Wal-Mart and the Future of Healthcare

I gave a speech at a healthcare association last week, and the main topic of questions directed to me concerned the announcement that Wal-Mart will be selling an Electronic Health Records (EHR) software package to physicians at Sam's Club. Priced at $25,000 the EHR system is priced at half the cost of competing systems. The other EHR vendors at the conference were pulling their hair out. The physicians were loving the fact they could save over $20,000. Sounds like Wal-Mart, doesn't it?

Wal-Mart is poised to become one of the largest forces in American healthcare. Ironically, they have formally partnered with the SEIU in trying to address the issue after withstanding withering criticism from the union for years on healthcare issues such as employees depending on Medicaid for their healthcare. In 2006 Wal-Mart identified healthcare related issues as a priority, as a tactical PR move, but principally as a way to control healthcare costs both inside and outside the company. Their efforts are beginning to now come to fruition, and I believe they'll affect us all.

The first move Wal-Mart made was the shot across the bow of prescription drugs when they lowered the price of hundreds of generics to $4. What then happened? Everyone from Rite Aid to Kroger followed their lead. Wal-Mart's customers have saved $1 billion on prescriptions since this happened. But note nobody lowered their prices until Wal-Mart did.

Wal-Mart is planning to open 400 health clinics in stores over the next few years. Why wouldn't they? 130 million people come through their doors every week. They already have the physical space. Wal-Mart will charge around $55 for a visit. Hospital executives around the country I've talked to welcome this because it will relieve the pressure on their ER's to take care of colds, scraped knees and other minor issues. Nurse practitioners are ecstatic because the clinics will be staffed by NPs, creating thousands of new jobs in their field and raising their profile.

It sounded a bit silly a few years back when Wal-Mart opened optometry centers in their stores. Get your eyes checked at the same place you get tires and VapoRub? According to Carol M. Lazo, principal of Method Consulting, more than 13,000 people now work in these centers, and 6 million Americans rely on them for vision care.

I often state that Wal-Mart is not a store, it is an Information Technology company. Their servers in Arkansas have the capacity to store everything on the internet two times over. It is in the area of electronic health records where they may have the most impact, through EHR software sales and applying EHR standards to millions of future customers in their health clinics. If it were king of Wal-Mart, I'd go ahead and store a patient's records on their Wal-Mart Money Card. Why not?

WalMart may also become the largest referrer of medical care in the nation, by sending patients in their clinics to physicians when those patients have more serious healthcare needs. Ask a doctor, referrals are the lifeblood of a medical practice.

In 1990 Wal-Mart hardly sold groceries at all. By 2003, by applying scale and IT to the industry, they were America's largest grocer. They apply these same assets to other industries. Wal-Mart is entering the convenience store market in a big way. They are essentially the record label for the Eagles and AC/DC. They decided the HD-DVD/BluRay battle, and may become the nation's largest electronics retailer. Shopped at a Circuit City lately? Thought not.

Wal-Mart does not always succeed however. They tried to emulate Netflix with a DVD rental-by-mail program and failed when it seemed they had all the assets to dominate. They opened stores in Germany, and then closed them and left the country. My theory for this failure is that Germans don't quite understand greeters.

But in healthcare I think through sheer scale they'll prevail, and change the landscape of the industry as a healthcare "black swan." The 3 characteristics of a Nassim Taleb black swan event are 1) it is unexpected, 2) it changes everything and 3) it can be explained in hindsight. Wal-Mart's healthcare effort fits these criteria, especially the second. It will change everything. The iPod black-swanned the music industry. Craigslist black-swanned newspapers. Twitter is black-swanning Facebook as we speak. In much the same way, WalMart will unexpectedly be a black swan in the future of healthcare. Just ask the SEIU.

Follow Ron Galloway on Twitter: www.twitter.com/rongalloway

Comments

[jr23]

i have delt with the clinics a arnp is well trained and can handle many things
but the one in Cape Coral had a dr in tampa as there supervising dr.
it is a waste of money for anything but flu shots,school exams colds. anything that comes up in tests
you have to go to another dr for treatment.
the group went bankrupt, wm made it there money chack cash store.
the other problem is the nurse shortage you need 3 to 4 to run one of these mini clinics
there is not enough revenue to pay them
remember wal-mart only rented the space they don.'t own the practice.
there rx model was a great deal because the ins co do not pay much for rx wm let the uninsured
get the same break .now if they would only learn merchandising at the store level

as for the medical software keep it simple and easy to use cerners is difficult and expensive and
bugy, needs to be straight foward ,voice acctuvation would be a big plus.
and yes I WANT MY RECORD DOWNLOADED TO A MONEY SIZE CARD IN MY POCKET
WITH HISTORY AND TEST IS PLAIN TEXT READABLE ON ANY TYPE OF COMPUTER
we have seen it in scify movies and it would be cheep but most of all it could be here with the patient now

[spinns17]

walmart ownes us ,and this country.wakeup america

[jeffrey678]

This is a true story. While at my Doctors office I asked if I could have a flue shot. My Doctor did not have any and said he would call me IF he receives any deliveries. I called Sams Club and they were giving them out that day for $18.00 a shot. My doctor never called. My doctor would have charged $95 plus $25 for the shot. Health Care in this country is in bad shape when doctors can't get flue shots but retail stores can.

[Sundialsvc4]

Unfortunately, it makes Wal-Mart out to be, not a black-swan, but an angel. The health care system of this nation, like its total economy, is vastly bigger and more complex than this article makes it out to be.

Simple example... so Wal-Mart's clinics make lots of "referrals?" Uh huh. Only for patients that Wal-Mart's clinics (like any other clinic) first determined had the ability to pay them. And if they did issue a referral, big deal: you can't do a thing with it unless you have the ability to pay the doctor to whom you are referred.

Unless, and until, the costs of some baseline level of health-care are made available to a "group of insureds" that consists of "every citizen of the United States," the costs levied against group-members will be excessive in order to cover the costs of those who belong to no group at all ... and because those costs continue to rise, the pool of "no group" people will continue to rise. Costs are rising because the present arrangement makes no financial sense.

Therefore, in spite of the curious reference to "Black Swan," I do not believe that this business model is America's future.

[schatsie]

Have you been to an URGENT care facility? at $55 per visit and paying 30% of that to the NP, if they push thru 10 per hour then that is about $200 per hour.... and probably they will make sure you can't sue them or the practitioner.... not a bad model...

and I despise Walmart for bringing everything in from China and that 5 of the 10 wealthiest people in this country are Waltons, they are getting their pound of flesh from us.

[RightWingMarine]

it's nice to see an article about Wal-Mart that isn't bashing the company for some perceived slight. Wal-Mart sees a need and satisfies the market for that need. Doctors need a cheap way to electronically store medical records and Wal-Mart found a way. They should be commended, not condemned.

[marxmarv]

Walmart didn't find a damned thing. It's been common knowledge for some months that the President wanted to encourage uptake of EMR, and it's just possible that the de facto certification authority, an industry consortium based in Chicago that charges $29k and up for certification, had some small say in that plank. Walmart went to their in-store clinics' EHR vendor, one choice out of a dozen or so certified to the CCHIT '08 standard, and offers to drop ship Dell computers, the EHR software, and some consultants to the purchaser's practice.

Walmart is doing the same thing to the EHR services industry that they did to retail: blow the little guy out of the market.