Wal-Mart Offers Medical Tourism Legitimacy

November 17, 2012
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Employers are quieting changing their plans to encourage care delivery at high volume, good outcome, low cost facilities….

Employers are quieting changing their plans to encourage care delivery at high volume, good outcome, low cost facilities….

It’s a trend that I’ve been predicting for the last five plus years – medical tourism both domestically and internationally. It seems that the domestic approach got a big boast in recent weeks as Wal-Mart announced that it will begin offering their insured employees the option of undergoing certain procedures at highly ranked health systems across America with very little if no out-of-pocket cost to the employee — travel included (sometimes, even First Class). The approach is being taken for those high end procedures where it’s clear that volume equate to quality – for example, heart and spine patients – where data supports that notion that having the procedure done at a high volume institution results in improved care and lower costs.

The trend has started with the large companies that can negotiate a bundled rate with a health system in return for a guarantee on the delivery of a certain volume of services from the employer. Companies that are participating include: PepsiCo (250,000 employees), Lowe’s (234,000 employees), HCR ManorCare (64,000 employees) and, of course, Wal-Mart (1.1 million covered employees). Generally, the approach that’s taken is the procedure is offered at a highly reputable care delivery organization (e.g. The Cleveland Clinic) with no co-pays or deductibles and travel expenses for the patient and a caregiver or family member are frequently thrown in as part of the deal. The employee can still have the procedure done at their favorite, local hometown hospital but then the co-pays and deductibles apply – so there’s an out-of-pocket expense for the employee.

So, who is benefiting from this on the care delivery side? To date, contracts have included such institutions as The Cleveland Clinic in Cleveland, Ohio; Geisinger Medical Center in Danville, Pennsylvania; Johns Hopkins Medicine in Baltimore, Maryland; The Mayo Clinic in Rochester, Minnesota, Scottsdale, Arizona, and Jacksonville, Florida; Scott & White Memorial Hospital in Temple, Texas; Virginia Mason Medical Center in Seattle, Washington; and, Mercy Hospital Springfield in Springfield, Missouri. So, what’s with the Mercy Hospital in Springfield? Well, it just so happens that the hospital is the closest facility to Wal-Mart’s corporate headquarters in Bentonville, Arkansas.

Whether or not this reduces costs or results in better outcomes is an open question. But, the bet on the part of the companies is that savings will accrue. And, it’s clear that the health systems are very interested in gaining this type of business as a “bundled payment” arrangement. Randy Hargrove of Wal-Mart in announcing the companies decision noted that, “We’re looking to expand these programs to reduce our associates’ out-of-pocket medical costs and provide the highest quality of care and we plan to expand this program to include more procedures and providers.”

Furthermore, it seems that the shift is primary a “domestic” phenomenon. International medical tourism where the obvious cost differential can be huge has never really taken off despite early predictions that it would create a major shift in how healthcare was to be delivered. The Deloitte Center for Health Solutions has labeled the call for foreign medical tourism as “tepid” at best. We should anticipate that the trend for domestic medical tourism (is travel to Cleveland really “tourism”?) will only continue in the coming years as employers look for ways to reduce costs and enhance quality by driving better outcomes.

 

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