* Wal-Mart lines up 6 major health centers for procedures
* Employees and dependents enrolled in plans eligible
* Bundled pricing from suppliers should lower Wal-Mart's
* Wal-Mart has covered transplants since 1996
By Jessica Wohl
CHICAGO, Oct 11 Wal-Mart Stores Inc is
offering its U.S. employees and their families free heart and
spine surgeries at six major health centers at no cost to the
retailer's workers, as it tries to find better ways to cover
costly, complicated procedures.
Starting in January, workers and dependents enrolled in
Wal-Mart's medical plans will receive free consultations and
care for certain heart and spinal procedures along with travel,
lodging and food for the patient and a caregiver.
The six healthcare organizations include those that have won
high marks in terms of patient care and keeping unnecessary
costs at bay: Cleveland Clinic in Cleveland, Ohio; Geisinger
Medical Center in Danville, Pennsylvania; Mayo Clinic sites in
Minnesota, Arizona and Florida; Mercy Hospital Springfield in
Springfield, Missouri; Scott & White Memorial Hospital in
Temple, Texas; and Virginia Mason Medical Center in Seattle,
Wal-Mart is the world's largest retailer and the single
biggest U.S. employer outside of the government, with about 1.4
million workers. Any changes to its healthcare coverage can have
a ripple effect. The company shook up a different part of the
healthcare industry when its Walmart chain started selling
certain prescription medications for $4 back in 2006, a move
soon followed by other retailers.
Wal-Mart anticipates that the program will help reduce its
costs as it receives bundled pricing from the healthcare
organizations, but it cannot project the amount it might save.
Wal-Mart says that it pays about 60 percent of total cost of
healthcare for employees on its healthcare plans, including
out-of-pocket and premium expenses. For workers, including those
with low-paying jobs, costs will now be reduced as they will no
longer pay for such procedures.
"It's a growing trend and an important new aspect of
employers' ability to manage quality and improve their value
proposition," said Michael McMillan, executive director of
market and network services at Cleveland Clinic. "We see more
and more large employers asking about this kind of approach."
Cleveland Clinic doctors are not paid per-procedure, so they
have no financial incentive to operate and may find other less
invasive, less expensive ways to treat patients, McMillan added.
The deals with the six "Centers of Excellence," disclosed on
Thursday, should lower healthcare costs and may be copied by
other companies looking to control medical spending.
"I do think that this is our future and they're just ahead
of the game," said Helen Darling, president and chief executive
of National Business Group on Health, a nonprofit membership
organization of 346 employers including Wal-Mart.
Wal-Mart began covering transplants with the Mayo Clinic in
1996 and that coverage continues, Wal-Mart said.
Wal-Mart's announcement marks the first time that a retailer
has offered a national program for coverage of heart, spine and
transplant surgery, though some other companies already offer
similar programs on a smaller scale.
Cleveland Clinic said it set up a heart surgery program in
2010 for employees of home improvement retailer Lowe's Cos Inc
, which has since expanded to include other areas, and
recently reached a similar arrangement with Boeing Co.
While Cleveland's McMillan declined to say how many
procedures have been done under such agreements, the number of
Lowe's employees taking advantage of the service has
"significantly exceeded" expectations, with patients coming in
from 23 states.
He expects other companies to reach similar agreements.
"We call it the triple win," said McMillan. "It's a boost in
quality, it's an improvement in value and it's no cost out of
pocket for employees, so we think it is a great opportunity."
Direct-to-employer service arrangements such as these
accounted for about $1 million of Cleveland Clinic's revenue in
2011, a small fraction of its overall revenue of $5.83 billion.
Not all of Wal-Mart's U.S. employees sign up for its
healthcare plans, and part-time employees are not eligible for
coverage until they work for the chain for one year.
There are 1.1 million people, including workers' family
members, covered by Wal-Mart healthcare plans in the United
States, the company said. The lowest-priced coverage costs $17
per pay period, plus $10 to cover children.
Wal-Mart also said that it is adding Aetna Inc and
UnitedHealth Group Inc's UnitedHealthcare as
administrators for its medical plans. It already has Blue Cross
Blue Shield administer its programs, and now one of the three
companies will handle the process, depending on the location of
a particular worker.
Cleveland Clinic, Geisinger Medical Center, Scott & White
Memorial Hospital and Virginia Mason Medical Center will offer
cardiac procedures including open heart surgery for coronary
artery bypass grafting, heart valve repair, closures of heart
defects, and thoracic and aortic aneurysm repair.
Mercy Hospital Springfield, Scott & White Memorial Hospital
and Virginia Mason Medical Center will perform spine procedures
such as cervical and lumbar spinal fusion, total disk
arthroplasty and spine surgery revisions and other complex spine