I have a modest proposal for Wal-Mart CEO Lee Scott. In a recent Wall Street Journal article, Scott said that businesses should assume more of a leadership role in addressing the U.S. healthcare crisis, reducing waste and inefficiency in along the same lines as they've done internally. At the same time, Wal-Mart has been a) restructuring health benefits for employees, switching to CDHP-style high-deductible coverage in some cases and b) pushing a $4 generic drug offering. While these steps may offer some hope for its uninsureds, they're far from adequate, and don't really show the leadership he's positing. Instead, why doesn't Wal-Mart make a bold move and go into the healthcare business? The idea isn't new or untested--Kaiser built its own clinic in the 1930s, after all--and nobody's in a better position to make it work.
The process could start slowly, with Wal-Mart creating its own retail clinics on site rather than pairing with current partner RediClinic. This would serve as an on-site option for employee care, allowing even the uninsured to curtail illness and avoid unnecessary sick days at a very low cost. And it would have the added benefit of generating extra revenue when the employees weren't accessing the service.
The next step might be to contract directly with a provider network. Wal-Mart already has a history of wringing incredible deals out of its suppliers (in some cases, so good that the supplier goes out of business.) I'm sure the world's largest retailer could turn its incredible deal-making power to good use in this context, negotiating below-rock-bottom prices for access to its huge employee base. Over time, Wal-Mart could either put its favorite physicians on salary or gradually develop its own contracted network, one serving its own needs--and eventually, simply build out to address existing healthcare delivery patterns, the same way its stores pick out good retail locations. And as for getting good deals from insurers? Child, please. This is Wal-Mart we're talking about. Everyone wants their business.
And finally, the last step is the Wal-Mart Hospital, branching out to a chain of Wal-Mart hospitals strategically located in the communities the retailer serves. These would be especially strategic in Wal-Mart's rural territories. Of course, a rural Wal-Mart hospital might have the same effect on rural hospitals that its retail stores have on local merchants--pushing out the competition through sheer economies of scale and leverage--but that's a separate discussion. The Wal-Mart hospitals could joint-venture with physician in each community to build ambulatory surgical centers, which would allow the company to treat its employees in a cheaper outpatient setting where possible. Meanwhile, Wal-Mart's world-class experience with shipping, logistics and supply-chain management would make sure that it was never out of supplies or forced to pay excessive prices.
I could go on and on, but you get the point. While Wal-Mart execs can posture till they're blue in the face, claiming that they are uniquely qualified to address the healthcare crisis. Let's see them jump into the pool and swim themselves. Not only would this offer a chance of solving their employees' healthcare problems, but given Wal-Mart's track record, it might actually force some changes in the entire healthcare industry's cost structure--and even generate a profit on its own. After all, Wal-Mart didn't become the world's largest retailer by being stupid. Should Wal-Mart make a move into the healthcare business? Post your comments and let us know. - Anne