How Value Gives Healthcare Providers an Edge
He adds that the organization's involvement in the Walmart plan has attracted interest from multiple employer groups but has had little impact on traditional local insurer negotiations. He sees this type of "shopping" growing in importance strategically for hospitals and health systems—more on the employer level than with individual patients.
Though it's also in the Walmart program, Cleveland Clinic has also made strides with a handful of other national employers looking for high quality, high volumes, and a package price for care.
"Boeing, Walmart, and Lowe's are all significant clients, but we have many others in the pipeline," says Michael McMillan, executive director of market and network services with Cleveland Clinic, a nonprofit academic medical center with 4,450 beds systemwide. "We have good relationships with other employers for second-opinion services."
And Cleveland Clinic sees such value propositions as a key growth area.
"We haven't reached capacity," he says. "We can serve a significant chunk of this employer population."
Only the beginning
The Centers of Excellence program grew out of a similar program that Walmart has conducted for organ transplants for about a decade. In nearly all scenarios involving group health benefits, a small number of people account for most of the healthcare costs incurred.
Tom Emerick, a vice president for global benefits for Walmart who left six years ago to consult with employer clients that wanted to develop similar transplant programs, says that in many employer health plans, between 6% and 7% of employees generate 80% of the costs. If the employer could get a handle on increasing the value of the high-dollar procedures its employees needed, that could make a drastic difference in its annual outlays for health coverage—never mind the benefits to patients who were receiving unnecessary transplant surgery.
In studying transplants, Emerick and Walmart discovered that there was wide variation on utilization around transplants—certainly one of the riskiest and most expensive procedures known to healthcare.
In 1996, Walmart chose Mayo as its partner for transplants.
The eye-opening statistic, he says, is that they found that a significant number of patients, 40%, after being examined by Mayo physicians, did not need transplants. That data has held firm as he's helped set up similar programs in recent years for other employers.
"Over those years, four in 10 people who were told they needed a transplant clearly did not need one," Emerick says. "It's astonishing that it's happening at that rate. And some of these transplants are utterly inappropriate. For some of my clients, it's as much as 60%."
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