Healthcare

Walmart, Disruptors Take Aim At US Healthcare’s High Costs

healthcare costs

The COVID-19 pandemic and the related U.S. recession have combined to make already-soaring healthcare costs even more of a crisis. But an increasing number of players are wondering if lowering healthcare costs might be less complicated than it seems. They aim to compete on price and pressure the existing, inefficiently expensive system to cut costs.

Two big innovations:

Walmart’s Network Of Healthcare Clinics

Walmart is looking to take its expertise at building retail supercenters and driving down costs and apply that to healthcare.

The retail giant has been slowly wading into healthcare services, operating about two dozen low-cost clinics in Georgia, South Carolina and Texas. This month, the company opened its latest clinics in Loganville, Ga., and Springdale, Ark.

The clinics offer basic walk-in medical services in roughly 1,500-square-foot spaces. Described as the “supercenter of healthcare,” the sites aim to offer affordable primary care, urgent care, diagnostics, x-rays, behavioral health and dental work.

Primary care appointments cost $40, while a pediatric appointment costs $20. That makes Walmart the more affordable option for consumers — even those with insurance, who often face a $50 copay for a primary care visit.

Such low prices could disrupt the industry, even though Sean Slovenski, Walmart’s president of health and wellness, said in an American Telemedicine Association panel that’s not really the company’s intention.

“We didn’t set out to disrupt healthcare. We set out to meet the needs of our customers at Walmart,” Slovenski said, per MedCityNews. But he admitted that “when we say it’s $20 to have your child seen with a primary care physician and it’s really $20 … when you come in and walk out and get the bill and it’s still $20, that’s quite a disruption in the space.”

The company aims to cut costs by eliminating many of the middlemen and focusing on customers who pay upfront rather than use insurance, MedCityNews said. While the clinics accept insurance, most customers would rather pay $40 out of pocket than a $50 insurance copay, the site said.

Walmart is building even more clinics at a rapid clip in response to consumer surveys about what they were looking for in healthcare services. That reflected consumers’ deep unhappiness with the status quo.

“They felt processed, like they were a number,” Matt Parry, senior director of strategy and customer experience for health and wellness at Walmart, told MedCityNews.

But Slovenski said the company doesn’t want to just use healthcare to bring customers to their local Walmart.

“We’re in healthcare. We’re not in retail healthcare,” he said. “We’re recruiting physicians in all of these areas and bringing them in.”

Telehealth Aims To Reduce Overhead 

Conversa Health CEO Murray Brozinsky recently told PYMNTS that digital health can improve patient care even as it eliminates billions of dollars of waste each year.

For openers, he said taking healthcare out of the doctor’s office brings down overhead, savings 10 percent to 20 percent of an in-office visit’s cost. But the longer-term savings run even deeper because digital platforms give physicians a low-cost way to keep in contact with patients, monitoring their progress and tailoring treatment in automated, nearly no-overhead ways.

After all, Brozinsky said the best way to lower healthcare costs is to find more efficient ways to keep patients healthy and in need of fewer expensive medical interventions.

“When you start to add in virtual platforms like ours, the big financial impact is [that] now you can have a platform with close to zero marginal cost, reaching out to all of your patients all the time on various schedules, depending on their situation,” the CEO said. “When you look at the billions worth of waste in the healthcare system, a big chunk of that could be obviated by having these digital connections in place, ready early on to intervene. That prevents things from getting more medically complicated and costly. And it takes away all those unnecessary, very high-cost outreaches.”

Brozinsky isn’t alone in seeing an opportunity to finally make inroads with consumers who in the past have held back from telehealth for fear over quality levels. Doctor on Demand CEO Hill Ferguson said in an interview earlier this year with Karen Webster that COVID-19 has done much to overcome patient resistance.

Now, he said, “the World Health Organization, CDC [Centers for Disease Control and Prevention] and others are actually recommending telemedicine as a great method to seek care.”

Ferguson said telehealth offers consumers both an easier access path and a lifetime of care at a more managed cost. “Virtual primary care really treats everything as a front door to the patient’s health,” he said. “That might mean preventative care, making sure they’re getting an annual virtual wellness checkup, making sure they’re getting their immunizations, making sure their lab work is up-to-date for their demographic needs. And beyond preventive care, there is also chronic condition management.”

Will Americans Go For The Disrupters?

Perhaps the healthcare industry’s disrupters can attract patients concerned with costs and getting what they need as inexpensively as possible. Some Americans will be willing to duck into Walmart or fire up a telehealth session if skipping a traditional office visit means lower and more transparent prices.

But the traditional U.S. healthcare system has never really dealt with much in the way of price competition. Whether cheaper alternative options can dent that dominance remains to be seen.

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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