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Wal-Mart emphasizes outcomes, value in Centers of Excellence program

Flexing its muscle with the healthcare buying power of 1.4 million employees, Wal-Mart last week announced it was contracting with six healthcare organizations nationwide to provide its health plan-covered employees with no out-of-pocket costs for specific heart, spine and transplant surgeries.

The program marks a growing trend of large employers negotiating directly with healthcare providers to contract for specific treatments to employees based on the provider’s track record of care cost and quality.

Participating healthcare organizations include: the Cleveland Clinic in Cleveland; Geisinger Medical Center in Danville, Pa.; Mayo Clinic sites in Rochester, Minn., Scottsdale/Phoenix and Jacksonville, Fla.; Mercy Hospital Springfield in Springfield, Mo; Scott & White Memorial Hospital in Temple, Texas; and Virginia Mason Medical Center in Seattle.

“Through these hospital systems, our associates will have no out-of-pocket expenses and a greater peace of mind knowing they are receiving exceptional care from a facility that specializes in the procedure they require,” said Sally Welborn, senior vice president of global benefits at Walmart in a press release. “This is the first time a retailer has offered a comprehensive, nationwide program for heart, spine and transplant surgery.”

The program is the first expansion for Wal-Mart of a similar program it launched in the mid-1990s with the Mayo Clinic covering organ transplants. Wal-Mart's new Centers of Excellence program will pay 100 percent of the costs for all covered Walmart employees, without co-payments or deductibles for the cost of their care, travel expenses and lodging for both the patient and a companion caregiver.

According to Wal-Mart spokesman Randy Hargrove, employees who undergo surgery at one of the six facilities will save from $5,000 to $12,000 in out-of-pocket expenses depending on the treatment they receive.

For the Cleveland Clinic, renowned as one of the top medical centers in the nation for certain heart surgeries and procedures, the arrangement with Walmart is similar to a 2010 contract it struck with home improvement retailer Lowe’s in 2010. It has also secured similar deals with a number of other employers including Boeing.

“Healthcare is in the midst of an unprecedented transformation and requires innovation to improve the way we deliver care to patients across the United States,” said Cleveland Clinic President and CEO, Toby M. Cosgrove, MD, in a prepared statement announcing the contract. “Programs such as these will help get patients to the right place, for the right care, at the right time while focusing on quality outcomes and cost control.”

The effort by Wal-Mart is the kind of leverage that large employers can employ as a means of lowering the overall cost of healthcare, said Sabrina Corlette, research professor at the Health Policy Institute at Georgetown University in Washington.

“This is an excellent example of an employer who is working to contain costs while also ensuring their employees are getting high-quality care,” Corlette said. “When Wal-Mart talks, that has a lot of influence.”

“I think what it addresses for a company like Wal-Mart," said Michael McMillan, executive director of market and network service for the Cleveland Clinic, in an article published in the Cleveland Plain Dealer, "is the ability to reduce the variation in outcome from a quality and cost point of view.”

Under the terms of the agreements Wal-Mart has struck with the providers, the company will pay a set, bundled price for specific heart, spine and transplant procedures. By directing care to the small handful of providers, Wal-Mart is also addressing the wide gaps in both costs and quality of care that exist from state to state and even city to city.
 

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