Walmart's Surgical Strike Against Healthcare Costs

Modern Healthcare

October 29, 2012

Walmart is betting that some workers who qualify to travel at the company’s expense for heart and spine surgery may not need it after all.

The retail giant announced this month it would pay for workers to travel for certain heart and spine surgeries to selected hospitals Walmart identified as high-quality. The employer also will cover workers’ out-of-pocket costs.

Workers will get a second opinion at the selected hospitals that may rule out the need for surgery, officials said. The initiative expands on Walmart’s long-standing program to cover costs for workers who travel to the Mayo Clinic for transplant operations.

The effort, said Walmart spokesman Randy Hargrove, seeks to avoid unnecessary care, as well as preventable complications, by giving workers access to hospitals that specialize in certain procedures. “No one wants to have surgery if they don’t have to,” he said.

Tom Emerick, a former vice president of global benefits for Walmart and now president of Emerick Consulting, said patients with heart, spine and transplant procedures often are among a small group of workers who account for a large share of employers’ healthcare costs. The procedures also are among those for which research shows variation of utilization across the United States to care for similar patients, he said, which suggests overuse.

A January review in the Archives of Internal Medicine reported multiple studies that found overuse of coronary artery bypass surgery, a procedure included in the Walmart program.

Emerick, who also is a partner and chief strategy officer for the Chicago benefit consulting firm Laurus Strategies, declined to comment directly on Walmart or the expansion of its benefit for workers who travel to selected hospitals.

Asking the best

Surgeons at the Mayo Clinic find that some patients can avoid or delay transplants, which can be less invasive and less expensive, said Charles Rosen, M.D., a transplant surgeon and chair of the division of transplant surgery for the Mayo Clinic.

“The most expensive transplant that we do is the one that the patient does not need or is inappropriately done,” said Rosen, who also is Mayo’s associate medical director for contracting and payer relations. The Mayo Clinic will continue to contract with Walmart for transplant consultations and surgery.

Leah Binder, president and CEO of the healthcare purchasing coalition the Leapfrog Group, said more employers should follow Walmart’s example to save workers from the risk and pain of unnecessary surgery because transplants require prolonged and invasive follow-up care. “If you can possibly avoid a transplant, you do so. All employers should be doing this,” she said.

Walmart workers who may need coronary bypass grafts, a heart-valve replacement or repair, and other complex cardiac surgery can travel to the Cleveland Clinic; Geisinger Medical Center in Danville, PA; Scott & White Hospital in Temple, TX; and Virginia Mason Medical Center in Seattle.

For spine surgeries, including cervical and lumbar spinal fusion, Walmart workers can travel to Mercy Hospital Springfield in Missouri, Scott & White Hospital and Virginia Mason Medical Center.

Hargrove said Walmart used several criteria to select the centers, including their having established systems and accountability for evidence-based medicine, and physician incentives tied to outcomes, not the number of procedures they perform. One goal is to avoid readmissions, he said. The company is seeking to reduce the variation in cost and quality of care.

Not alone

The Cleveland Clinic is in talks with other employers about similar agreements and has a 2-year-old exclusive contract with Lowe’s for cardiac surgery, said Michael McMillan, the clinic’s executive director for market and network services. The Lowe’s agreement also has expanded to include back and spine surgery and pain management, he said.

Negotiations with employers to create bundled payments have focused on procedures such as heart, spine and orthopedic surgery, which have a more standard and limited set of services than chronic diseases that must be managed over years, McMillan said. National variation in heart, spine and orthopedic surgeries, and increasingly sophisticated quality measures for the procedures also make them strong candidates for such contracts, he added.

Alan Scarrow, M.D., president of Mercy Clinic Springfield, said the Missouri hospital is in talks with other employers. “I just think that this is one of the better ideas that I have seen to contain prices,” he said. “It’s market-driven. It’s based on appropriate utilization of resources. It aggregates care in centers that have shown high quality. The price is something we can be profitable at.”

Scarrow said Walmart is looking to hospitals included in the program to avoid unnecessary surgeries. "Patients come to us for essentially a second opinion,” he said.

Mercy Clinic offered to screen Walmart employees using telemedicine in an effort to avoid unnecessary travel, but the company said it preferred patients meet with physicians in person, Scarrow said. Ultimately, he added, the cost of airfare is far less than the cost of an unnecessary heart or spine surgery.

“If they fly somebody out, and we say, ‘Look, this isn’t appropriate; you don’t need surgery,’ that cost savings could buy a lot of plane tickets,” he said.