Everyday Low Prices Are On Their Way to Healthcare

Reflecting on the historic changes in healthcare, one typically thinks of clinical breakthroughs. Like ether, as a surgical anesthetic; or penicillin, the first widely-used antibiotic; or even sequencing the human genome. But, that’s not what’s rocking the world of healthcare now. Today’s headlines (particularly in this ABL Healthcare Online issue) are all about the dramatic changes occurring in healthcare – from both within and without. Nearly any one of these stories alone would give pause, but in the aggregate they spell what many had despaired of: Controlling Healthcare’s “Unsustainable” Spending Growth.

In recent issues, headlines have been dominated by news and rumors of hospital mega-mergers: locally, Dignity & CHI and Providence St. Joseph Health & Ascension Health; while across the nation, Advocate-Aurora creating the tenth largest non-profit hospital system, and a plethora of other deals have been consummated or announced. Yet, based on the results of earlier mergers, they rarely produce the efficiencies anticipated, let alone lower prices for patients. As Melanie Evans wrote in Modern Healthcare a couple of years ago, “the business case for bringing systems together can be undermined by previously unidentified problems, distracted management and clashing cultures, experts say. Those pitfalls can wind up being a drag on financial results and delay or diminish expected benefits.” One might recall the disastrous Stanford/UCSF Med Center merger as an example. As the San Francisco Business Times headlined in April 2000: “Marriage is rough; divorce in expensive.”

What’s clearly more interesting now are the retailers entering the marketplace hand-in-hand with “traditional” insurers, particularly Walmart & Humana and CVS & Aetna. Particularly Walmart. It’s become the world’s largest company (with $486 billion in 2017 revenues) and largest private employer (with 2.3 million associates) while offering “everyday low prices.” Those folks back in Bentonville know a lot about customer service, distribution, squeezing suppliers, and managing pharmacies (third after CVS and Walgreens). They also know a lot about serving people in rural locations (that’s where Sam Walton got his start), folks on fixed incomes (like seniors), and the average American family (whose median household income is $59,039, for a family of 4). And, since Walmart only has 5,000 stores in which to put their pharmacies and clinics in the country, given CVS’s 9800 pharmacies (with currently 1100 MinuteClinics) “at the corner of Happy and Healthy,” chances are excellent that over 71% of the country’s population will soon be able to get their primary care at a store within five miles of their homes.

The good news is that these “convenience stores” may well be able to provide the convenient – and affordable – care that does indeed keep people healthy. And, that could be the biggest breakthrough of all: primary care being delivered conveniently and affordably, so that we can still afford to provide specialty care to those who really need it.

Mimi Grant, President, Adaptive Business Leaders (ABL) Organization – Round Tables and Events for CEOs of Healthcare and Technology Companies