Concept eyed by doctors, insurers
Walmart steps into health care Retail giant’s program a perk for employees; others aren’t so sure
When United Flight 3715 touched down in Houston on Dec. 26, Gordon Warlick didn’t much care that he was part of some grand experiment to turn the American health care delivery and payment system on its ear.
The 63-year-old Walmart truck driver from Oklahoma just wanted his neck fixed.
He balked at the sight of a chauffeur waiting at baggage claim, holding up a sign with his name on it like they do in the movies. But by the time he and his wife, Connie, were settling in to the back of the Lincoln Town Car taking them to their Marriott suite, he was thinking he could get used to this.
In two days he would get the operation he needed at Memorial Hermann-Texas Medical Center. One of the best neurosurgeons in the nation would be scrubbing in to remove the bone spurs pressing
against his spine.
His bosses at Walmart had stepped in just when the health care system seemed to be failing him.
The corporate retail giant, known for its price slashing and tough bottom line, has cast itself against type by sending employees with specific, serious health conditions to the nation’s most elite medical institutions for what it calls the best of the best care.
Walmart then foots the entire bill, skirting traditional insurance reimbursement models by paying one flat fee for everything. It even throws in limo service. The employee pays nothing.
The company says its Centers for Excellence program is open to any worker who averages 30 hours a week and is enrolled in a Walmart health benefits plan.
In many ways it is a remarkable perk, especially for a company that in the past has taken heat for not providing affordable coverage for some of its workers and their families.
The concept is not new. Other large corporations such as Boeing and GE have embraced similar programs. The reasoning is that by going directly to top-flight medical institutions, employees get high quality care with better outcomes so they can return to work more quickly.
For Warlick, there was no time left to waste.
For months, he had been locked in a maddening circle, bouncing from one local doctor near his hometown of Owassa to the next. Each one, it seemed, asked the same questions, often ordering the same tests, and then passing him back to get a referral for someone else.
“I need some help,” he told his insurance case worker on the other end of the phone in late October. “I don’t know what’s going on. It’s costing you money; it’s costing me money. I’m just going from one doctor to the next.”
In the long run, companies say, it costs them less by avoiding delayed treatment and there are fewer risks of complications and re-hospitalizations.
There are now 12 sites around the country used by Walmart, with marquee names like Mayo and Johns Hopkins. Last May Memorial Hermann’s Mischer Neuroscience Institute was added to the roster. Also on the list is Northeast Baptist Hospital in San Antonio.
About 165 Walmart employees around the country have been referred to Memorial Hermann so far.
Once in Houston, patients, like Warlick, who truly need critical surgery get it. But a striking discovery found that about 40 percent who arrive after being told by someone else they needed surgery don’t need it after all.
Patients are reassessed and when possible are treated in less invasive ways, such as with injections or physical therapy, said David Bradshaw, Memorial Hermann’s chief strategy and business development officer.
Roughly that same percentage is being replicated at the program’s other sites, officials said.
That suggests widespread over-treatment, or at least faulty diagnoses, across the nation’s health-care system.
“It’s the fragmentation of care that contributes to the waste in the health care system,” said Bradshaw, “We have a lot of work to do as an industry.” Bundling vs. status quo
The surgical travel is the flashy part, but the second piece of Walmart’s program is the most controversial. Some doctors aren’t keen on upending traditional payment formulas, fearing they will be left out of the equation.
When Walmart picks a center of excellence, the company uses its formidable bargaining might to pay one price for everything, from doctor to facility to patient travel costs. Called bundling, it is not unlike making one payment for cable, internet and phone. Paying a one-stop-shopping price for several services is typically less expensive than paying each individually and often more efficient.
The medical institution Walmart has picked then doles out individual payments like a general contractor paying subs.
In health-care settings, the theory goes that a doctor who has a particular expertise and does a procedure frequently will likely have better outcomes. The flat fee presumably reduces an employer’s risk and gives hospitals an incentive to keep quality high to reduce future medical complications for which they would have to pay.
Ultimately, higher-quality outcomes drive lower costs, said Lisa Woods, senior director of health care benefits for Walmart. She declined to be more specific on what kind of cost savings her company sees.
Bundling payments is just another slice in health-care reform that seeks to shift away from a fee-for-service model, where every doctor visit and every test ordered is a separate bill to be paid by an insurer, the government or individual patient. Instead, in a “value-based” system payment is based on care quality and results.
“We don’t know what works, but if we don’t go out there and try and share what we’ve found then we have the same system we have today,” Woods said.
While it is unclear how well Walmart’s program would translate to smaller companies with less clout, the time seems ripe for corporate experimentation.
Last month, Amazon, Berkshire Hathaway and JPMorgan Chase announced they were joining forces to create an independent health-care company for their combined half-million U.S. employees.
Even though details are scarce, the announcement was met with cautious excitement from health policy experts who welcomed the promise it would be “free from profit-making incentives and constraints.”
Heavy corporate footprints in their employee’s health care are coming from a place of frustration, said Travis Singleton, senior vice president of Merritt Hawkins, a leading national physician search and consulting firm based in the Dallas area.
“I think they’re saying to insurers and providers, We’ve given you plenty of time to fix it on your own and you haven’t,” he said.
Still, not everyone is ready to blow up the status quo.
“The Texas Medical Association has been opposed to bundled payments,” said Dr. Carlos J. Cardenas, a McAllen gastroenterologist and president of the nation’s largest state medical association with 50,000 members.
The group believes most bundled plans leave physicians vulnerable to inadequate compensation, especially if treatment has been difficult and time-consuming.
“We really believe physicians should be involved in the development of these models because it is their services that are necessary,” Cardenas said.
There is also concern that locals are shut out when their patients are flown hundreds of miles away to be treated by a doctor they have never met before.
Travel carries its own risks, said Dr. Arthur “Tim” Garson, director of the Texas Medical Center Health Policy Institute, adding that most patients and their families want to be close to home.
“As a short- to medium-term idea, it is brilliant. As a long-term solution you don’t want every large corporation in the United States deciding that they’re going to send their employees all over the country,” he said. “It behooves the Walmarts of the world to look locally and use those facilities if the outcomes are even close.”
But he applauds Walmart and others for stepping up to find their own solutions.
“It’s shame on all of us that these corporations have to do it. The system should be better than this,” he said. “And shame on us if we don’t learn from this.” Medical merry-go-round
In Gordon Warlick’s telling the trouble started last June while working in triple-digit heat. A sudden and terrible pain shot through his chest and left arm. He thought he was having a heart attack.
The truth is his medical problems had been building in stealth for years, the wear and tear of four decades of loading and unloading heavy freight.
As people age the cushion between the discs, or bones, in the neck deteriorate. Small growths called bone spurs can form. In Warlick’s case bone spurs were pushing against his spine, causing nerve damage that if left unchecked would lead to paralysis.
By the time he arrived in Houston, his left arm was dangling useless, so limp he could no longer slide it into a shirt without help, his fingers too weak to pick up a soda bottle.
His medical merry-go-round in Oklahoma included emergency rooms, trips to his primary doctor, a nerve study, and a meeting with an alarmed orthopedic surgeon who said Warlick was in big trouble. But that doctor also said he didn’t do necks. Warlick would need a referral for a neurosurgeon.
“I was just so sick and tired of getting run around,” he said. “I’m watching my arm disappear and I still don’t know what’s wrong with me.”
Although he had insurance, he also knew costs were mounting.
“It was like everyone wanted a piece of the pie,” he said.
He remembered the Centers of Excellence program from some past HR meeting. Sounded almost too good to be true. Soon stacks of paperwork arrived and medical records needed fetching. To qualify he had to be tobaccofree. After dipping Skoal for 35 years he gave it up the next day.
In early December Dr. Daniel Kim, a renowned UTHealth neurosurgeon at Memorial Hermann, told Warlick by phone he could either have the surgery lo- cally or travel to Houston. But he needed to do something quickly.
Walmart gives employees the choice of participation. But if they don’t get treatment at a designated Centers of Excellence hospital their treatment is considered out-of-network and the company’s insurance pays only half. That cemented the deal.
“I’m not going to be bashful. I liked the idea of no cost,” he said.
Surgery in Houston was scheduled for Dec. 28, but when Warlick called his local primary care physician to say he needed some basic pre-operative tests and post-surgical follow-up care, the doctor apparently scoffed.
“Your doctor is not on board. Never has been,” Warlick said the office staff told him. That was four days before he was to leave for Texas.
He scrambled to find another doctor in his network who would cooperate. And then, suddenly, he and his wife were boarding a plane the day after Christmas.
“This ain’t happening,” he thought as they landed. “I’m just a hick from the sticks.”
Two days later Kim sliced open Warlick’s neck to get to his spine. They call it going in through the front door.
“It’s real delicate real estate,” the surgeon said later.
One hour and four minutes later it was over. When his eyes blinked open a nurse did a quick assessment.
“Do you know where you’re at?” she asked. “Houston, Texas.” By the time his wife got back from the cafeteria Warlick was sitting up in bed watching football. The next day he was discharged to recuperate at his hotel. He didn’t even need a neck brace. Movement was returning at remarkable speed.
On Jan. 3 the couple flew home, shuttled to the airport in a Town Car.
“It’s a little ouchy,” he said recently, “but I’m fine.”
And bored. He’s itching to get back to work.