Tom Emerick, Emerick Consulting

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Tom Emerick, President, Emerick Consulting
Editor’s Note: When news of the Walmart initiative broke we turned to someone we knew who had a unique perspective and insight into the company’s motivation and approach. Tom Emerick of Emerick Consultingmanaged Walmart’s program for 15 years until he went out on his own five years ago. As it turns out Tom is very familiar with the program having offered the benefits team with some technical advice throughout the exploration and implementation. Here’s what Tom had to share on this exciting development. “First, I want to offer a hearty congratulations to the Walmart management team for implementing this program. The company truly has an excellentvisionary benefits team that was able to appreciate how this program will dramatically improve care for Walmart associates while reducing out-of-pocket expenses. What makes this program unique compared to what other companies have done and what I find most exciting about it is that they chose multiple centers of excellence around the country. Most companies that have taken a step in this direction have only chosen one – Lowe’s with Cleveland Clinic, Pepsi with Johns Hopkins… With multiple centers they’re going to have the ability to truly compare outcomes, readmission rates, efficiencies, and so on with a large, like-to-like patient volume. No one’s ever had that opportunity before. What I believe they’ll likely do if one clinic is performing better than others is share what they’re doing and how they are doing it better. This a huge accomplishment that will create an excellent productivity loop that not only Walmart associates will benefit from but all patients that visit those centers. This was a very visionary move by the Walmart leadership team.” Medical Travel Today (MTT): If I’m correct, Walmart has some experience sending patients to centers of excellence, correct? “Yes, they’ve had a transplant program in place since the mid-90s. That program has been extremely successful. One of the most interesting aspects of it is that by incentivizing members to go to Mayo Clinic, they’re getting a more accurate and thorough diagnoses. The big surprise is that they often find that a transplant is contra-indicated for their case. And I’m not just talking one or two cases. At the Mayo they’re sometimes able to implement a more effective and much less expensive treatment plan that’s not nearly as dangerous as lifting out one’s heart or other organ. I imagine the program may have saved a number of lives. As an example, there was a Walmart associate in Texas whose doctor wanted to do a heart transplant. The patient went to the Mayo where they found all he needed was a stent. He got it and went home. That story gets repeated hundreds and hundreds of times over the years. This is why the expanded program is so exciting. It ensures that people who have not just heart problems but spine problems, etc. will get the right diagnosis and the right treatment. And Walmart’s waiving the co-pay for the associates so there are no losers in this arrangement. I can’t say it enough. It’s truly a fabulous new option and Walmart deserves a lot of praise.” MTT: How do you think other employers are going to respond to this initiative? “I think a lot of companies know they need to do something like this. The truth is in benefits plans today in large companies 6-8 percent of the members are responsible for 80 percent of the dollars spent. Unfortunately employers tend to target the wrong group with their messages. They go for the masses and completely miss the real source of the problem. The extreme growth in cost isn’t the 94 or so percent but the minority outliers. Companies need to micromanage that group. The Walmart model offers an excellent way to do that. By getting better diagnoses and treatment plans you solve a multitude of problems. And the truth is 10 – 20 percent of those outliers have simply been misdiagnosed. Specialists simply don’t coordinate care and they often, collectively, miss the underlying condition that’s causing all the other issues. Add to that you often have flawed or suboptimal treatment plans. At centers of excellence they take a more thorough and coordinated approach to care. A consolidated diagnosis works to put an end to unnecessary and erroneous treatments, surgeries, and medications, They are about the best quality of care for members. I truly believe this program could be the tipping point for a lot of companies in terms of managing the outliers. I expect there will be a large surge in the number of companies adopting this approach in 2013 and -14. Personally, I’d refer to this as a specialized centers of excellence program rather than a medical travel program. So much of medical travel, especially international, has been about receiving discounted care. That is NOT what this approach is about. The objective isn’t to get lower prices but to have more effective diagnoses and treatment plans for their sickest employees. Ultimately the best quality care is often the most cost-effective. And not only that., there is the quality of life factor to consider. The fellow with the stent versus a heart transplant is a good example of that. If you can resolve your medical issue more effectively, less invasively, it’s just a complete win-win-win. Back to your question about how and when other companies will respond, I really think we’re on the cusp of a huge surge. I remember when the first PPO came out with Allied Signal. At that time four-hundred and ninety-nine members of the Fortune 500 said “we’d never tell employees which doctors to go to.” Five years later they were all doing it. I think this will follow same track. You’ve got a few companies doing, others will start doing it in July of 2013, and in three to four years most companies will have it in place.” MTT: So that’s how employers will respond. What do health systems and facilities need to be doing to be a part of this surge? “I think most hospitals are keenly aware of what’s going on. They’re already losing patients to centers of excellence thanks to what Lowe’s, Pepsi, and Walmart have been doing. There will be winners and there will be losers. Typically heart surgeries count for 20 percent of the revenue and 40 percent of the profit at a hospital. The facilities that adapt will be winners and those that don’t will lose. If they want to be involved they need to create constructs in their organization that mirror what the best centers – the Geisingers, Mayo, Scott & White, Mercy St John’s, and others – are doing. As the surge occurs, hospitals and clinics will need to convert to this model and that includes creating accountability on behalf of physicians to get make the right diagnosis and implement an appropriate and effective treatment plan. That gets to another point. We really need a new definition of quality in our healthcare. The typical definition focuses first on whether or not the procedure is done to the gold standard. The approach we should be taking should first ask is ‘is this the right procedure’. Is it even needed? I think the current definition ties to the prevailing ethic in U.S. healthcare which is ‘if it may help let’s do it’. That ethic needs to change to first address what’s the desired patient outcome and then it should look at what’s done focusing on using the least invasive and safest treatment to achieve the desired outcome. If we did just that we could cut healthcare costs in the U.S. by $600 billion per year. The interesting thing is that ethic is common in the commonwealth nations. The U.S. stands alone in often using the most risky and invasive approaches simply because they’re the most profitable. However, this Walmart program puts at least one significant group of people on the path to receiving a better quality of care here in the U.S. Keep your eye on it. It’s going to be something to watch. About Tom Emerick Thomas G. Emerick is the President of Emerick Consulting, LLC, a firm engaged in providing consulting services to a broad spectrum of clients. Emerick’s years with Walmart Stores, Inc., Burger King Corporation, British Petroleum, and American Fidelity Assurance Company have provided an excellent blend of experience and contacts. As a consultant he offers technical advice to employers as well as works with hospitals to establish them as medical destinations. Tom has served on a variety of employer coalitions and associations, including being on the board of the influential National Business Group on Health, the U. S. Chamber of Commerce Benefit Committee, and many others. He can be reached at

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