Wal-Mart, The Next Big Healthcare Player

For all the heat that Wal-Mart has suffered over the years for its employee health benefits, I wonder how much play this story will get.

Wal-Mart announced today that it is planning to open as many as 400 health clinics in its stores over the next two to three years. The retail giant says that if demand remains high, it could open as many as two-thousand of the clinics within seven years.

The company says it will contract with local hospitals and other health organizations to get the clinics up and running.

In a speech to the 2007 World Health Care Conference, Scott notes:

The fact is the time for politics in our nation’s debate on health care is long past. The
time for real and meaningful change has come.

We think the country agrees that health care needs to be affordable. It needs to be
accessible. And it needs to be high quality.

Scott also took the opportunity to talk about the last big healthcare initiative undertaken by Wal-Mart, the $4 generic drug program:

I think the American people want to make better health care decisions. But most importantly, I think Americans -- with the help of their doctors and the right tools and information -- are ready to make better health care decisions.

Our company saw this with our $4 prescription drug program. It was one of the most
exciting things we have done in a long time -- for a lot of reasons.
It reaffirmed that Wal-Mart is the unbeatable price leader. It energized our associates.

They saw yet again the power of our company’s purpose -- to save people money so they
can live better.

There were a lot of great stories about seniors not having to cut their pills in half, or parents being able to do something extra for their families. The $4 program made -- and continues to make -- a difference in the lives and the health of the American people.

We also saw pharmacists and doctors working together in new ways on behalf of their
patients. When patients had prescriptions that might cost hundreds of dollars, our
pharmacists reached out and worked with their doctors to determine if a generic might be a better alternative.

But you know what else it did -- on a more systemic level? It empowered consumers.

We educated consumers about the efficacy of generics. We gave them complete price
transparency. We posted the list of prescriptions and the price -- $4. We encouraged
them to talk to their doctors and learn about generics. And you know what happened?
They acted like consumers. They started making more informed and better decisions.

The response has been nothing short of spectacular. Since we launched the program, our customers have saved about $290 million dollars on their prescription drugs -- that is $290 million removed from the cost of health care in this country. $4 prescriptions now account for more than 35 percent of all the orders we fill -- and that percentage is growing. And listen to this: nearly 30 percent of the $4 prescriptions are filled without insurance.

Within days of announcing our $4 program, countless other discounters, drug stores and supermarkets dropped their prices on generic prescriptions. That has surely saved our health care system millions more.

So let there be no doubt that the private sector can lead. The private sector can make a difference.

The cost savings for consumers cannot be overstated, Wal-Mart, by itself, saved American consumers $290 million dollars on drugs since September 2006, a span of 8 months, that comes to $36.25 million a month or over $1 million dollars a day. If there is any doubt as to whether private market forces can effect real change in a short time, take this lesson to heart. One company saves American consumers over $1 million a day on one of the most expensive health care costs around--prescription drugs. That does not count how much money is being saved by consumers at other pharmacies and companies. I would be suprised if Wal-Mart's leadership on this matter was saving consumers some $2 to $3 million a day through market competetion. At $3 million a day, this market drive approach saves American consumers nearly $1.1 billion a year. That is Billion with a great big fat B.

Now with teh announcement of health clinics, my suspicion is that this too will server to drive down the costs of health care while providing transparency about costs. But the clinics provide a way to deliver healthcare without the hassles of an emergency room and for the uninsured this can be literally a life saver. Will Wal-Mart make some money off this program--you bet, they are after all in the business of making money. But the difference is that Wal-Mart makes its money not on individual transactions, but on the power of volume. If a visit in a Wal-Mart clinc costs $5 dollars, they might lose money on that transaction, but they make money on other transactions or on the fact that they might have thousands of such transactions per day and that volume is what drives their business model.