What does Wal-Mart’s Healthcare Retail and IT Play imply for Patients, Physicians, Providers and the rest of us?
This blogpost was first published on the 13th of August, 2008.
Wal-Mart, the largest retailer in history, is betting big on Healthcare and why not!
Given the escalating costs of healthcare in a recession impacted economy with well over 47 million Americans bereft of any kind of insurance coverage, the notion of low cost retail clinics at your friendly neighborhood retail store, is an idea whose timing is night! After all, can you and should you pay for a “Mercedes Benz” like treatment at your physician’s clinic that will cost an arm and a leg for a common cold or strep throat, when a walk-in clinic at your nearest mega-retail store can offer “Toyota quality” treatment from a qualified and experienced nurse practitioner for perhaps as little as $30-60 per patient?
Wal-Mart’s Retail Healthcare Strategy
Wal-Mart currently has over 40 clinics operating in its stores and plans to partner with healthcare providers and healthcare entrepreneurs to open 600+ clinics in the next couple of years, with a potential for more than 2,000 clinics in its stores in the foreseeable future [Ref 1].
What is this significant for mainstream Americans? Given the ever escalating costs of healthcare, this is a move towards delivering right quality, right priced healthcare with price transparency accessible to millions who otherwise cannot afford treatment today, but have a reasonable expectation for “value for their healthcare dollars” similar to their spend in other areas.
The retail clinics are anticipated to be operated by third party physicians and nurse practitioners with practice management (patient registration, billing, e-prescribing) and electronic medical records (EMR) software provided by eClinical Works, a healthcare IT company located in Westborough, MA [Ref 2].
The promise in addition, to the quality of treatment delivered is the use of electronic health records (EHRs) to ensure transparency, accuracy and portability to assure a better customer experience. This would be well aligned with the Obama administration’s mandate and initiatives to drive electronic health record adoption across the country, to drive higher transparency, accuracy and quality at a lower total cost of treatment. Also implicit is the promise that medications if prescribed will be instantly transmitted to the in-store pharmacy for pickup before the patient leaves the store – “one stop shop” now acquires new meaning for many of us!
Driving Healthcare IT (HIT) adoption – Electronic Medical Records (EMRs) and Physician Practice Management
Wal-Mart’s move in healthcare does not stop at merely installing walk-in clinics at its retail stores. Given the Healthcare IT stimulus provided by the current administration that offers physicians over $ 40,000 per year in subsidies to install and embrace “meaningful usage of EHRs” to enable “evidence based medicine” i.e. treatment that can be meaningfully monitored, measured and analyzed to ensure superior patient outcomes, and also compared against peers to potentially enable “pay-for-performance” models currently unknown in healthcare, this presents a significant market opportunity for Wal-Mart.
Given the miniscule 17% or so penetration of EHRs at small physician offices unlike large hospitals (according to a recent government sponsored survey in the New England Journal of Medicine), the incentives outlined above, as well as the penalties for lack of “meaningful adoption” of EHRs, it can be reasonably anticipated that the next 5 years will see significant adoption of these technologies to move us into the 21st century. After all, isn’t it a travesty that in today’s technology enabled era, our medical records continue to languish in paper format within manila folders in doctors offices?!
Figure. Andy De’s Analysis of Wal-Mart’s Retail Healthcare (Business-to-Consumer (B2C)) and Healthcare IT for Small Physicians Practices (Business-to-Business (B2B)) Strategy
Wal-Mart’s strategy (please see the service-market opportunity matrix above) for creating and penetrating this market is the stuff that business case studies from Harvard Business School articulate, to train their next cohort of consultants and managers (there is a current HBS case study on eClinical Works referred below)! Given that Wal-Mart’s Sam’s Club subsidiary has over 200,000 healthcare providers and physicians, it will offer the e-Clinical Works EMR and/or practice management software offering loaded ion Dell’s servers, for approximately around $ 25,000 for the first physicians’ practice and about $ 10,000 for each additional doctor within the same practice [Ref 1]. Following the installation and training, estimated annual maintenance and support costs are anticipated to be in the $ 4,000 -6,500 on an annual basis. Dell will provide the installation of the hardware with eClinical Works delivering the software installation, training and maintenance. As well, physicians can anticipate a hosted option – currently offered by eClinical Works, priced at around $400/month for EMR+ Practice Management or $ 250/month for EMR alone [Ref 3].
Can Wal-Mart’s Personal Health Record (PHR) be far behind?
Given this ambitious strategy to address the needs of both physicians and patients, Wal-Mart also has a significant opportunity to drive adoption of Personal Health Records (PHRs) with a competitive offering similar to those offered by Microsoft Health Vault and Google Health.
Wal-Mart is part of a consortium called Dossia – formed by a group of companies including AT&T, Pitney Bowes, Applied Materials, BP, Cardinal Health, Sanofi-Aventis. Dossia’s goal is providing employees, their dependents, retirees and others in their communities with an independent, lifelong health record, one that is personally-controlled, private, portable and secure [Ref 4].
Dossia’s Founders are funding Dossia and its platform called Indivo, an independent secure, non-profit infrastructure for gathering and securely storing information for lifelong health records. At the request of employees and other eligible individuals, Dossia gathers health data from multiple sources. Employee participation as a Dossia user is completely voluntary and individuals have complete control over who sees their information.
Dossia’s PHR platform called Indivo, provides a secure data infrastructure that aggregates and stores health information for individuals to create a lifelong personal health record with medical information from multiple sources. Once gathered and securely stored in a decentralized database, the health information is continually updated and is available to individuals for life even if they change employers, insurers, or doctors.
Although access to Dossia’s PHR platform and database has been initially limited to the employees of founding companies including Wal-Mart, it is perhaps not inconceivable that this could be scaled to meet the needs of consumers of these companies as well in the foreseeable future. It is also not inconceivable that Wal-Mart could potentially offer this free to patients (consumers) of its in-store Health clinics as a loyalty building mechanism (similar to frequent flyer advantages offered by airlines) to build “stickiness” for both the clinics and its pharmacies. For instance, having your personal health records as well as all of your current medications on a secure server that only you can access anywhere, anytime, to retrieve your medication information for the pharmacy, or provide your physician in the event of an accident while on vacation, is compelling especially for the elderly or the technologically challenged, and could offer “barriers to switching” for Wal-Mart, going forward.
As well, bundling Dossia’s PHR platform and services along with the eClinical Works physician practice management and EMR offering (after rending eClinical Works interoperable with Dossia) would also make this even more compelling for physicians who can now not only digitize their medical records, but also potentially offer interested patients a digital and secure copy of their personal health records (PHRs) gratis, or as a fee based service. While this is perhaps easier said and done, given the lack of universally accepted Healthcare Interoperability standards, this could be a significant step in the right direction, especially given the incentives for adoption provided by the ARRA (American Recovery and Reinvestment Act of 2009) stimulus from the Obama administration, referred to above.
While this is currently strategic prognosis on the part of this author at this time, monitoring Wal-Mart’s moves in PHRs will be interesting indeed, going forward.
Hey Doc, Wal-Mart is your IT Provider and you better believe it!
While the notion of purchasing your IT software, hardware and services from your retailer may pose questions for many physicians, Wal-Mart has adroitly mitigated this risk thru its partnerships with a well known brand like Dell and a well known small practice software offering from eClinical Works (currently used by over 25,000 physicians) [Ref 1,2]. Proof of this concept will be provided to prospective physicians thru the usage of this software and hardware within the retail clinics currently in place within the Wal-Mart retail stores.
Given the high cost of sales and marketing involved with selling healthcare IT to small physicians offices, the adoption, scalability and success of Wal-Mart’s “aggregator model” could potentially be a game changer in Healthcare IT. At the same time, the provision of quality, transparent healthcare at a low cost within its walk-in clinics, if successfully embraced, may well be the panacea for millions of Americans without insurance – the next 3-5 of years will be interesting indeed, as we monitor and perceive the progress of Wal-Mart’s Healthcare strategy and execution.
1. Wal-Mart plans to market Digital Health Records System, Steve Lohr, The New York Times, March 11, 2009.
2. eClincal Works: The Paths to Growth, Harvard Business School case study # 9-807-025 by Robert F. Higgins and Mark Rennella, February, 2007, Harvard Business School Publishing, Boston, MA.