Tag Archives: virginia mason medical center

Walmart Shows Way on Health Benefits

Walmart, a true leader in benefit innovation, is taking the next right step, expanding its popular and successful Centers of Excellence.

When Walmart workers, called associates, use Centers of Excellence, deductibles and co-pays are waived. All travel expenses are paid for the patient and a companion.

Starting next year, if covered folks at Walmart have spine surgery outside of a Center of Excellence, it will be considered out of network, and only 50% of the costs will be covered.

This is a huge step and is reminiscent of the early days of preferred provider organizations (PPOs), provider networks and health maintenance organizations (HMOs). At the beginning, if you got care through a PPO, your deductible and co-pay were waived. In a few short years, those programs evolved into ones that paid regular benefits with deductibles, etc., if you used PPO doctors, but applied higher deductibles and co-pays if members went out of network. Of course, in most HMOs, if members went out of network, nothing was paid.

See also: Walmart’s Approach to Health Insurance  

What Walmart is doing now, while a very logical extension of what benefit plans have been doing for more than 30 years, is a huge step forward in truly controlling waste, overtreatment and misdiagnoses in health plans.


Here is the press release:

The Right Care at the Right Time: Expanding Our Centers of Excellence Network

Starting next year, Walmart will double the number of world-class medical facilities available to our associates who have been told they need a spine surgery. Whether you’re a cashier in Wyoming who’s been with the company for six months or you’re a 20-year associate running a store in Miami, if you have Walmart health insurance, you have this benefit.

We are adding the Mayo Clinic facilities in Arizona, Minnesota and Florida to our current list of Centers of Excellence (COE) for spine surgeries, which are Mercy Hospital Springfield in Missouri, Virginia Mason Medical Center in Washington and Geisinger Medical Center in Pennsylvania. Our COE program is about more than just access to these facilities and their specialists; it covers these procedures at 100%, including travel, lodging and an expense allowance for the patient and a caregiver.

Why would Walmart offer a benefit like this? It’s pretty simple – we care about our people and want them to receive the right care at the right time.

Walmart started offering this benefit in 2013, and our data tells us we are making a difference for our people, but we want to do more. That’s one of the reasons for adding more eligible medical facilities to the program. Other reasons these medical facilities were selected are that each facility:

  • Fosters a culture of following evidence-based guidelines, and, as a result, only performs surgeries when necessary.
  • Structures surgeons’ compensation so they [have incentives to provide] care based on what’s most appropriate for each individual patient and look at surgery as a last option.
  • Is geographically located throughout the country to provide high-quality care to participants in one of Walmart’s health benefits plans.

Research, as well as our own internal data, shows about 30% of the spinal procedures done today are unnecessary. By utilizing the Centers of Excellence program, our associates are assessed by specialists who are [given incentives] differently to get to the root cause and prescribe appropriate treatment.

Our associates are very important to us, and we want to make sure they and their families receive the highest level of quality care available.
Preventing a surgery that someone doesn’t need is only part of our Centers of Excellence. The other, even more important aspect is making sure our people receive the right diagnosis and care plan for their pain. In The New Yorker, renowned surgeon and public health researcher Atul Gawande underscored the importance of this approach:

“It isn’t enough to eliminate unnecessary care. It has to be replaced with necessary care. And that is the hidden harm: Unnecessary care often crowds out necessary care, particularly when the necessary care is less remunerative. Walmart, of all places, is showing one way to take action against no-value care—rewarding the doctors and systems that do a better job and the patients who seek them out.”

Walmart is not alone in this approach to appropriateness of care. One example is the Choosing Wisely initiative, which is backed by recommendations from more than 70 specialty societies including the American Academy of Orthopaedic Surgeons, North American Spine Society and the American College of Surgeons. The stated purpose of Choosing Wisely is to help patients choose care that is supported by the evidence, not duplicative of other tests or procedures already received, free from harm and truly necessary – we couldn’t agree more.

To further encourage our associates to take advantage of this offering, next year, spine surgeries at one of our six Centers of Excellence medical facilities will continue to be covered at 100% with travel and lodging paid for the patient and a caregiver. If the surgery is performed outside of a COE facility, it will be considered out of-network and paid at 50% in most cases.

Our associates are very important to us, and we want to make sure they and their families receive the highest level of quality care available. 

We have seen spine surgeries performed often when they are not necessary. By making these changes in our benefit offerings next year, Walmart wants to make sure that our associates and their family members are diagnosed correctly and that they get the best possible treatment.

See also: There May Be a Cure for Wellness  

Employers: Don’t Pay for ‘Never Events’

The initial installment in this series expressed concern that too narrow a focus on wellness diverts companies’ attention from more compelling opportunities to save money and improve employee health outcomes. This installment starts with a related  shocker: By far the most costly inpatient diagnosis code, septicemia, is not addressed by any wellness program in the country.

Here is the government’s official ranking:


Septicemia due to contamination, which is just one of many avoidable hospital errors, shows that there is a major opportunity to save money by directing employees to hospitals that are most likely to avoid errors. To back their commitment to avoiding errors, such hospitals also usually offer a “never-events” policy, meaning they agree not to be paid for events that are their fault and that should never happen. So your employees will be more likely to have a safer experience—and, if they don’t, you don’t pay. (To be fair to hospitals, not all septicemia is contracted there. At the same time, many blood infections contracted in hospitals are not primary-coded as septicemia.)

The opportunity for you would be to highlight hospitals within your network that agree to a list of specific items that make up a never-events policy. “Highlighting” might include waived deductibles or co-pays for employees who choose highlighted hospitals over others, thus noodging more employees to safer hospitals.

What is included in a “never-events” policy?

The Leapfrog Group, which is the nation’s leading arbiter of hospital quality, has a policy that requires hospitals to undertake five steps following a never-event:

  • apologize to the patient;
  • report the event;
  • perform a root-cause analysis;
  • waive costs directly related to the event;
  • provide a copy of the hospital’s policy on never-events to patients and payers upon request.

Examples of never-events culled from this complete list are:

  • Certain hospital-acquired infections/septicemia
  • Wrong-site/wrong surgery/wrong patient
  • Objects left in body
  • Wrong blood type administered
  • Serious medication errors
  • Air embolisms
  • Contaminated or misused drugs/devices
  • Death

Any given never-event is rare, but in total 5% to 10% of inpatients suffer a significant adverse event during their stays. The consequences – in cost, suffering and lost productivity – could be substantial.

No need to take my word for the cost: The Leapfrog Group provides a Hidden Surcharge Calculator that can be used to estimate the financial impact of hospital errors.

Do hospitals in your network have a never-events policy?

At the very minimum, by default they have such a policy for Medicare, which doesn’t pay extra for certain never-events. Medicare still pays the standard diagnosis-related group (DRG) case rate but doesn’t reimburse “outliers” separately if the added hospital time was caused by a never-event. Obviously, the DRG rates are set a little higher to begin with. So hospitals that do a good job – typically Leapfrog-rated “A” and “B” in the Hospital Safety Score report – embrace this payment scheme, while others would have been better off getting paid the old-fashioned way.

Some hospital systems extend this policy to employers – or will, if you or your carrier ask and you are a large enough customer, and their quality is high enough that the economics work out for them.

Leapfrog A-rated hospitals are therefore the most likely to be willing to negotiate a never-events policy for your employees. These hospitals aren’t necessarily the name brands in your marketplace. In Washington, for example, Virginia Mason Medical Center (VMMC) is the hospital consistently earning the highest Leapfrog scores. Not surprisingly, it was among the first hospitals in the country to offer a never-events policy to employers. The hospital was highlighted in Cracking Health Costs for its many best practices. VMMC is one of the few hospitals that Walmart, Lowes and other jumbo employers will actually fly employees into, to ensure the best care. And yet you’ve never heard of VMMC, have you?

So what should you do?

You still need to offer a wide local hospital network to employees. It simply isn’t worth the inevitable pushback to require a narrow hospital network.

Instead, just ask existing network hospitals to offer you a never-events policy, or let you become part of a policy they already offer to employers. There is plenty of precedent of this. For years, the state of Maine has tied hospital payments for its own employees to quality and safety standards, including Leapfrog standards. And Maine, despite being among the poorest states, consistently ranks #1 or #2 in Leapfrog quality ratings. Coincidence? I think not. Particularly if you can contract in conjunction with your local business coalition, you have the chance to influence hospital safety, just like Maine did.

Additionally, you can follow the lead of those other jumbo employers named above and contract with the country’s safest hospitals for any employees who wish to make the trip. Yes, I know, you aren’t a “jumbo employer.” But a firm named Edison Health helps small employers with the contracting and logistics of such arrangements. It also offers a tool, validated by the Validation Institute, to help you figure out if medical travel would be a worthwhile endeavor for you.

This type of contracting requires a little work on your end, but if all you want is discounts and coverage and don’t want to put in the work, you could punt to an exchange. On the other hand, you self-administer your health benefit for one good reason: to influence employee health, and this is a clear opportunity to do so. By contrast, wellness is a LOT of work…and likely increases your costs in the short run. Wellness will take years to pay dividends, if any, whereas you can start influencing employee hospital choice immediately.

Why Healthcare Costs Soar (Part 3)

In Part 1 and Part 2 of this series, David Toomey and I described a wildly successful collaboration with Virginia Mason Medical Center (VM) and a few Seattle employers.

During the the time of the VM collaboration, we invited major physician groups to meet with the employers. One of the most memorable meetings was with the CEO and chief medical officer (CMO) from a very well-regarded physician group in Seattle that has high fees but low performance.

As you would suspect, the employers were better prepared for this meeting than they had been for the meetings with VM. When the CEO and CMO talked about their strong emphasis on quality, the employers asked about quality monitoring and the process of care. Rather than acknowledging opportunities for further analysis and professing an openness to collaboration, the providers responded with confidence about their model of care.

Afterward, the employers expressed concerns about whether this premier provider could improve care and reduce costs. We posed a couple of questions: Are you saying you don’t want this provider in the network? Are you really ready to tell your leadership that this physician group, which many executives use, is not in the top tier?

The employers were aware of the dynamics with network configuration and the trouble that businesses have when a provider is dropped from the network and even a few employees complain. The employers responded that they wanted to have additional meetings with this group, because of its reputation.

After a couple of follow-up meetings, the employers recognized that this group was not committed to the process of care that they expected. They decided that the group should not be in the performance-based network. Importantly, the employers were now equipped to discuss their rationale with their leadership teams.

The CEO of the provider group felt respected, because of the time the employers spent with him, even though he did not like the outcome. He eventually acknowledged the group had work to do.

Employers make purchasing decisions with suppliers every day. For some reason, the healthcare procurement process involves the carriers and other vendors but often skips the actual suppliers of healthcare (except in a fairly small, but rapidly growing, number of major corporations).

The big question is: Why are more self-insured employers not engaging directly with providers?

In a broad network, there will be a bell curve around performance. Most employers say they want quality providers in their networks, but half the providers in their broad-based networks are below average. While everyone espouses “quality,” the variation in care is significant, and the medical ethics around treatment often drive that differential. Healthcare is big business. It is time to reward employees and channel them to primary care physicians and specialists who are truly committed to medically appropriate care.

A major reason why healthcare costs grow faster than general inflation is because most self-insured employers are simply not dealing with healthcare providers in the way we have described in this series of posts.

A Hospital That Leads World on Transparency

Jeremy Hunt, secretary of state for health in Britain, recently toured the Virginia Mason Medical Center in Seattle. He said the visit was “inspirational” and announced plans to have the British National Health Service (NHS) sign up “heart and soul” to a similar culture of safety and transparency. Hunt wants doctors and nurses in NHS to “say sorry” for mistakes and improve openness among hospitals in disclosing safety events.

I had a similar reaction to my tour of Virginia Mason. The hospital appears impressive—and truly gets impressive results. My nonprofit, the Leapfrog Group, annually takes a cold, hard look at the hospital’s data and named Virginia Mason one of two “top hospitals of the decade” in 2010. Every year, it ranks near the top of our national ratings.

Virginia Mason’s success is rooted in its famous application of the principles of Japanese manufacturing to disrupt how it delivered care, partly at the behest of one of Seattle’s flagship employers, Boeing. There are numerous media stories and a book recounting the culture of innovation Virginia Mason deployed to achieve its great results, so I won’t belabor the point here. But at its essence is Virginia Mason’s unusual approach to transparency. Employees are encouraged to “stop the line” – that is, report when there’s a near miss or error. Just as Toyota assembly workers are encouraged to stop production if they spot an engineering or safety problem, Virginia Mason looks for every opportunity to publicly disclose and closely track performance.

It is not normal for a hospital to clamor for such transparency. Exhibit A: the Leapfrog Hospital Survey, my organization’s free, voluntary national survey that publicly reports performance by hospital on a variety of quality and safety indicators. More than half of U.S. hospitals refuse the invitation of their regional business community to participate in Leapfrog, suggesting that transparency isn’t at the top of their agenda. But for Virginia Mason and an elite group of other hospital systems, not only is the transparency of Leapfrog a welcome feature, but they challenge us to report even more data, faster.

I hope the British health care system takes Virginia Mason’s model and runs with it, but, more than that, I hope the model takes hold here in the U.S. Too many hospitals in the U.S. avoid disclosing their performance instead of welcoming transparency as an opportunity to build trust with the patients in their care.

The movement toward transparency has a long way to go. We do not have publicly disclosed accreditation reports, even though those reports are tickets for hospitals to obtain public funding through Medicare. We do not yet know enough about infection rates, sentinel events, medication errors and outcomes including death rates from many common (or uncommon) procedures. Price transparency is also rare, according to a report by the Catalyst for Payment Reform.

The ultimate example of our tendency toward non-disclosure came last week, when USA Today reported that CMS quietly removed from public disclosure the incidence of certain “never” events, like objects left in after surgery. Experts disagree on the merits of how CMS counts these “never” events, and CMS—no doubt influenced by lobbyists—believes that they aren’t fair to hospitals. Yet, in a culture of transparency, CMS would do the opposite: first err on the side of reporting the “never” events, then let the experts refine the measure over time. Indeed, as the Virginia Mason experience demonstrates, the very act of reporting can accelerate improvement and transformation.

It’s time for the U.S. to ignite its passion for free speech and lead the world in applying it to health care.