business

Wal-Mart eyes more involvement in medical care services

A report by the big box retailer suggests it is looking to provide care as part of health system reform, but it's unclear exactly how.

By Victoria Stagg Elliott — Posted Nov. 28, 2011

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Wal-Mart Stores Inc. is apparently taking another crack at the health business, again bringing up the question: Will the world's largest retailer have a major impact on patient care?

Wal-Mart has sent a request seeking vendors to help expand the breadth of its retail clinic operations into diagnostic and chronic care services. But despite its ability to dominate in retail, health care has been a tougher business for the company. It has had success with pharmacy-related initiatives but a spottier record with in-store clinics.

The difference, analysts say, is that although Wal-Mart has direct corporate control of its pharmacy projects, it must contract retail clinic services to outside hospitals or medical operators because of state laws limiting the practice of medicine to corporations formed for that purpose. Thus, the company can't instantly institute a highly market-disrupting, chainwide initiative for patient care.

"This is not the way Wal-Mart does things," said Tom Charland, CEO of Merchant Medicine, a retail clinic consultancy firm in Shoreview, Minn. "They do things efficienctly. They do things on a large scale. But health care operates like no other industry."

NPR and Kasier Health News reported Nov. 9 that Wal-Mart had issued a request for information to potential vendors that could provide diagnostic services and chronic care management.

The list of diagnostic services included allergies, lipid abnormalities, sexually transmitted diseases and liver disease.

Diabetes, asthma, obesity, arthritis, sleep apnea and HIV were on the list of candidates for chronic care management. Partners were to be selected on Jan. 13, 2012.

After the report, Wal-Mart issued a statement from John Agwunobi, MD, MPH, president of Wal-Mart's U.S. Health & Wellness division. "The RFI statement of intent is overwritten and incorrect," he said. Wal-Mart declined further comment.

However, the company has not withdrawn the request. "It's clear they are bound and determined to participate," Charland said. "But I don't think they know where they want to go with this."

Wal-Mart announced in 2007 that it will host 400 retail clinics by 2010. At the time, the company had 58. Today, Wal-Mart has about 140 clinics and rents the space to local medical groups or hospitals.

Not all of the 2007 groups continue to operate clinics in Wal-Marts; some jumped ship, complaining about signage and space restrictions.

Wal-Mart has entered the health care system in other ways. The company offers employees a personal health record through Dossia, which is expanding services to member companies. However, five years after its introduction, few Wal-Mart employees -- and few workers of all the employers behind the Dossia consortium -- are using the PHR, reflecting the struggle of patients to accept the technology.

Pharmacy success

Efforts to drive traffic to Wal-Mart's pharmacies have been more successful. In 2006, Wal-Mart became the first national pharmacy chain to price certain generics at $4, linking their sale price to the cost of acquisition rather than the cost of a competing name brand. Most other national chains followed Wal-Mart's lead.

In the past year, a partnership with Humana's Medicare Part D program has boosted Wal-Mart pharmacy sales, according to statements made during Wal-Mart's third-quarter earnings call on Nov. 15.

According to third-quarter results from Humana released Oct. 31, membership in the company's prescription drug plan grew 47% from Sept. 30, 2010, to Sept. 30, 2011, primarily due to its low-cost plan with Wal-Mart. Humana said the price of less than $15 a month makes the Wal-Mart co-branded plan the least expensive of its kind. In exchange, members must fill their prescriptions at Wal-Mart pharmacies. Wal-Mart did not say how much revenue it generated from the deal.

Experts are unsure that, whatever Wal-Mart's plans for expanding the size and scope of retail clinics, the company can match the success of its pharmacy-related offerings.

People who track health care industry trends believe that some of Wal-Mart's problems are due to the inability of retail clinics to find traction. Their numbers have grown in the past decade but generally have fallen short of projections, with growth being essentially stagnant in the last two years. About 1,220 store-based clinics operate across the U.S.

Many started out as cash-only practices and began taking insurance when that was unsuccessful. Experts believe expanding chronic care services is the latest attempt to make this model work.

"Acute care was not a viable business model, and they started expanding into chronic disease management," said Glen Stream, MD, president of the American Academy of Family Physicians. "Even that model was not viable. I see this expansion into more full-spectrum primary care as their next effort to find a viable business model."

Although plans for a full platform may have been overstated in Wal-Mart's request for information, industry watchers and health policy advocates have several theories about Wal-Mart's goals and plans.

Most believe that the retail giant intends to expand into medical care. This could take the form of more retail clinics or the establishment of freestanding facilities.

The company, which announced in October that future part-time employees will not qualify for health insurance, could be looking to provide medical services to employees. Or it could be looking to further drive traffic to stores.

Total net sales, including in stores outside the U.S., increased 8.2% to $109.5 billion, according to third-quarter results. Sales at U.S. stores grew 2.7%, but traffic declined 1.3%.

Experts say the most probable theory is that the company wants to take advantage of increased health care demand, which will most probably result from the complete rollout of the Patient Protection and Affordable Care Act by 2014.

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External links

Walmart request for Information, via Kaiser Health News (link)

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