. But none of it is caused by life insurance. As I previously wrote in response to a comment by Uwe Reinhardt:
I have life insurance. But when I die, the insurer is not going to pay for my autopsy, my cremation, the urn that will hold my ashes, or the cost of the plane needed to sprinkle my ashes over the Princeton University football field (or some other suitable place). Instead, my wife will get a check.
When insurers become buyers of care instead of insurers of care a number of things begin to change, all of them bad:
- The provider becomes the agent of the third-party payer, rather than the agent of the patient — even shaping the practice of medicine to the third-party’s view of how it should be practiced.
- The provider no longer competes for patients based on price.
- Absent price competition, the provider no longer competes for patients based on quality.
- Overall, the provider’s incentive is to maximize against reimbursement formulas rather than provide low-cost, high-quality care.
Most people (even most health policy experts) have no idea the extent to which third-party payment makes efficient provision of medical care impossible. Here is an excerpt from one of my previous posts:
Misa and his team thought they had the solution: a “concept clinic” that uses doctors for only the most complex cases, and steers most patients to nurse practitioners and physician assistants… Then they did the calculations: What if Park Nicollet had used this model in 2009, when it had about a million total patient visits to primary care; and if everyone had paid Medicare rates?
They discovered that the concept clinic would have run at a 40 percent loss; about the same as the current model… The problem, in part, is that Medicare payments also drop under this kind of model; it pays less for visits with nurse practitioners than doctors. That ate up any savings.
The perverse incentives work both ways. They not only discourage conventional sources of care from becoming efficient, they discourage efficient care givers from accepting patients who rely on third parties to pay their medical bills. As Tom Saving and I wrote in The Wall Street Journal earlier this year, most walk-in clinics won’t accept Medicare enrollees and almost none accept Medicaid enrollees because of their low payment rates. (Yet if Medicare and Medicaid would pay the market price — or allow the patient to pay a “balanced bill” to reach the market price — care would be more accessible for the elderly, the poor and the disabled and the government would save a lot of money in the process!)
Fortunately (at least for efficiency’s sake) a lot of people are paying for a lot of care out of their own pockets or out of medical savings accounts of one sort or another. As a result, there are about 1,300 walk-in clinics nationwide (see the graph below via Sarah Kliff at Ezra Klein’s blog). These include about 140 Wal-Mart clinics, CVS Caremark’s nearly 550 Minute Clinics and Walgreen’s 355 Take Care clinics. All of these clinics post prices; they keep records electronically; most can prescribe electronically; and, according to one study, they provide more reliable care than conventional primary care physician’s offices. [See our previous reports here, here and here.]
So what is Wal-Mart up to? I previously reported that a lot has been going on at Sam’s Club — generally below the health media radar screen. For example, in June they offered the following screenings to male customers at no charge:
- BMI Index measurements,
- Blood pressure tests,
- Cholesterol readings,
- PSA (prostate cancer) tests, and
- TSH (thyroid stimulating hormone) tests.
And, here’s the schedule they have been following since then:
- July: Kids Health Screenings
- August: Vision Health Screenings
- September: Diabetes Screenings
- October: Women’s Health Screenings
- November: Digestive Health Screenings
Wal-Mart is clearly testing the waters.
John C. Goodman, PhD, is president and CEO of the National Center for Policy Analysis. He is also the Kellye Wright Fellow in health care. His Health Policy Blog is considered among the top conservative health care blogs where health care problems are discussed by top health policy experts from all sides of the political spectrum.
Categories: Uncategorized
Wal-Mart Stores, Inc., doing business as Walmart, is an American multinational retailing corporation that operates also by team members of Dissertation bliss review as a chain of hypermarkets, discount department stores, and grocery stores.
Walmart provide international standard facility so many people apply for Walmart positions does not mean that endorses Walmart, its means there are more people apply jobs and many of those applications are probably from previous industry employees that Walmart due to out of country buying and so many from local retailers walmart mission statement it’s very clear there is no problem everyone all of big manufacturing company interest to contract Walmart.
@Peter1, In some cases reasoning with someone is like peeing in the ocean. Afterward you feel relieved but the ocean is not really affected.
Pardon my typos, phone upload. Thanks
As provocative and argumentative as always Mr. Ogden, however, I would suspect that the reason so many people sought jobs at Walmart was the necessity of putting food on the table.
It was not so long ago, Mr. Ogden, that Walmart employees were paid so poorly they qualified for Medicaid. It was that the liberal Hillary Clinton among their board of directors, and finally influenced them to offer health insurance. And still, that health insurance was negligable. They were the subject of a facinating documentary shown on a cable station regarding their hiring practices, and are facing round two of a class action lawsuit by female employees due to discriminatory promotion practices. And no, Mr. Ogden, my primary knowledge did not come primararily from “liberal Media”.
Nate, looks like my post is “awaiting moderation” To save you the anticipation read below:
“The Effects of Wal-Mart on Local Labor Markets – – by David Neumark (University of California-Irvine), Junfu Zhang (Clark University), and Stephen Ciccarella (Cornell University), IZA Discussion Paper No. 2545, Jan. 2007
This study presents the most sophisticated analysis to date of Wal-Mart’s impact on retail employment and wages. Analyzing national data, the study found that the opening of a Wal-Mart store reduces county-level retail employment by 150 jobs. Because Wal-Mart stores employ an average of 360 workers, this suggests that for every new retail job created by Wal-Mart, 1.4 jobs are lost as existing businesses downsize or close. The study also found that the arrival of a Wal-Mart store reduces total county-wide retail payroll by an average of about $1.2 million. This study improves substantially on previous studies by convincingly accounting for the endogeneity of the location and timing of Wal-Mart’s entry into a particular local market. That is, Wal-Mart presumably does not locate stores randomly. When expanding into a particular region, it may, for example, opt to build in towns experiencing greater job growth. Unless this location selection bias is accounted for, one might compare job growth in towns that gained Wal-Mart stores versus those that did not and erroneously conclude that Wal-Mart caused an expansion in employment. The authors of this study have devised a persuasive method of accounting for this bias. They also argue that the method developed by Basker (see next item below) to account for this bias is flawed and therefore her conclusion that Wal-Mart has a small positive impact on retail employment is not reliable.
and this:
Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion – By Emek Basker, University of Missouri, Review of Economics & Statistics, February 2005
Often cited and typically misrepresented by Wal-Mart supporters, this study examines the impact of the arrival of a Wal-Mart store on retail and wholesale employment. It looks at 1,749 counties that added a Wal-Mart between 1977 and 1998. It finds that Wal-Mart’s arrival boosts retail employment by 100 jobs in the first year—far less than the 200-400 jobs the company says its stores create, because its arrival causes existing retailers to downsize and lay-off employees. Over the next four years, there is a loss of 40-60 additional retail jobs as more competing retailers downsize and close. The study also finds that Wal-Mart’s arrival leads to a decline of approximately 20 local wholesale jobs in the first five years, and an additional 10 wholesale jobs over the long run (six or more years after Wal-Mart’s arrival). (Wal-Mart handles its own distribution and does not rely on wholesalers). This works out to a net gain of just 10-30 retail and wholesale jobs, and the study does not examine whether these jobs are part-time or whether they pay more or less than the jobs eliminated by Wal-Mart. The study also found that, within five years of Wal- Mart’s arrival, the counties had lost an average of four small retail businesses, one midsized store, and one large store. It does not estimate declines in revenue to retailers that survive. Basker looked at the effect of Wal-Mart on retail employment in neighboring communities, but found that the confidence intervals were too large (meaning the results showed wide variation) to draw any conclusion about Wal-Mart’s impact. (Her initial working paper, published in 2002, reported an average decline of 30 retail jobs in surrounding communities, but, after correcting an error, she determined the confidence intervals were too large to produce a precise result.)
“most of Wal Marts sales come from domestic goods, largest of which is groceries”
I guess you think AG jobs pay the same as manufacturing jobs. You speak as if there was no distribution for food products before Walmart. I wonder if Walmart supports using illegal immigrates in the AG business, their biggest employer?
“After that Wal Mart sells the same clothes and electronics everyone else does.”
That’s the competitive race to the bottom that Walmart creates, forcing everyone else to buy overseas.
It’s odd you support offshore sourcing now because in the past you’ve argued how many jobs are created by buying local. Maybe that’s just healthcare?
You’re also not reading my link. I read yours.
http://www.newrules.org/neumarkstudy.pdf
http://www.missouri.edu/~baskere/papers/
“manufacturing employees that Walmart put out of business due to overseas buying”
Its time to update your dogma, most of Wal Marts sales come from domestic goods, largest of which is groceries. After that Wal Mart sells the same clothes and electronics everyone else does.
“many from local retailers who realize they’ll be out of work soon.”
Again retailers around Wal Mart see an increase in sales so Wal Mart not only creates direct jobs but increases employement around them. If you read the study, I know you have problems stomaching any non liberal propoganda but tough it out, to control for the study they measured where workers come from and most are very local due to income and transportation issues. The shoppers though come from considerable distance to shop at a Wal Mart. So there is a decrease in jobs 20 miles away but those workers are not applying at Wal Mart.
As with anything there is a trade off. It’s not as if Walmart (or any other big box) creates something from nothing. A lot of what it “creates” actually robs from other retailers and sectors in the community and does not really add net benefits.
http://www.newrules.org/retail/key-studies-walmart-and-bigbox-retail
Just because 25,000 people apply for 325 Walmart positions does not mean that endorses Walmart, it just means there are more people than jobs. Many of those applications are probably from former manufacturing employees that Walmart put out of business due to overseas buying and many from local retailers who realize they’ll be out of work soon.
Comment from your link Nate pretty much sums up the mentality of commenter.
“Arguably, Wal-Mart is actually overpaying for these jobs, likely because of minimum wage laws and other governmental regulations.”
I don’t think James Joyner ever worked for income that did not come from taxpayers.
” I don’t care for Walmart myself, I don’t think they treat their own employees well and I think a companies worth really lies in how well they treat their own”
Is that based on what you read in the liberal media or actually talking to Wal Mart employees? If they were so terrible why do so many peopel want to work there so badly?
“The new Wal-Mart Stores Inc. location opening Friday in suburban Evergreen Park received a record 25,000 applications for 325 positions”
http://www.outsidethebeltway.com/wal-mart_gets_25000_applications_for_350_jobs/
Wal Mart is improving the lives of people that were unemployed or had jobs worse then what Wal Mart provides.
Wal mart improves unemployement and income for minorities and provides the start to moving up in life, remove Wal Mart these people would not have opportunities.
http://web.bsu.edu/cob/econ/research/papers/keil2006rrs.pdf
For every ill Wal Mart has commited their are Unions that have done 10 times worse, yet thos same Unions are given a free pass to attack Wal Mart.
For example when the Unions hired people to picket Wal Mart in Las Vegas they were paid minium wage and given no benefit or the opportunity to buy benefits, far less then what they would have earned had they been working for Wal Mart instead of pickiting them. Further the Unions provided no water or food or facilities. Wal Mart provided those picketing them all of that.
I, for one, find it humorous that while Walmart is considering entering the field of consumer clinics, this appears to be causing some a bit of, shall I say, heartburn? I don’t care for Walmart myself, I don’t think they treat their own employees well and I think a companies worth really lies in how well they treat their own; but really, the conservatives should be doing cartwheels here. Their agenda’s are being met. A private entity is taking over health care. Or at least some part of it. Whoopee!
One thing I will say on Walmart’s behalf though, and this speaks to the power of its considerable marketing power, it is ability to offer such low cost generic medications, where none of the other chain pharmacies will. If I had more space to complain, I could tell you a story or two about what I have been going through for a month now between Caremark and CVS over my mothers medications.
“But US private insurance needs so much for marketing, wages, sales commissions and corporate profits”
over 50% of group insured Americans are covered by self funded plans which have no marketing and corporate profits.
If government would stop discourging self funding the problem would be solved.
Large expenses are easy to insure, they are very predicatable in large populations.
Its not insurance that is the problem its the type of insurance. A scheduled benefit plan would not have the same problems as a reimbursement policy when it comes to inflation. Dental is a good example, a scheduled dental plan has no inflation unless the plan sponsor increases the per procedure reimbursement. This puts pressure on dentist to not increase their fees.
If health insurance returned to scheduled benefits inflation would be killed. Your academic hospitals could never justify their charges. With reimbursement directly from the carrier eliminagted they couldn’t blame the insurance carrier for not paying enough.
When we underwrite insurance for groups covering individuals with pre-existing conditions we know what those conditions are going to cost and usually end up pretty close. If we could sell a policy that paid that amount and put the onus on the member to not exceed it we could go 5 years without ever increasing the benefit.
When my daughter got a bad ear infection at the beach this summer, the best option was a retail clinic at one of the chain stores. It was a $100 flat fee, which wasn’t more than a doctor’s visit to someone we didn’t know. We couldn’t find a doctor who could take her right away and there was only one ER nearby and it was packed. The nurse practitioner spent time with us and was very thorough. She even called back to check on my daughter the next day. I was impressed.
If you get caught in another market like that and need healthcare pricing information, you can also check out http://www.healthcarebluebook.com, our free consumer web site. At least then you’ll know what you should be paying, even if you choose another option.
Steve, I have no illusions about the need for private insurance.
We already have social insurance in the form of Medicare, Medicaid and Social Security and those programs, though under a strain (like old bridges and other infrastructure) continue to work. The VA is another illustration of social insurance but thanks to the military nature of the program they make no apology for means service-connected testing for eligibility.
Despite the misinformation machines spewing panic in America about “socialism” and “government-controlled health care” private insurance in various forms is universal in most of the developed world as an adjunct to their respective tax-supported medical care. (I am not informed about the details but I think Canada might be the exception, but I have read remarks elsewhere from people from Britain who have never darkened the door of a NHS provider, having always obtained care from private sources.)
But US private insurance needs so much for marketing, wages, sales commissions and corporate profits (mutual and non-profits being the exceptions) that one part of PPACA is the little-discussed but much argued about “cost-benefit ratio” which mandated (there’s that hated word again in another context) that 85& of all premiums must be used for actual medical care, leaving only fifteen cents on the dollar for marketing and all other administrative expenses. (The percentage is not the same for non-profits, I believe.) I don’t know if Medicare or Medicaid payments will be considered premiums or actual care. From where I stand they look like both since even though Medicare Part A costs are supposedly collected through payroll taxes, those of us on Medicare also contribute to Part B in addition to whatever other expenses are incurred.
Every time I see another TV ad for insurance or the latest of designer medicine I can only think of the expense of air time and production costs, every dime of which must eventually be collected from somebody’s medical bill. Unless there is another revenue stream other than that that coming from bills provider billing there is no other source for the money burned up by those advertisements.
So I would not design a system without insurance. But I would absolutely put a limit on how much advertising they can deduct as a business expense on their books. And in the case of pharmaceuticals I would go back to the days when direct to consumer advertising was a social taboo as smoking in hospitals is today.
Just a few more musings from an old guy in retirement.
(I have more to add to a comment below but I have to get ready now for an assignment. Later…)
No doubt total health care costs would be contained rather quickly if we did away with Medicare/Medicaid, or “allow the patient to pay a “balanced bill” to reach the market price” (allow?) and did away with private insurance too. As John Goodman points out correctly, the issue of access to care will also be largely resolved: “care would be more accessible for the elderly, the poor and the disabled and the government would save a lot of money in the process!”
If we also stop using doctors, and go back to apprentices and I presume allegiance to Apollo, health care total costs should hit rock bottom in no time.
And this system has been proven to reduce costs in many countries without insurance and doctors.
Speaking of Walmart, why of all things did they choose to offer PSA tests?
Maybe it is time for major changes to the medical education system?
Is there some mental and/or bureaucratic construct that keeps us stuck? Like the Johari Window, is there a blind spot in our thinking that keeps us stuck?
What if we went back to an apprentice system (albeit modified). Open the doors of medical school up to many more students. With vast improvements to simulation technology there should be no reason we could not train a lot of students intensely over a shorter period of time all as primary care providers for much less money. These providers graduate to work for 60-80K under the mentorship of a group of five highly trained and experienced Primary Care Providers/Mentors. The group of physician/mentors would split their week. A third of the week sitting in a room discussing cases and help with these provider graduates (who are seeing the majority of the patients), a third of the week seeing more complex patients themselves and a third of the week engaged in research or overseeing research. The provider graduates would take rotating first call at night and on weekends with mentors providing rotating back up call. Additionally, if 5 physician/mentors were used then each physician/mentor (or Attending) could take an entire week off quarterly in addition to a full month off yearly. I think this would raise moral amongst Primary Care Physician’s tremendously. The variety (teaching/practicing/research) would keep them fresh and extend their total years of service.
Honestly are Residents getting the attention they need now from Attendings who are pressed on every side to bring in research dollars and wear several hats? My experience is that even the current residents are not always getting what they need. Even seasoned surgeons have felt the need for continued coaching and mentoring as covered in the recent NPR story http://www.npr.org/2011/09/27/140849085/pro-athletes-have-coaches-why-not-everyone-else?sc=ipad&f=1008
This was a concept championed by the late Eugene A. Stead, Jr. MD who served as the Chairman of Medicine at Duke University from 1947-1967 and prior to that Chairman of Medicine at Emory. His residency was at Peter Bent Brigham Hospital. His vision was to free up the physician researcher to make the discoveries that would bring about lasting positive change in medicine instead of them simply serving full-time on the wards, non-stop. He helped to form the famed North Carolina State University, Duke University, University of North Carolina at Chapel Hill research triangle with this concept. Many consider him to be a brilliant educator with several students going on to Chairmanships as well. See “A Doctor’s Doctor” by John Laslo, MD & Franicis A. Neelon, MD or see “A Way of Thinking: A Primer on the Art of Being a Doctor by Eugene Stead, Jr. MD & Barton f. Haynes, MD.
These Primary Care Graduates would go on to advance through a series of accomplishments including testing and application after 2-4 years of service in Primary Care. They would apply to competitive residency/apprenticeships in the medical specialties or they could advance to be physician/mentors.
This would place the majority of providers in Primary Care.
This poor Georgia boy had a vision for health care. He was not an ignorant or unprincipled man wanting to make money for HMO’s and Insurance Companies. He had a larger vision. Sadly, most do not even now what his vision was.
If you can’t tell I am a mid-level provider and I actually feel that the medical school system should become THE institution to educate all who diagnosis and prescribe. If the physicians don’t lead then others will and this is currently happening, see the New York Times article titled, “When the Nurse want to be called Doctor”.
We are waiting for you to lead. Now is the time for creativity.
Devise a health care system without insurance. The expenses are so large, I dont see how you can do it. Also, people do not respond predictably to incentives when it comes to health care. For example, the recent Health Affairs paper that showed dropping co-pays does not increase consumption of primary care services.
To be clear, I think insurance is a problem, but it is largely unavoidable. Please note that John Goodman, the author of this piece, has health insurance.
Steve
For most people with coverage a health insurance policy is like the entrance charge to an all-you-can-eat buffet. And when the employer picks up half the tab it’s better than “…and kids eat free.”
Health care costs have increased consistently faster than GDP since about 1930. Insurance may be a factor, but it is likely only one causing our costs to rise so quickly.
Steve
October 2007:
“It is thus tempting to believe that the moment for reform has finally arrived and that we stand on the verge of historic change. Yet before reform advocates get too exuberant, they would do well to remember what happened the last time health care reform topped the national agenda. In the early 1990s, reformers also believed that the conditions were ripe for change1; then, as now, soaring health care costs and growth of the uninsured population fueled public dissatisfaction (see tableComparison of Key Factors Affecting the Demand for Health Care Reform, Early 1990s and Today.). When President Bill Clinton took office in 1993 with Democratic majorities in the Senate and House of Representatives, the country appeared inexorably headed toward health care reform. But just a year after its introduction in September 1993, the Clinton Health Security Act (see boxKey Provisions of the 1993 Clinton Health Security Act.) was dead in Congress. What happened to the Clinton plan, and what lessons can today’s reformers learn from its failure?
http://www.nejm.org/doi/full/10.1056/NEJMp078201
Never underestimate the power of momentum.
I knew it wouldn’t last. This is where Dr. Goodman and I part ways. Your question, Jonathan, is the right one to ask. My point in agreeing with that part of his post was that health care and insurance have different missions.
Health care is about medicine and healing.
Insurance is about risk management.
Although they are related (or in the case of the US, bound together in a dysfunctional relationship) neither of these two groups has any real need to reduce costs because whatever costs are incurred are the responsibility of someone else.
In the case of insurance, “costs” originate with whatever providers are in the game, and those amounts are simply managed (not controlled) by actuaries and accountants.
Providers, on the other hand, intuitively know that their clients (patients and their families) may pay some small fraction of the bill, but the big bucks come from elsewhere — insurance, Medicare or Medicaid. Nowhere in that system is there any compelling need to reduce costs in any meaningful way.
“Third party” can mean anything from mutual insurance plans to national single-payer systems and a constellation of group insurance, workers comp and hybrid arrangements in between. A small segment of patients using HSAs or MSAs have a better grasp of costs than most health care beneficiaries, but their number is too small (and their socioeconomic status too high) .to have any serious impact on costs universally.
As long as healthcare is regarded as a commodity I don’t expect the current system to change much. Reliable health care should be universally available and as reliable as safe drinking water and safely engineered buildings and highways. (Unfortunately it remains frozen in the same place that dental care has always been — if you can afford it, you have crowns, root canal work and even cosmetic improvements. Otherwise you endure the pain of sequential toothaches until eventually they get pulled or fall out. And if you can afford it, dentures can be a great blessing.The dental equivalent of medical care, as Congressman Grayson said, is “Get sick and die.”)
I read somewhere that fifty cents of every healthcare dollar comes from “the government.” Unless and until more people wake up to the reality that when they incur higher costs as patients the result is higher costs for them as taxpayers. The system now in place is more akin to a lottery or an all-you-can-eat buffet. Once in the door, those who access the system are more interested in what they can get than what they paid to get in.
Stated differently , unless and until patients and their families get some real “skin in the game” healthcare costs will continue their upward march.
~~~~>Take it away, Doctor Goodman…
So, John and John, if third party payers are necessarily so bad for efficiency/cost in health care, why do the third party payers in the rest of the world keep expenditures half as high as those in the US, with universal coverage and access issues in general that are about the same? Why did health care expenditures outpace inflation and GDP growth by an even higher rate before managed care than after it took hold in the early 90s?
You seem to forget that health care cost growth was out of control in the indemnity days. That was the main reason employers turned to managed care, which for all its faults had lower costs than indemnity insurance. If those costs hadn’t been out of control, managed care would have remained a small niche in the health care landscape.
…ignore the third-party payers. Almost everything that’s wrong with our health care system is the direct result of third-party payment; and some of the most striking examples of efficient care are emerging in those parts of the market where third-party payment is either nonexistent or of marginal importance.
[and]
When insurers become buyers of care instead of insurers of care a number of things begin to change, all of them bad:
Dr. Goodman, I have often disagreed with arguments you have advanced, but this is truly insightful and should be put up in lights. Thanks for this. It’s a step in the right direction, separating medical care from risk management, two entirely different disciplines that should never have got so badly entangled.
Retailers understand costs far better than physicians or actuaries.