Last year, Walmart announced a plan to provide full primary care services to consumers nationwide within five to seven years. With its latest announcement, as reported by The New York Times, it now intends to start fulfilling its promise. Starting with six clinics in South Carolina and Texas, Walmart announced its intention to open six more clinics by the end of 2014. Walmart stores are often in rural areas that are medically under served, and they may be leveraging their locations to provide medical services in these under served areas. A big winner in this new development may be QuadMed, the service provider who won the contract to partner with Walmart in this effort.
How Walmart intends to use these primary care clinics isn’t completely clear. The traditional QuadMed model has been to provide comprehensive primary care services and to be the patient’s sole primary care provider. Their clinics typically use primary care doctors, with nurse practitioners supplementing the care. Specialty care is typically referred to the specialists in the community, but QuadMed doctors provide all the primary care, even in the care of complex cases.
But in the Walmart deal, there’s a subtle difference. Nurse practitioners will be providing the care with oversight of physicians, but the physicians won’t actually see patients – just providing oversight. This is a different model that may have implications for Walmart. As reported in The New York Times, the QuadMed Medical Director, Dr. David Severance said, “In that circumstance (complex care patients), it’s our desire to get those individuals established with a primary care provider, preferably a physician within the community.”
This is a different approach for QuadMed. The Walmart clinics won’t be a primary care center, but will employ a nurse practitioner model that uses physician in the community for primary care, in some cases. This model has similarities to the Walgreens and CVS approach of “retail clinics” that provide a limited scope of services and don’t deliver primary care. QuadMed has provided more comprehensive services, that of a patient-centered medical home led by a strong primary care physician. Their clinics have an excellent track record of providing cost-efficient, high-quality care in a timely manner. This new model of care will need to be delivered with a mid-level approach and a partnership with a physician in the community. That may be tricky.
The Walmart approach to delivering outpatient care could fill an important void, especially in under served areas. I was surprised to learn the Walmart clinics will only be open 8:00 a.m. – 5:00 p.m. Monday through Saturday, and 10:00 a.m. – 6:00 p.m. on Sunday. I imagine the hours will expand over time to offer more evening hours to better compete with urgent care centers—especially in Texas, which doesn’t restrict free-standing emergency and urgent care centers. To be successful over time, the clinics will also need to accept their patient’s private insurance; this will be another change in the QuadMed model.
Medical care can be fragmented, with multiple physicians treating the same patients, but not communicating well. This fragmentation can lead to medical errors, inefficiencies and increased cost. The physicians overseeing the Walmart clinics should have a clear method of communicating with other physicians caring for these patients, ensuring all involved are aware of any diagnoses and treatments resulting from the clinic visit. There should also be a method to avoid duplicate lab tests and x-rays – a common problem in today’s medical care community. Well-run centers generally do a better job of using generic prescriptions, managing referrals to specialists, and avoiding unnecessary tests, especially CT and MRI exams. Since the actual care will be delivered by nurse practitioners, not by physicians, close oversight will be important to avoid these pitfalls.
This is a big step for Walmart, and I’m hopeful these clinics perform well. Will Walmart one day be the largest provider of primary care in the U.S.? Don’t be surprised to see that happen.
Michael L. Taylor, MD, FACP
Chief Medical Officer
The recent New York Times article, As Hospital Costs Soar a Single Stitch Tops $500, discusses the cost of an Emergency Department (ED) visit. EDs are under intense scrutiny by all parties – payers, employers, providers, and the government – about cost, quality and patient-engaged care. In fact, nationally, 62% of ED visits are urgent care (not emergent), making them more of a “department of available medicine” than necessary. This varies across the country, where some markets show ED usage at 42% urgent visit share, while others tower north of 90%. Avoidable visits or overuse are typical of both Medicaid/self pay and commercially insured individuals. A national savings of $4.4 billion is possible if 20% of ED visits are redirected to an alternative or lower-cost care site.
Reform-based Medicaid expansion implies more demand for EDs, and requires adequate actual or virtual capacity. The opportunity is to provide alternative care settings. Some providers have had success in offering preventive screening physicals, care at urgent care centers (that accept insurance) and direct one-one patient engagement. One health system was able to reduce ED business by $1.5 million in Medicaid/self pay by reaching out to “frequent fliers” (5 or more ED visits per year) and educate them that the ‘next time,’ they can get the same or more appropriate care at a community health clinic. Providing the right capacity for the right care type in the right service setting goes a long way to protect the ED for the truly medically needy.
Commercially insured patients can also over-use the ED. 29% of employer-paid commercially insured patients, presenting with both an unavoidable and emergent condition, belong in the ED. 42% could have been cared for in a primary care setting. The net savings for redirecting commercially insured visits to a physician office setting is $1171 per visit. This invites a structure for an urgent care service line in physician offices.
The New York Times article states that compared to alternative outpatient care, the price of an ED visit is high, especially from the view of the cost-accountable consumer. However, EDs provide crucial health services, and there is a price for those life saving resources. What types of care belong in the ED is another matter that underscores its role at the eye of the storm of shifting outpatient care. All stakeholders – payers, employers, consumers, the government, and providers – are participating in the shift.
For more details, please download one of these publications.
Delivering Profitable Growth Through Market Intelligence, Dunn, MacCracken, 2012
Avoidable Emergency Department Usage, HealthLeaders Media Fact File, October 2013
VP, Advisory Services
A recent NPR report, Health Care Costs Are Projected to Outpace Economic Growth, shared that healthcare costs are projected to increase next year, but more slowly than in the past. Healthcare spending data from Truven Health shows that hospitals remain at the epicenter of healthcare spending.
Our reports show that hospital spending through Q2 2013 is nearly 4.5% higher than last year. Among all healthcare spending, the low spend is in pharmacy and drugs (1.6 percent), with a moderate spending increase in physician spending (1.6 percent). Since 2006, hospital spending has been the escalator of higher healthcare spending, driven partly by sicker inpatients and the growth of hospital outpatient business, so this is not unusual.
The escalation of hospital outpatient business is reflective of an expanded care continuum by most hospitals, as well as more responsive care delivery to forestalling readmissions and eliminating unnecessary admissions.
VP, Advisory Services
Pricing transparency is more crucial to consumer provider selection, given more healthcare spending. Price and affordability are one of the top two factors defining quality for Generation Xers and Baby Boomers, and the third highest factor among the younger Millennials and older Generation Xers. The recent article, Disruptive Innovators: Cost Competition Puts Pressure on Providers underscores the future impact to providers. This is more apparent in outpatient care, where there are many more competitors for the same provider services. Providers wanting to keep the educated, informed and patients willing to act will need to engage around direct price competition – via payments, rates and payer channels. The Truven Health Treatment Cost Calculator integrates payer coverage benefits applied to any planned procedure, and gives the consumer more provider switching options than seen in the past. For the Millennial deciding between seeing the doctor or spending money on food, entertainment and cell phone fees, healthcare may be postponed. The Baby Boomers and Greatest Generation have higher loyalty to primary care providers, and may have a comparatively slower rate of defection for pricing purposes for planned procedures, such as the colonoscopies.
Complete a short form to download the Truven Health research brief, Matching the Market: Using Generational Segments to Attract and Retain Consumers, that explains the motivations behind four current generations:
These generational attitudes affect how consumers view a variety of healthcare decisions.
- Greatest/Silent Generation (adults born before 1942): Physician Directs Me
- Baby Boomers (1943–1960): Engage Me
- Generation X (1961–1981): Educate Me
- Millennials (Adults Born Since 1982): Connect With Me
VP, Advisory Services
In today’s market, providers planning for service reconfiguration are focusing on several areas: physician networks, outpatient networks, payer risk initiatives, acute care provider partnerships, and pre-/post-acute care provider partnerships. Driven by healthcare reform, the provider delivery system is rapidly consolidating and contracting in new ways. With the new risk and value-based reimbursement incentives, hospitals and health systems have to develop comprehensive care networks that will provide the right care, at the right price, in the right setting.
So how do providers begin to bridge fee-for-service and value-based care? With strategic planning. In fact, strategic planning has never been so important. Being willing to make new connections and take risks will be hallmarks of a successful planner.
Using the same approach to strategic planning and involving the same planning stakeholders won’t work under healthcare reform. Planning processes need to be more flexible, frequent, and adaptive to ensure that hospital leaders have a strategy for acquiring and delivering care through partnerships.
How can hospital planners get started?
Complete a short form to download the full issue brief.
- Engage a larger group of internal stakeholders in the strategic planning process, such as physician leadership; fiscally aligned physicians via the physician-hospital organization (PHO) or employed group practices; and senior clinical and operational leaders.
- Prepare capacity for the arrival of the newly insured.
- Coordinate the outpatient network with the strategic business plans.
- Leverage performance best practices.
- Establish provider partnerships with pre- and post-care delivery providers.
- Assess payer risk initiatives by episode-driven care.
Vice President, Advisory Services