How WalMart Is Disrupting Healthcare In A Lateral Way

10 years ago when I first started covering Walmart, most people thought that Walmart would change healthcare by leveraging it's stores into healthcare centers/retail clinics. At the time Walmart had nearly 4000 stores, and 125 million people visited those stores every month, so if they were actually able to pull this off, not only would they be able to dominate the retail healthcare space, but indeed much of healthcare.

Today, Walmart is poised to change healthcare delivery, but not in the way we all thought they would 10 years ago. Now they can change healthcare by sending their nearly 2,000,000 employees to selected hospitals and clinics across the country. It's a program they call Centers of Excellence (COE). And if it catches on, and other companies adopt it, it could radically change healthcare delivery NBA real source of disruption two hospitals outside of the COE system.

I've often argued that Walmart is not really a store, it's a data company masquerading as a store. Over the last 10 years Walmart has studied healthcare data regarding its employees, and found that a large portion of their employee healthcare expense is the treatment of chronic conditions.

So Walmart set up a program to treat these conditions at hospitals around the country known for providing high quality/cost efficient care for these particular maladies. This includes heart, hip, spine, and knee surgery, but has been enlarged to treat other conditions.

Here is Walmart's own reasoning for the COE program-

"Walmart started offering this benefit in 2013 and our data tells us we are making a difference for our people, but we want to do more. That’s one of the reasons for adding more eligible medical facilities to the program. Other reasons these medical facilities were selected are that each facility:

  • Fosters a culture of following evidence-based guidelines, and as a result, only performs surgeries when necessary.
  • Structures surgeons’ compensation so they are incentivized on providing care based on what’s most appropriate for each individual patient and looking at surgery as a last option.
  • Is geographically located throughout the country to provide high-quality care to participants in one of Walmart’s health benefits plans."

Mayo Clinic in Minnesota is a Walmart center of excellence. Mayo is providing healthcare for Walmart employees for several types of cancer, including breast, colon, lung, prostate, and rectal. On the Mayo website, they state the following:

"If you have received a diagnosis of breast, colon, lung, prostate or rectal cancer, you may be eligible for enhanced benefits including:

  • Medical record review by Mayo Clinic cancer experts to determine if you would benefit from travel to Mayo Clinic
  • On-site evaluation at Mayo Clinic, if recommended
  • Travel, lodging and daily allowance benefits for you and a companion caregiver to make your stay as comfortable as possible"

In other words Walmart has determined that it is less costly for them to send an employee and a companion to Mayo Clinic for treatment, than it is for that employee to receive treatment locally. Walmart wouldn't do this if they didn't have the data to back this up. I've included a list at the bottom of this post of the procedures that Walmart will cover at a center of excellence.

For the last four or five years this program at Walmart has been voluntary. But at the beginning of this year it appears Walmart has made a change to at least certain types of treatments. From the Northwest Arkansas Democrat Gazette -

"Starting Jan. 1, Walmart Inc. will require employees needing spinal surgeries to travel at the company's expense to one of eight designated hospitals for the operations. Walmart, which is self-insured, says the program that has been voluntary since 2013 has cut down on unnecessary procedures.

The Bentonville retailer will pick up the tab for the surgeries and all related travel expenses for patients on the company's health insurance plan, including a caregiver.

The mandate is a change to a program that until now was completely voluntary. Under the program, covered employees may choose to have a number of procedures, including transplants, heart surgeries and knee and hip replacements, at one of the approved hospitals with all expenses paid. Participation in the program will still be voluntary for these other types of surgery.

Walmart spokesman Justin Rushing said the retailer chose to mandate travel for spinal surgeries after finding that about half of those who chose that option learned they didn't need surgery after all."

Not only is Walmart seeing higher quality outcomes at their Centers Of Excellence, they are also saying that sometimes surgery is not required at all.

Here is where things get interesting in a larger sense. Walmart currently employs about 2 million people. If Walmart has a great deal of success with their Centers Of Excellence program, other large employers will surely follow.

According to Fortune Magazine - "Fortune 500 companies represent two-thirds of the U.S. GDP with $12.8 trillion in revenues, $1.0 trillion in profits, $21.6 trillion in market value, and employ 28.2 million people worldwide."

So if just the companies in the Fortune 500 followed Walmart's lead, nearly 30 million people (and their families) would receive treatment for many of the "chronics" at someplace other than their home, or local hospital.

For example, let's say you live in Aiken South Carolina, and you work for a Walmart, and it is been determined that you need a herniated disc removed. Ordinarily, you would get that done at Aiken Regional Medical Center by a local orthopedic surgeon, and your health insurance would pay for it.

Under this new scenario, you and a companion would probably travel to Mayo Clinic's location in Jacksonville Florida, receive your treatment there, and then travel back home. Walmart pays for the treatment and the travel. And who is going to complain about receiving treatment at the Mayo Clinic?

The local hospital is cut entirely out of the process.

The center of excellence program by Walmart it Is clearly a priority for them and it's picking up steam. If it was just Walmart's 2 million employees we were talking about, this would be an issue that hospitals need to pay attention to.

But if this program is a success, and Walmart proves to other companies that it is easy to adopt and easy to scale, then this could be a real problem for local hospitals, as many people that they have traditionally treated in the past, for relatively high paying procedures, will now leave town for them.

Hospitals should take note and keep a close eye on the progress of this initiative.

List of Walmart Centers Of Excellence as of 3/1/19 -

Cardiac

• Cleveland Clinic - Cleveland, Ohio • Geisinger Medical Center - Danville, Pennsylvania • Virginia Mason Medical Center - Seattle, Washington

Weight loss surgery

• Geisinger Medical Center - Danville, Pennsylvania • Northeast Baptist Hospital - San Antonio, Texas • Scripps Mercy Hospital - San Diego, California

Spine surgery

• Emory University Hospital - Atlanta, Georgia • Geisinger Medical Center - Danville, Pennsylvania • Mercy Hospital Springfield - Springfield, Missouri • Mayo Clinic Arizona - Phoenix, Arizona • Mayo Clinic Florida - Jacksonville, Florida • Mayo Clinic Minnesota - Rochester, Minnesota • Memorial Hermann Texas Medical Center - Houston, Texas • Virginia Mason Medical Center - Seattle, Washington

Breast, lung, colorectal, prostate, or blood cancer

• Mayo Clinic Arizona - Phoenix, Arizona • Mayo Clinic Florida - Jacksonville, Florida • Mayo Clinic Minnesota - Rochester, Minnesota

Hip and knee replacements

• Johns Hopkins Bayview Medical Center - Baltimore, Maryland • Kaiser Permanente Irvine Medical Center - Irvine, California • Mercy Hospital Springfield - Springfield, Missouri • New England Baptist Hospital - Boston, Massachusetts • University Hospital - Cleveland, Ohio • Virginia Mason Medical Center - Seattle, Washington

Organ and tissue transplants (except kidney, cornea, and intestinal)

• Mayo Clinic Arizona - Phoenix, Arizona • Mayo Clinic Florida - Jacksonville, Florida • Mayo Clinic Minnesota - Rochester, Minnesota