Walmart is setting an example for other employers with its new partnership to provide accountable care for 6,600 employees. (Photo: Shutterstock)

In today's world, the owner of the data has power. But the power remains dormant unless the data is analyzed, understood and shared judiciously.

Employers have begun to do that analysis. They are arriving at understanding it. And now, they are judiciously sharing it with health care providers. Result: A power shift is occurring. This shift is leading to newly forged partnerships that, if they develop as intended, will shake the foundations of the traditional employer/provider relationship.

Walmart, the retail Goliath, announced such a partnership in October 2018 with New Orleans-based health care system Ochsner Health Network. They have formed an accountable care organization covering 6,600 employees of Walmart and the related Sam's Club in Louisiana.

In a press release, the new partners explained that the ultimate purpose of the union was to lower Walmart's health care spend while improving health outcomes for its plan members.

“Walmart and Ochsner Health Network came together with the common goal of reducing health care costs, while focusing on improved quality and patient experience,” says David Carmouche, MD, President, Ochsner Health Network. “Walmart associates now have a plan that simplifies copays, coordinates care and provides access to thousands of providers in dozens of locations.”

Walmart isn't the first employer to enter in to such an agreement. And it certainly won't be the last.

Two years ago, Whole Foods, the grocery retailer, struck a partnership with Adventist health for its Southern California plan members. Similar to Walmart's deal, Whole Foods guaranteed Adventist volume patients for a volume discount.

And the National Business Group on Health, a membership organization that focuses on health care issues for its large employer members, reported that nearly half of its members either are already directly contracting with providers or plan to do so in 2019.

What's game-changing about the Whole Foods/Walmart deals is who's left out: the health insurance industry. As self-insured employers, their only commitment to the insurance industry with respect to health care after striking such a partnership is whatever reinsurance coverage they have signed on for to cover any catastrophic claims.

Walmart is setting an example for other employers, says NBGH's Steve Wojcik, vice president, public policy, by essentially saying, “We have the data on the provider's outcomes. We have the patients. By committing them all to one provider, we are guaranteeing revenue. Now, what's our discount, and how will you make your outcomes performance with our plan members even better, if you want to keep our business?”

“The Walmart-Ochsner partnership is a very promising development,” says Wojcik. “As employers dive deeper into their data, they are identifying where they can better manage cost.”

More employers are realizing that they can ally themselves with health care providers that have strong track records for performing such basic procedures as colonoscopies and knee replacements, and achieve better outcomes at lower cost. Walmart and Whole Foods are taking these kinds of alliances to the next level.

“As they gather more experience and data on outcomes and cost, more employers will engage [directly] with the delivery system,” Wojcik says.

The employers' primary objective in directly contracting with a provider is to create a partner committed to continuing improvement who will offer a discount in exchange for a guaranteed number of plan member patients.

“The employer's main leverage is showing the provider the data, saying, 'This is how you stack up.' Their main point is to show them the data and let them figure out how to make clinical adjustments to improve,” Wojcik says. “The employer doesn't want to be involved in managing the hospital. But increasingly, employers want better control over how they spend their health care money.”

Understanding and managing the outcomes data is the key to that, he says.

While large employers are best positioned to strike such partnerships with providers, the tools to do that are becoming available to small and mid-sized employers as well.

“We have just touched the tip of the iceberg when it comes to employers directly contracting with medical providers,” says Jerry Beinhauer, MD, Founder and CEO of Appley Health. “Right now, these agreements have largely been regional in scope and limited to large companies. They soon will grow to include coverage for when employees travel and will also include more than just massive health systems.”

Appley's health care product, a platform driven by blockchain technology, is designed to connect employers and providers directly, eliminating the insurer's role and reducing the employer's overall health spend. Employers can benefit from the data-driven platform regardless of size, Appley Health says.

Wojcik doesn't see insurers being cut out of the health care game, and that's certainly not the point of the Walmart partnership. “Walmart is just one local partnership. At the national level, insurers have a role to play.”

But, he adds, “Because of certain restrictions that insurers have in their contracts, it might make more sense for employers who have the resources to work directly with the providers.” Chief among those resources: the wherewithal to self-insure.

“I see such partnerships growing over the coming year if their desired outcome is to realize greater healthcare value, and they experience some demonstrable wins in achieving this outcome,” says David Claud, MD, PhD, Chief Medical Officer, Activate Healthcare. “Value in this case is quality, most commonly measured as clinical outcomes, plus service, which are the things most important to patients, divided by cost.”

Claud sites the following factors that can drive successful collaborations:

Greater alignment and a more shared understanding of what is desired in terms of quality and service.
Exchange of de-identified data so that both parties can make meaningful use of data, gain insights about how to enhance value, and jointly execute such actions.
Effective avenues of communication that allow for quicker understanding of and mitigation of barriers to patients pursuing high value care.

Insurers still have a role to play in the partnerships, says Nelson Griswold, founder and CEO of Bottom Line Insurance, if they are willing to change the way they do business. Savvy brokers around the nation are connecting their employer clients directly with health care partners to improve outcomes and save money. These brokers act more as consultants, as they bring together their employer clients with health care systems that either have proven they can deliver high quality services, or are committed to improving their performance in exchange for guaranteed plan member business.

“The value proposition offered by these brokers is this: They say to the provider, 'How would you like to get 80 to 90 percent of procedures from my client's plan members? We will create a value based or narrow network plan, and you are the provider for that plan.'”

Under these plans, employees still have choices, he says. For instance, if an employee needs a procedure or treatment that the partner/provider doesn't offer or isn't very good at, the employee can go elsewhere for the same terms (generally no co-pay or deductible). If the employee wants to go elsewhere for a procedure that hospital provides and performs well, the employee picks up most of the cost.

“The hospital agrees to provide a preferred rate, which is much better rate than Humana's or Blue Cross's, because they are going to get volume. That's where they make their money. For the employer, it's a lot less expensive, 20-30 percent off the top. The idea is you make it easy for the employee to make the right choice, and you are educating them at the same time about their health care.”

Thus, while the traditional health insurer may be eliminated from the equation by employer/provider partnerships, insurers acting as advisors will be invaluable to implementing such partnerships, Griswold says.

In the end, these employer/provider partnerships based on outcomes and volume discounts, regardless of their structure, will offer value to others besides the partners, says NBGH's Wojcik.

“Other providers will have to review their data to improve their performances as well,” he says. “All of the patients of the health system will benefit from improved performance. It will have a strong ripple effect in the community.”

Read more about the changing dynamics of the health care industry:

Instant Insights /

New employer/provider partnerships take direct contracting to next level

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