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Walmart, other employers get choosier about workers' doctors

The Wall Street Journal. logo The Wall Street Journal. 4/4/2019 Melanie Evans

Walmart Inc. and other employers want more say over which doctors care for their workers, and they are ramping up efforts to pick and choose physicians included in health plans as they seek to reduce health spending.

Many big companies are mining data from their own health plans and public records and working with consultants to compare physicians, searching for those with the best results and competitive costs. Top doctors earn favored spots in health insurance offered to workers; poor performers are more costly for patients or excluded entirely.

More than 5,000 members of Walmart’s health plan have seen doctors chosen for performance under the retail giant’s program, which covers travel and medical costs to bring employees to select doctors at top hospitals for some surgeries, such as orthopedic and spine procedures, and cancer care.

Results convinced Walmart executives that choosing top doctors is vital, said Lisa Woods, who helps oversee the company’s health benefits.

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Employees in the program spend less time in the hospital, need less expensive follow-up care and return to work more quickly, the company reported last month in the Harvard Business Review. Many were able to avoid surgery altogether, as Walmart’s selected surgeons recommended other options. The program is popular with many employees, but some have been frustrated when told surgery is not necessary, the company said.

The company is seeking to bolster the program, which is run by the Pacific Business Group on Health and Health Design Plus, a consultant that administers employer health plans. The number of workers who saw top-performing orthopedic doctors doubled last year after Walmart scaled back coverage for other physicians. As of January, use of Walmart’s chosen doctors for spine surgery is required for coverage. It won’t pay for surgery elsewhere.

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The Bentonville, Ark.-based company also is working with startup Embold Health, founded by former Walmart executive Daniel Stein, to identify top-performing doctors in local communities. Walmart plans to expand its effort to steer employees to top doctors to include chronic diseases such as diabetes. That would be a significant expansion of the tactic for the country’s largest private employer, which could then direct many of its 1.5 million U.S. workers to preferred doctors for more common illnesses. Today, Walmart selects doctors nationally, often requiring lengthy travel by workers.

Others are joining: Four companies signed on this year to the Pacific Business Group on Health program, including one global company with more than 225,000 U.S. workers, the coalition said.

Singling out doctors is an ambitious effort by employers to wrest more control over health spending, which is projected to pick up with labor-market strength. Health plans have narrowed the choices available to insured workers, but selection largely focuses on groups of hospitals and physician practices, not individual doctors.

“It puts providers on notice,” said Paul Fronstin, director of health research and education at the Employee Benefit Research Institute. “Once you’re left out, it causes you to question why.”

Comparing doctors’ quality is challenging; to judge performance, an analysis needs to look at doctors who care for at least 35 to 45 similar patients, research suggests. A doctor may have patients from multiple employers and insurers, and data on the doctor’s performance is spread across each. Patients may also see multiple doctors, making it difficult to decide which is most responsible for their care, and results can be affected by hospitals and other medical staff.

“We’re still struggling with how to profile individual physicians,” despite two decades of research, said physician and Harvard Medical School researcher Ateev Mehrotra. “There is an enormous disconnect between what patients want and what we can give them,” he said.

One employer coalition, the Health Transformation Alliance, has pooled health-plan data for roughly three million workers across 50 large employers, including International Business Machines Corp., JPMorgan Chase & Co. and Berkshire Hathaway Inc.’s BNSF Railway Co., and is analyzing physician performance with IBM Watson Health, according to HTA’s chief executive, Robert Andrews.

The coalition’s first target is diabetes care by endocrinologists, comparing costs of medical care and outcomes such as hospitalization rates for complications, said George Murphy, who oversees health benefits for Lincoln Financial Group and is leading the alliance’s analysis. The effort seeks to compare similar patients across doctors, so physicians who care for sicker patients aren’t penalized.

Employers spend billions of dollars on workers’ health benefits each year but have struggled to use that purchasing power. And attempts to be more selective regarding care quality have met pushback from some hospital systems. Contracts negotiated in secret between dominant hospitals and insurance companies acting on behalf of employers can stifle such efforts, The Wall Street Journal reported.

Walmart’s existing program identifies top providers in roughly a dozen regions. Employees like Steven Moore, 62, then fly or drive with a care giver to those providers at the company’s expense.

Mr. Moore and his wife traveled from their home in eastern Maine to the Boston area to see one of Walmart’s selected surgeons to replace Mr. Moore’s knee last November. A Walmart representative contacted by Mr. Moore after he booked his surgery at Calais Regional Hospital near his home told him he could switch to a surgeon in the Boston area, where the procedure would be free.

Walmart, along with home-improvement giant Lowe’s Cos. and health-care supplier McKesson Corp. saved an estimated $19.4 million in 2017 for those patients who saw employers’ selected spine and joint surgeons, largely because employees avoided costly complications and unnecessary medical care, Walmart reported this month in the Harvard Business Review. Lowe’s and McKesson also operate such travel programs.

More than half of those covered by Walmart’s health plan who traveled for spine surgery between 2015 and 2018 recommended by a local doctor discovered the procedure wasn’t necessary, according to Walmart. Twenty percent who had been told they needed new hips or knees didn’t.

“I signed up,” said Mr. Moore, who spends most of his workdays standing as an automotive-service manager for Walmart. The surgery was successful, he said, and he has returned to work, can do more at the gym and sleeps at night without pain.

Health Design Plus compares how often patients unexpectedly return to surgery or develop an infection along the surgical site and how often surgeons perform operations. “Not every doctor who has applied to be part of it has been accepted,” said Ruth Coleman, who founded the company.

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