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Walmart is so desperate to fix health care, it flies employees to top hospitals in other states for treatment

CNBC logo CNBC 3/17/2019 Christina Farr
a group of people performing on a counter: Shoppers walk past the entertainment and electronics section in a Wal-Mart Supercenter store in Rogers, Arkansas.© Provided by CNBC LLC Shoppers walk past the entertainment and electronics section in a Wal-Mart Supercenter store in Rogers, Arkansas.

Bill, an employee at Walmart, had been suffering from mild neck pain and a tremor in his hands. A local surgeon recommended spine surgery as the next course of action.

Walmart decided to send him and his wife on a flight to a hospital in another state, all expenses paid, so he could get a second opinion. He saw a team of clinicians at Geisinger Medical Center, a top hospital system in Pennsylvania. They noticed a subtle shuffle in his step and diagnosed him with Parkinson's Disease.

The employee avoided a painful, expensive surgery that he did not need. Walmart (which is self-insured) saved about $30,000 it would have paid for that surgery, and it also benefited when Bill went back to work after his symptoms improved. Geisinger got paid for the consult.

In the end, Bill's story, which both Geisinger and Walmart shared this week with permission, was a win for everyone.

But it also speaks to a larger trend: U.S. employers are getting increasingly fed up with the myriad problems with the U.S. medical system. Companies pay for about 49 percent of Americans' health care, and are facing rising costs without any real improvements in outcomes.

So Walmart and its partners published a case study detailing their approach in Harvard Business Review, in an effort to disseminate its ideas more broadly.

Walmart's Lisa Woods, who wrote the piece with Jonathan Slotkin, a director of spine surgery at Geisinger, and Ruth Coleman, a health executive and nurse, described how they've succeeded by focusing on more than just lowering costs. They also looked for ways to improve overall health outcomes for their workers, so they could return to work, including by offering travel programs for workers to see doctors at top hospitals who were not incentivized to push for an unnecessary surgery.

Related video: Analyst explains what Walmart is doing right

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'Skinnin' us alive'

Walmart is not the only employer advocating for change.

Berkshire Hathaway's Warren Buffett, who formed an alliance with J.P. Morgan CEO Jamie Dimon and Amazon's Jeff Bezos, has described health care as the "hungry tapeworm on the American economy." The trio of executives formed a nonprofit company in 2018, called Haven, to figure out how to stem health costs with technology.

Walmart, which also offers pharmacy service and health clinics, has been aware of the problem for much longer than that. The Harvard Business Review piece noted that its founder Sam Walton in a meeting with senior leaders almost thirty years ago described health care as "skinnin' us alive" He went on: "if we don't get it done this year, I'm gonna get real upset. I mean real upset."

The company's Centers of Excellence program, which requires its employees to use a curated list of hospitals for some surgeries, has been in place for about six years. (It was optional until 2018.)

It started with a relationship with Mayo Clinic, but Walmart has been forming these arrangements with other health centers including Geisinger. Spine surgeries were an early focus, as they are expensive and often unnecessary.

Sometimes, these hospitals will agree with the community physician and recommend surgery. But they'll often diagnose the patient with a different condition, like Bill, or they recommend physical therapy or other less invasive options instead.

Geisinger's Slotkin described the experience as "concierge, white-glove care that was reserved at other companies only for highly paid executives."

Walmart employees also get their travel paid for to get second opinions on cancer diagnoses and heart surgeries.

At the heart of the program is an idea that health care incentives need to change. Rather than paying health providers for performing procedures and tests, Walmart rewards them for overall health outcomes.

And it's going well, so much so that Walmart wants to encourage other employers to follow its lead. And Geisinger said wants to make the program available to smaller employers, including mid-sized companies.

"This has been a journey we've been on for several years," said Woods, a senior director in Walmart's benefits department, in an interview with CNBC. "We're committed to sharing what we learn."

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