Wal-Mart will see you now

By Dave Chase
November 11, 2011

By Dave Chase
The views expressed are his own.

“We don’t have a debt problem. We have a healthcare problem.” Those are the words of Laura Tyson, one of the most respected economists in the world. In Bill Gates’ recent TED talk, he described healthcare as the factor that is devastating state budgets leading to education cuts. Clearly something must to be done now to address this crisis.

With the possible exception of the federal government, no organization is in a better position to reverse healthcare’s hyperinflation than Wal-Mart.

If that sounds crazy, let me explain. As Ezra Klein recently pointed out in a Washington Post graphic, it’s not the age or obesity of the population that is driving healthcare costs. Nor does it have much to do with alcohol or even malpractice costs. Rather, as the many cost comparisons in the presentation below show, we simply pay more for the same items when compared to other countries.

No organization in the world has more prowess than Wal-Mart at negotiating costs with suppliers of products and services. With 1.4 million employees and hundreds of millions of customer visits every month, Wal-Mart’s impact is without parallel. It’s one reason that the Sierra Club partnered with Wal-Mart on its Sustainability Program. In healthcare, Wal-Mart’s $4 prescriptions program has saved their customers billions since the program’s introduction.

Sam’s Stimulus

With a buying power that rivals the entire country of Canada, Wal-Mart has the power to drive costs down. Even if we didn’t do anything to affect the number of surgeries, hospitals stays and volume of procedures, if Americans paid the same as Canadians, it would cut what the U.S. spends on healthcare by 50%. Nothing would have a bigger impact on stimulating consumer spending. We could call this Sam’s Stimulus (Sam Walton, not Uncle Sam).

To tap their impact, I propose the following 5-point plan that could finally slay the healthcare cost beast:

Make primary care more accessible

IBM and other large employers have studied healthcare costs around the world. IBM alone spends roughly $2 billion per year on healthcare. The findings of their studies came to a surprisingly simple conclusion where countries were getting the best bang for the buck from their healthcare spend: More primary care access led to a healthier population which, in turn, led to less money spent. MedLion, profiled as The Most Important Organization in Silicon Valley No One Has Heard About, has shown they can deliver high quality care with prices that are affordable for low-income workers. This model is referred to as Direct Primary Care (DPC) or Direct Patient Centered Medical Homes (D-PCMH).

Imagine if Wal-Mart took the DPC model and scaled it nationally. It would be a boon for primary care providers who want to operate free of insurance, as it validates a model that has proven to yield better health outcomes while lowering costs dramatically. Fortunately, one of the least known elements of the new health law may be the most important. It’s the DPC provision allowing the separation of insurance from day-to-day healthcare to save 40% off the cost of primary care.  See Health Insurance’s Bunker Buster for more. Showing the support for this element of the health reform, a GOP Representative who fought against reform and is an MD has proposed a bill to utilize the DPC model with Medicare recipients.  This leads into the next item.

Demand a standard wrap-around insurance policy

For Direct Primary Care (DPC) to work, it is best paired with a wrap-around insurance policy to cover non-primary care items. If Wal-Mart supports a DPC standard (see details here) this gives insurance companies something that can allow them to underwrite a wrap-around policy to complement what is being delivered via the DPC package. This would accelerate the development of independent DPC practices as long as they offered the same baseline services (they are free to add things above that to differentiate their service).  Wal-Mart’s national scale is critical, as insurance companies can’t underwrite for something that is wildly variant. This gets health insurance back to its roots and what insurance is so good for – rare stuff you hope never happens vs. insuring the equivalent of a car tune-up.

Drive savings for scans and surgeries

The best way to save is to avoid the need for that item. However, there are still plenty of instances where scans and surgeries are appropriate. In a piece entitled Hotwire for Surgery, I laid out how extra capacity in “beds” and “suites” creates an opportunity for both buyers of hotel rooms and surgeries to drive savings of 50% or more without any degradation of quality. Similarly, there is a massive overcapacity in scanning equipment (CT, MRI, etc.) since healthcare in a “do more, bill more” reimbursement model has incentivized a huge overcapacity in scanning equipment. Like hotel rooms, the marginal cost to deliver another scan when they would otherwise be idle is nominal. Some of the Direct Primary Care providers, without any national buying power, have negotiated up to 90% discounts off of scans from top facilities.

Remove administrative inefficiencies

One of the big contributors to excessive American health expenses is administrative overhead. Wal-Mart has used information technology to make their supply chain efficiency a competitive advantage. They can do the same for the healthcare value chain. My 78-year-old dad buys his plane tickets and checks-in online. Surely, every patient ought to be able to schedule and check-in for appointments. There’s a staggering inefficiency in how this is typically done today. There are many other items like this.

Share the healthcare cost innovation learnings

Baked into every product or service Wal-Mart sells are the healthcare costs of their suppliers who are also facing ever-increasing healthcare costs. With their scope of vendor relationships, Wal-Mart touches thousands of businesses. The fact is, healthcare costs are a competitive disadvantage for Wal-Mart today. As the nation’s largest employer, anytime they increase healthcare costs to their employees, they get negative press. By gathering with other corporations and discussing how to get more value from each healthcare dollar spent, they can turn their huge healthcare spend into something that could generate positive press as they help many organizations reign in healthcare hyperinflation by sharing best practices, combine buying power and more.

In summary, whether we call this Sam’s Stimulus or the Walton Wallop on healthcare hyperinflation, Wal-Mart has a unique opportunity to revive the U.S. economy.  The only downside to this plan is some healthcare providers aren’t well positioned to deliver high quality healthcare at a lower price, but this is a small price to pay for reviving the economy and putting the country on a path where healthcare costs won’t bankrupt the nation.  Few corporations have ever had a bigger opportunity to help themselves while helping the country. To turn a phrase, what’s good for Wal-Mart is good for the country.

Editor’s note: Dave Chase is the CEO of Avado, a healthcare technology firm. Some of the companies mentioned in this essay (not Wal-Mart) are customers of Avado.

PHOTO: Re-useable Walmart bags are seen in a newly opened Walmart Neighborhood Market in Chicago September 21, 2011.  REUTERS/Jim Young

15 comments

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[...] Wal-Mart will see you nowReuters Blogs (blog)Wal-Mart considers expanding services at its health clinicsSTLtoday.comWFMY News 2 -New York Times (blog) -Patch.comall 31 news articles » [...]

[...] Wal-Mart will see you nowReuters Blogs (blog)Wal-Mart considers expanding services at its health clinicsSTLtoday.comWFMY News 2 -New York Times (blog) -Patch.comall 31 news articles » [...]

[...] an MD has proposed a bill to utilize the DPC model with Medicare recipients. … Read more on Reuters Blogs (blog) This entry was posted in Looking-For-Sugar-Baby and tagged …, banks, give, Round, see, stress, [...]

[...] Wal-Mart will see you now See Health Insurance's Bunker Buster for more. Showing the support for this element of the health reform, a GOP Representative who fought against reform and is an MD has proposed a bill to utilize the DPC model with Medicare recipients. … Read more on Reuters Blogs (blog) [...]

[...] in the …Wal-Mart considers expanding healthcare services at its clinicsLos Angeles TimesWal-Mart will see you nowReuters Blogs (blog)Wal-Mart considers expanding services at its health clinicsSTLtoday.comWFMY News [...]

[...] Wal-Mart will see you now See Health Insurance's Bunker Buster for more. Showing the support for this element of the health reform, a GOP Representative who fought against reform and is an MD has proposed a bill to utilize the DPC model with Medicare recipients. … Read more on Reuters Blogs (blog) [...]

Americans are not stupid. But they are Ignorant

I just came back from Thailand in January where, for the fifth year in a row, I got a complete physical: Blood work, EKG, carotid echography test, Upper and Lower abdominal ultrasound, chest Xray, Cardio Stress Test, Urinalysis, Stool Examination…all for $400!!!
Just the Stress Test alone would have cost $3000-$4000 in the US. The blood work alonge would have eaten up the $400

Americans are getting ripped off by the health care profession and the sad part about it is that they are blissfully ignorant about how expensive their “free market” health care system is. Everyone in health care here wants to make a bundle: Doctors, Insurance Companies, Drug Companies, hospitals. It’s all about protecting their own industry and overcharging to increase profits.

In Thailand hospitals post their costs for everything from a colonoscopy to heart bypass surgery so you can compare the cost at different hospitals. That’s how the free market is suppose to work, right.

But here in the US You won’t ever find a price list by any doctor or hospital in the US. Go ahead. call your local hospital and see if you can get a price list for a colonoscopy, and EKG, an X-ray, even the daily cost of a hospital room. Good luck. It’s all very secret. You can’t compare or shop for better rates. The US medical profession doesn’t want any comparison shopping that would force doctors and hospitals to compete with each other on price. And no price advertising PLEASE!!!

In Thailand they have the option of a public health care system that is free for everyone and a private system that provides better service and more options if you are willing to pay for it. The private option is still ten to fifteen times cheaper than in the US because the public option forces it to be competitive in order to woo patients. In the US there’s no choice. No public. Only and overly expensive private system.
Two years ago I had a condition called Esophageal dysphagia. The throat doctor in my hometown in California said he could fix the problem for $2500 in his office. I went to a Thai PUBLIC HOSPITAL (used my US passport as ID) and had the surgery done for $100…including the doctor and the anesthesiologist and a biopsy. Try to find that in the USA!!!!

Posted by Naksuthin | Report as abusive

Go for it! What are we waiting for?

Posted by alwayslearning | Report as abusive

Wonderful, common sense opinion piece. Flames coming, I’m sure.

I support and buy from Wal-Mart because they consistently make me feel valued as a customer. If my taxes went to a similarly “friendly government” I wouldn’t be as concerned about it’s ever-expanding intrusion into our lives.

Some Wal-Marts already offer, I believe, “urgent care” services in the same manner as they offer banking services, eyeglasses, food, etc. They were the major retailer that took an ax to drug costs with their $4 prescriptions, saving “their customers billions since the program’s introduction” (as you point out). It’s a natural “fit” with all that they do.

Wal-Mart makes their products available 24 hours a day. At present, my can’t get in to see her local primary care phyysician with less than two week’s notice unless it is an “emergency”. Many minor ailments (we hope) run their course in that time. It’s twice that long for me to get in to see my doctor at the VA (unless, again, I go in as an emergency. If one of us gets sick on a Friday, we know we may be in trouble by Monday but just “hope for the best”. Wal-Mart would immediately fix this.

Wal-Mart’s people are as courteous and helpful as any, and their managers are available and listen or respond to requests and deficiencies. They price-match competitors which saves me extra driving and time to save on sale items. The three cents and now ten cent discount on prepaid gas purchases adds up even though my car gets 33-35 mpg. They are serious and generous in taking back or replacing purchases that aren’t “right”. What’s not to like about such a provider?

I don’t have one locally, but have three within 18 miles. One is newer, cleaner, and better run; and the most convenient; but I occasionally visit the others for something needed “out of stock” to maintain awareness.

As for “shopping local”, when the retailers in my community learn to treat the customer as well as Wal-Mart, I will share some of my business. It is in no one’s best interests to reward bad attitude or poor selection, price and/or service just because a store is “local”. My business is earned, the old fashioned way.

Excellent, well-thought out idea. Let’s Do it ASAP!

Posted by OneOfTheSheep | Report as abusive

This world sure is changing… In one regard we freak out about having a federal health care system and on the other side we’d freak out to have a Wall-Mart healthcare system…. It just looks like two competing big companies to me… The only difference is, you don’t get to vote the bums out at Wallmart… We got a big population now, and if we are gonna give everybody decent care, we might have to centralize…its gonna turn us all into numbers. Personally, I like the cranky old hold-out private practitioners who haven’t run to these health groups yet. Thee are still a few of ‘em left and they always seem to know a LOT more than Kiaser/Sutter/health Net…I’m gonna miss ‘em when they’re gone.

Posted by Tracy--lee | Report as abusive

[...] in the …Wal-Mart considers expanding healthcare services at its clinicsLos Angeles TimesWal-Mart will see you nowReuters Blogs (blog)Wal-Mart considers expanding services at its health clinicsSTLtoday.comWFMY News [...]

Yes, flames will come I hope.
Reuters should not allow CEOs of company’s to publish an “Opinion”. People expect that an opinion article or piece is done by an individual, not a corporation. CEO’s are ALWAYS representing their companies. They are, as they freely admit, the number one salesperson for the organization.
This article is pure SPIN. It is about positioning Avado, purely and simply.

If Mr. Chase wants to publish an opinion, then it should be on any other topic except healthcare and technology.

Posted by tmc | Report as abusive

Great idea. Lets offshore healthcare. Wal-Mart will ensure that those pharmaceutical companies move the last remnants of their north American operation to China. That will save bundles. Then all of those expensive medical supplies. You know, the $100 Band-Aids, those need to be moved to Vietnam or Malaysia. I mean, let’s face it, most of the doctors in my hospital are from India and China anyway right? With the internet and Technology [Avado advertisement here] those doctors can stay at their native home, be paid paltry amounts, and see you on a nice South Korean wide screen HD monitor. The Associate (still on food stamps even though employed by Wal-Mart) will be happy to help with your every need in case the robotic arm gets stuck.
Seriously though, healthcare cannot be “fixed”, as we’ve seen over the last two decades. It must be re-invented. Perhaps letting Wal-Mart destroy it may bring about a better system, but I would think there are more humanitarian ways.

Posted by tmc | Report as abusive

@tmc,

I feel your pain (as does anyone closer than 20′ to their monitor), but you present few, if any, facts to back up your position.

Is it not clear that Medicare does NOT negotiate drug prices, but the VA does? I can tell you that the VA charges ME more as a co-pay than I can buy my statins, etc. for directly from Costco Mail Order in Everett, WA, with free, timely shipping to my door.

Is it not true that virtually NO hospital will give a consumer a written price for a procedure up front? That’s why I go to an independent mechanic for anything and everything not covered by warranty. The system is consumer-unfriendly and taxpayer unfriendly.

You seem to suggest we just keep doing what we’re doing. What part of unsustainable do you not understand?

Posted by OneOfTheSheep | Report as abusive

You are correct @OneOfTheSheep, I offered no facts, just a bit of wisdom drenched in sarcasm. It is an opinion column after all.
Of course the system is unsustainable. That’s been pretty obvious for quite a while now. Even the politicians don’t deny that. I also agree that the VA should be more efficient (I’m an old vet too). But I don’t think that going retail is the answer. In fact, I recommended re-inventing health care (not that I know how, I’m just one man) in the previous post, not just shifting the ball to a “better ” company with a price list as you seem to suggest.
But you miss the point of my posts anyway. Mr. Chase is the CEO of a company trying to sell software to Wal-Mart (or anyone else I would assume) . His “Opinion” is very highly biased. In fact, this should have been an Infomercial, not a opinion.

Posted by tmc | Report as abusive

our local wal mart seems to have very long wait times to get prescriptions filled, but I guess when they are doing the cheapest possible health care that they will somehow assure that wait times will be very short.

Posted by zotdoc | Report as abusive

At least make it a seperate/outside entrance! Locating disease control next to fruit and veggys doesn’t make sense! Young/healthy folks can pay a minumum catastrophic fee until they want better coverage! Everyone should pay a min fee for catastrophic care (say anyone working period) We all pay into a pool to help the least of us!

Posted by DrJJJJ | Report as abusive

@zotdoc,

I call ahead, or have my doctor do so. Accordingly, any wait is just to pick up and NOT to “get prescriptions filled”.

On Friday evenings, Saturdays and end of month days, there is (surprise, surprise) usually a wait to pick up. Since complaining without suggestions for improvement is a waste of everyone’s time, I have suggested the pharmacy manager bring in more clerical check-out staff to improve the situation in these predictable periods; and also suggested they get those “take a ticket” machines for the pick-up line so people can shop and wait at the same time. That’s a “win-win” solution for all involved.

@DrJJJJ,

A separate entrance for health clinics? Good idea. I’d also like to see a separate waiting area in every doctor’s office for those without obviously contagious symptoms, and to see office personnel out there every half hour or so wiping down chairs with antiseptic wipes. Don;t expepct to see that in my lifetime.

“Young/healthy folks can pay a minimum catastrophic fee until they want better coverage. Everyone should pay…”.
I’m sure WANTS “better coverage” no matter what they have. I’m sure those people in the 19th and 20th centuries WANTED better coverage than they had.

One inconvenient truth. Those who are or would be financially responsible understand the difference between a “want” and a “need”. If an economy can’t AFFORD to cover every risk plus the kitchen sink then it has to reduce costs, not cover some things, adopt coverage limitations and/or separate wants from needs.

We are looking at huge numbers of Americans who will spend their final years living with diabetes and its considerable expenses. A huge majority of these are obese beforehand. It’s no mystery that as many as half could avoid the disease entirely or reverse it with reasonable
eating and exercise habits.

I see no reason there should not be a local, state and federal effort to establish community walking, Tai Chi, Yoga and jogging groups. These could be co-located with baseball and soccer fields so while junior is doing his or her thing, mom and dad can do theirs.

If people won’t get off their couch or out of their car and take reasonable care of their bodies, I see absolutely no reason taxpayers should get the bill for treating the conditions that predictably follow a life of physical sloth.

If I agree it is everyone’s right to vegetate and overeat
please agree it is taxpayer’s right to deny them coverage for predictable and avoidable chronic disease, even if these be “the least of us”.

Posted by OneOfTheSheep | Report as abusive

@zotdoc,

I call ahead, or have my doctor do so. Accordingly, any wait is just to pick up and NOT to “get prescriptions filled”.

On Friday evenings, Saturdays and end of month days, there is (surprise, surprise) usually a wait to pick up. Since complaining without suggestions for improvement is a waste of everyone’s time, I have suggested the pharmacy manager bring in more clerical check-out staff to improve the situation in these predictable periods; and also suggested they get those “take a ticket” machines for the pick-up line so people can shop and wait at the same time. That’s a “win-win” solution for all involved.

@DrJJJJ,

A separate entrance for health clinics? Good idea. I’d also like to see a separate waiting area in every doctor’s office for those without obviously contagious symptoms, and to see office personnel out there every half hour or so wiping down chairs with antiseptic wipes. Don;t expepct to see that in my lifetime.

“Young/healthy folks can pay a minimum catastrophic fee until they want better coverage. Everyone should pay…”.
I’m sure WANTS “better coverage” no matter what they have. I’m sure those people in the 19th and 20th centuries WANTED better coverage than they had.

One inconvenient truth. Those who are or would be financially responsible understand the difference between a “want” and a “need”. If an economy can’t AFFORD to cover every risk plus the kitchen sink then it has to reduce costs, not cover some things, adopt coverage limitations and/or separate wants from needs.

We are looking at huge numbers of Americans who will spend their final years living with diabetes and its considerable expenses. A huge majority of these are obese beforehand. It’s no mystery that as many as half could avoid the disease entirely or reverse it with reasonable
eating and exercise habits.

I see no reason there should not be a local, state and federal effort to establish community walking, Tai Chi, Yoga and jogging groups. These could be co-located with baseball and soccer fields so while junior is doing his or her thing, mom and dad can do theirs.

If people won’t get off their couch or out of their car and take reasonable care of their bodies, I see absolutely no reason taxpayers should get the bill for treating the conditions that predictably follow a life of physical sloth.

If I agree it is everyone’s right to vegetate and overeat
please agree it is taxpayer’s right to deny them coverage for predictable and avoidable chronic disease, even if these be “the least of us”.

Posted by OneOfTheSheep | Report as abusive

[...] Reuters: Wal-Mart Will See You Now With a probable difference of a sovereign government, no classification is in a improved position to retreat health care’s hyperinflation than Wal-Mart. If that sounds crazy, let me explain. As Ezra Klein recently forked out in a Washington Post graphic, it’s not a age or plumpness of a race that is pushing health caring costs. Nor does it have many to do with ethanol or even malpractice costs. Rather, as a many cost comparisons in a display subsequent show, we simply compensate some-more for a same equipment when compared to other countries (Dave Chase, 11/11). [...]

I would not give Walmart the “Time of Day”. By far, the greediest company in America. By putting thousands of businesses out and by being among the first to open the road to China, all the while advertising “Made In America”, they have emerged as the giant world retailer.

I for one believe that any doctors that would work for them would be on the bottom of the toteum pole as doctors and that is one thing I don’t want caring for my health.

Another thing is I will not support a company, other than an emergency health service, that makes their workers come in on Thanksgiving and New Years day.

Posted by Abetterplace | Report as abusive

[...] Reuters: Wal-Mart Will See You Now With the possible exception of the federal government, no organization is in a better position to reverse health care’s hyperinflation than Wal-Mart. If that sounds crazy, let me explain. As Ezra Klein recently pointed out in a Washington Post graphic, it’s not the age or obesity of the population that is driving health care costs. Nor does it have much to do with alcohol or even malpractice costs. Rather, as the many cost comparisons in the presentation below show, we simply pay more for the same items when compared to other countries (Dave Chase, 11/11). [...]

I can’t believe so many people would fall for this guys spin. This would be wrong on soooo many levels.

Posted by tmc | Report as abusive

I don’t see going to Walmart for my primary care but I’m glad they are planning to do it. It should provide a jolt to get the broken healthcare system to fundamentally rethink what they are doing. What exactly was wrong with paying my family doctor directly without insurance middlemen mucking things up? When Walmart brings efficiencies, consumers usually win. If you don’t like them, shop elsewhere. Sounds simple to me.

Posted by MilitaryMan | Report as abusive