What Will Wal-Mart Health Care Look Like?

The following were notes taken at a recent speech given by columnist Ron Galloway, who often writes on Wal-Mart’s effect on the future of health care:

  • 130 million people per week go to Wal-Mart.
  • Wal-Mart is an IT company — and seeks to apply this knowledge to other businesses.
  • Wal-Mart has saved $1.6 billion for pharmacy customers with their $4 generic script program.
  • Wal-Mart plans to have 400 clinics by 2011, and 2,000 clinics by 2014!
  • Wal-Mart needs 11,000 clinic visits per year (in each store) to break even. Each store averages 1.7 million visits per year, so only 7/10 of 1% of visitors can stop by the clinic to make it break even. The fixed co-pay to see the Nurse Practitioner is $65.
  • Roughly 40% of clinic users are uninsured.
  • By 2014, Wal-Mart is projecting a minimum of 11,000 clinic visits to 2,000 stores, which equals 22 million patient visits. And all visits will be captured in their EMR.
  • Wal-Mart projects that 12.5% of their clinic patients would have gone to the Emergency Room. Based on 2,000 clinics, this is diverting 2.8 million visits away from emergency rooms.
  • However, Wal-Mart projects that 10% of clinic visits (about 2.2 million) will require a referral to more specialized care. Even assuming a modest value of $1,000 in the cost for additional services, this equates to $2.2 billion in referral value. Will hospitals be interested in partnering?

Comments (9)

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  1. Virginia says:

    For as much as I loathe shopping at Wally World, I have to admit that I think this is a step in the right direction.

  2. Brian Williams. says:

    This is a great example of how the benefits of capitalism are easily extended to everyone, not just the rich. If only the government would get out of the way…

  3. artk says:

    Is walmart planning to charge you for referring you to another physician? Isn’t that unethical?

  4. Bart Ingles says:

    I wonder if hospitals will begin complaining that the Wal-Marts are draining away too many ER patients.

  5. Tom H. says:

    This is an example of the ways the supply side responds when they have to deal with people spending their own money.

  6. Devon Herrick says:

    If you think back to episodes of Little House on the Prairie, Mr. Oleson ran the general store and was the richest man in town. After all, in much of the United States merchandizing was still a cottage industry 125 years ago. Competition, transportation, logistics and information technology, in addition to equity and debt financing, have totally changed the shape of retailing in the past century. Yet, medical care delivery has hardly changed in the past 100 years because doctors are not free to rebundle and repackage their services; and state laws (shaped by medical societies) regulate how, and by whom, health care can be delivered. Physician care still bears much resemblance to a cottage industry – mostly because of government regulation and third-party payment. If you want access to medical goods and services, you still have to see Dr. Oleson.

    Walmart has the potential to make medical care far more accessible, convenient and efficient if we only allow them to compete; and if patients have greater incentives to act like consumers.

  7. Joe S. says:

    This is fascinating. Exactly what you would expect in a free market for medical care.

  8. Art says:

    An interesting point could be made by stressing the credentials of the Wal-Mart clinics staff, which are being done in chain drugstores as well.

    This is a part of the “new” National HC Reform, where using Nurse Practioners who are authorized to perform a limited number of processes which include prescribing drugs and making referrals. This places Wal-Mart and their clinic competitors in a perhaps conflicting position in the “drug prescribing” and physicain “referral” business, that are not a problem with their physician counterpart that patients can’t see just by “walking in”. While it is impossible to train millions of physicans which takes 10 years, there are millions of nurses who can be “promoted to Nuerse Practitioners” who will become the “General Practioners” that do not exist now and nevr will in the future. But these “referals”
    will never be seen as a “rationing factor”?

    While generics are focused on in the article and are 70% of all prescriptions filled, brands dispensed at Wal-Mart while only 15% of prescriptions, 85% of all prescription dollar sales are in brands drugs. While Wal-Mart customers are getting their generics “on the cheap” the brand drug business is 85% of their sales and profits and increased in price every year.

    And as a huge customer Wal-Mart buys all drugs at the lowest commercial prices but seems to only “pass through” savings on the generics.

    So buy your drugs at the place you can pay the lowest price and buy generic where a drug is equal to or better than the brand class! Buying drugs by reviewing the entire class of drugs offer a huge array of generic opportunities, which while not at the “standard” $4 rate are much less expensive than any single brand drug.

    The big players are just using the old tried and true methods of using “lost leaders” to gain the market sales they want – the most profitable ones on the brands!

  9. marstar says:

    This may be the answer to the democrats healthcare. Instead of government takeover, open healthcare to the free market and notice how good American ingenuity takes off. WO!W