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Walmart to test ideas aimed at reducing unnecessary health care spending

Julia La Roche

As part of an effort to curb health care spending, Walmart (WMT) is testing new health-focused programs in select markets for its existing medical plan.

The goal of the retailer’s new pilot programs is to enhance local care to avoid potentially unnecessary treatments and visits. Beginning in 2020, the nation’s biggest private employer will run pilots in select markets along with its existing medical plan, to see if they can scale across the entire company. Walmart hosts more than 1 million associates and family members on its medical plans.

The idea is to test whether these new programs — called Featured Providers, Expanded Telehealth, Personal Healthcare Assistant, National Quality Provider Resource, and Nationwide Fitness Club Access — can help prevent users from running up unnecessary or avoidable costs, according to Walmart.

Driving Walmart’s effort is what the company says are approximately one-third of medical costs in the U.S. that are racked up by unneeded treatment. The initiative comes as employer-sponsored insurance costs have skyrocketed around the country.

"Our healthcare system is just too complex," Adam Stavisky, senior vice president of U.S. benefits at Walmart, said. "The system is opaque. It's expensive. Candidly, it can be intimidating for many people."

Calling the rising cost curve “the north star” for Walmart, Stavisky noted that “Thirty percent of all care in America is unnecessary."

The Centers of Excellence example

Customers shop in the pharmacy section of a Sam's Club store, a division of Wal-Mart Stores in Bentonville, Arkansas June 4, 2009. Warehouse club operators like Sam's Club charge consumers an annual fee to shop in their stores and offer discounts on everything from flat-screen TVs to printer paper to beef tenderloin. REUTERS/Jessica Rinaldi (UNITED STATES BUSINESS HEALTH)

Walmart’s Centers of Excellence, a program that first debut in 2013, gave the company insight into how and why health care dollars are spent. The program allows for employees enrolled in the company's medical plan to access specialized care at top hospitals. Options include certain cancer treatments, hip and joint replacements, and spinal surgery, among others.

For example, if a local doctor tells a Walmart employee enrolled in the company's plan that he or she needs spinal surgery, they can go to one of the Centers of Excellence hospitals. The visit is covered under the company's plan, and Walmart also pays for the travel, lodging, and food for the patient and a caregiver.

The experience taught Walmart that in some cases, patients were being referred for unnecessary treatment. According to the retail giant, more than half of the Walmart employees (or their relatives) who traveled to one of the Centers of Excellence for spine surgery at the recommendation of their local physician discovered that they did not need the procedure. Meanwhile, 20 percent of the patients sent for joint-related issues also didn’t need the procedure.

"Once they were given a different treatment plan, they avoided unnecessary surgery and recovered more quickly. In addition to better medical outcomes, their medical costs were greatly reduced," the company said.

With that in mind, Walmart associates in Orlando and Tampa, Dallas-Fort Worth — and the retailer's home-base of Northwest Arkansas — will have access to a program called Featured Provider starting next year. To do this, Walmart tapped Embold Health, a startup founded by the retailer's former chief medical officer Daniel Stein.

Embold Health uses data and analytics to identify doctors consistently delivering the best care, and will offer Walmart's Featured Provider program a list of highly-rated local doctors in fields like primary care, cardiology, gastroenterology, endocrinology, obstetrics, oncology, orthopedics, and pulmonology. That list will be updated quarterly.

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Another program will focus on telemedicine, an offering that's currently available to nearly all associates on the medical plans. Through telemedicine, associates can virtually visit a physician or mental health professional for just $4. For this service, Walmart works with Doctor On DemandGrand Rounds, and HealthSCOPE Benefits.

Under the new telehealth pilot, though, associates in Colorado, Minnesota, and Wisconsin will be able to use the Personal Online Doctor program "to manage chronic conditions, coordinate specialty care, provide nutritional and diabetic counseling, and coordinate behavioral health referrals and visits."

The new telehealth program in those states allows associates to book an appointment with a physician within an hour, and a mental health provider within a week, dramatically reducing the average wait time.

To address some of the confusion that comes with the healthcare space, associates in North Carolina and South Carolina will be able to try out the Personal Healthcare Assistant, a concierge service offered through Grand Rounds. Using the internet, phone, or mobile app, associates can have all of their questions answered, from billing to understanding a diagnosis.

Elsewhere, all associates will be able to pilot the National Quality Provider Resource, which will use Grand Rounds to source in-network doctors, while the Nationwide Fitness Club Access will be available for all associates 18 and older through Tivity Health Prime Fitness Network for as little as $18 per month.

The pilots will help the world's largest retailer learn how it can best lower ballooning medical costs.

"We will thoughtfully assess to see how we expand them," Stavisky said. "If one-third of care is unnecessary, we believe all of the programs tie back to that."

Julia La Roche is a finance reporter at Yahoo Finance. Follow her on