Walmart's low-cost approach could shake up providers
This week, I'm going to conflate Walmart with The New Yorker magazine. Wish me luck.
As an institution and retail destination, Walmart has made me slightly queasy. Its rambling wares have put many a mom-and-pop store out of business. Conversely, it shut down one of its own stores in Quebec as a retort to employees there who formed a union.
By contrast, The New Yorker has always made me slightly more informed. It's a repository for some of the best journalism published in the United States, as well as some of the sharpest humor writing.
A case in point was the recent satire, "Messages from Dr. Abravenel." It's a series of voicemails left by a clinician for a patient between holes during a golf holiday. Dr. Abravenel (Hebrew for "father priest of God") tells the patient in question he's misplaced his medical records. When they're finally found in another player's golf cart, he tells him he's terminal. Then, it turns out that diagnosis is in reference to another patient who's dead. Nevertheless, he still faxes him a $50,218.91 bill from the pro shop--which includes charges for performing an implant remotely and "breakage and misc."
Dr. Abravenel tells the patient that even though the charges were intended for the dead man, it's simply easier for him to pay it "and, possibly, obtain a reimbursement later. That will avoid any problem with the collection agencies." The insurer on the bill is "Visa or MasterCard."
That's not exactly what most patients encounter when interacting with their physicians, but it makes a point: Many patients feel they're at a remove from them and treated more as a commodity than an individual. Incidentally, the piece's author, Ian Frazier, recently penned a book about the months he spent traveling across Siberia in a van that often failed to start. Yet, it was something about his medical experiences that seemed to truly exasperate him.
Walmart isn't known for generating great life-affirming experiences itself. Nonetheless, its leadership is looking for a way to break into the healthcare business big-time. As reported by National Public Radio last week, the gargantuan retailer sent out a request for information to its vendors that said "Walmart seeks to dramatically ... lower the cost of healthcare while maintaining or improving outcomes and ... expand access to high quality health services by becoming the largest provider of primary healthcare services in the nation." That includes the management of chronic conditions such as diabetes.
A bold promise--and one the company pretended to back away from not long after the NPR story broke.
Walmart has detected in healthcare what made it the largest corporation in retailing history: a market demand. According to the Kaiser Family Foundation, a health plan enrollee with family coverage through an employer-sponsored policy pays more than $4,100 a year in out-of-pocket costs, nearly triple the amount a decade ago. Those with individual coverage pay thousands more. They're looking for ways to cut their costs--which few doctors are even aware exist for their patients.
If Walmart can offer a $29.95 primary care visit of passable quality, or perhaps a primary care plan for $99 per person per year, it will get a flood of business. Whether or not the Affordable Care Act passes legal scrutiny is not relevant here, as it really contains no concrete cost controls. If Walmart can continue to keep those costs down, hospitals will have no choice but to court them as part of the ACO evolutionary process.
The Walmart proposal has been met with some skepticism, most notably from the physician community. May I suggest they look at their partners in primary care--pharmacists. A generation ago, most worked at pharmacies they owned or were owned by an independent operator. Today, a large cross-section of pharmacists work for major retailers--including Walmart. And the $4 generic prescription that's now commonplace at big retail pharmacies? Introduced by Walmart.
That Walmart wants to get into primary care delivery to such a large extent should be a warning sign to providers. If they cannot endeavor to control costs themselves, an outside entity is going to do it for them. And the suppliers relentlessly pressed to keep their costs down so Walmart can pass it on to their customers will no doubt agree that no entity does it better.
Obviously, Dr. Abravenel is sort of a figment of a writer's imagination. But should you pit The New Yorker's flight of fancy against the red meat reality of Walmart, the good doctor will be flattened even before shouting "fore!" - Ron (@FierceHealth)