Thoughts on Walmart Going into Health Care
Photo by MikeMozartJeepersMedia via Wikimedia Commons
Bloomberg News recently had an article with the following headline: Checkup for $30, Teeth Cleaning $25: Walmart Gets Into Health Care.
Here’s an excerpt from the article itself:
…But now visitors to the Calhoun Walmart can also get a $30 medical checkup or a $25 teeth cleaning, or talk about their anxieties with a counselor for $1 a minute.
Prices for those services and more are clearly listed on bright digital billboards in a cozy waiting room inside a new Walmart Health center. Walk-ins are welcome, but most appointments are booked online beforehand. No insurance? No problem. Need a lab test on a Sunday? Sure thing.
And I was reminded of an argument we had back in 2017.
My comment was:
I read a very interesting comment somewhere the other day and wish I could attribute it to its author but I can’t find it and so I’ll just paraphrase it.
It said something to the effect of:
Both sides are going to have to compromise to make this work.
Republicans/Conservatives are going to have to reconcile themselves to there being Socialized Medicine
Democrats/Progressives are going to have to reconcile themselves to there being two tiers of medical care
I’ve since realized that there aren’t going to be two tiers of medical care; there are going to be a ton of tiers of medical care. Superawesome tweeter VGR put it like this:
The 4 modern castes, from bottom to top
The uninsured stricken
People on Plan B-Z
People on Plan A
People who don’t need plans— Venkatesh Rao (@vgr) January 28, 2020
One of the tiers of medical care is, yes, going to be the Walmart tier. And there are going to be tiers above that tier. Several, probably.
But this is a good thing.
I’ve argued before that we can start from a Day One Economics 101 lesson: price is a function of the rate of increase of supply versus the rate of increase of demand. If that’s the lens you look through the health care issue through, you will quickly see that we are in a situation where the price is going up a LOT… which means that we are in a situation where demand is rising faster than supply is rising. Pretty simple, right?
And then, from there, just look at any given solution and see whether the solution does one of two things:
1) Increase Supply
2) Reduce Demand
If it does not do one of these two things, then it will not affect the price. Which is going up.
The problem is that most of the things that government does to deal with health care, though, massage demand and actually increase it. Having a system like Medicare-for-All would immediately provide health care coverage to everybody in the country. Which, of course, increases demand rather than decreases it. And if the supply is not also nudged up, then you’ve got a place where the price is going to be fixed, demand increases, and supply remains the same and that gets you to one of the Economics 101 lessons from somewhere around the middle of the course: shortages, queues, and black markets.
Indeed, Brother and Ordinary Timer Emeritus Russell Saunders tweeted out his observation:
A 40% cut to my practice’s revenues means we close. Full stop. It is extremely difficult to see staying open, at least with the hours we currently provide, with a complete loss of all profitability and steep cut to provider salaries.
— Daniel Summers (@WFKARS) October 16, 2019
Given that we’ve talked about this before in comments, I wanted to ask him about one of the points that came up in the comments: “Just from the start, most Dr’s should also see some cost relief in the form of radically simplified coding, billing and reimbursement.”
So I asked him if he took that cost relief into account before he said what he said. He said, and I’m copying and pasting this:
However, just to be clear, that was a ballpark guess, and not necessarily an accurate reflection of Medicare rates compared to current revenues. Those numbers are unclear, though Warren’s plan does say that revenues should be sustainable because Medicaid rates would rise to Medicare, even if moneys from private payers would be a drop.
Warren’s plan includes a tax on employers that would blunt the benefit of not having to pay for employees’ insurance.
So with that established, I’m stuck again looking at the two things that strike me as most likely to address the problem of healthcare in the US by dealing with the price issue and seeing that there’s not a good way to address demand in any meaningful way.
But when it comes to supply? We might be able to increase the supply.
And I look at the new Walmart clinics. And see that the supply is going up.
And even if the quality isn’t as high as you might be able to find elsewhere, the supply is, still, going up. Even if it’s on a different tier.
And that’s a good thing.
I agree that this is a good development, the mass-provisioning of cheap checkups and whatever else they can provide.
When we talk about demand though I think its important to note that no one least of all the government can actually “increase demand”.
Unlike consumer goods like toasters and cell phones no one “wants” health care. There isn’t any Mad Man who can persuade people to say, “Y’know, I am going to go out and get me one of those appendectomies I keep hearing about!” Raising or lowering the cost of appendectomies doesn’t do anything to change the number of appendices that burst; it only changes the number of people who are given the magic ticket to the hospital.
In the economics of medicine, we really have only control over the supply end.Report
You seem to be using “demand” in two different ways in two different sentences but conflating them to meet the same thing.
If you agree that people can choose to spend time and money on health care but, for whatever reason, choose to *NOT*, then we’re in a situation where health care is similar enough to a toaster or a cell phone for the price/supply/demand curve to apply.
Even if the number of people who engage in recreational appendectomies is vanishingly small.Report
I’m puzzled by what an example of people choosing to not get treated would be.
My point was that “demand” is a poor word to use precisely because its meaning as relates to health care is completely different than as relates to consumer goods.Report
Here’s an example from a middle of a thread about how our health care policy is messed up.
Read the whole thread, if you want an entire discussion of people choosing to not get treated for illnesses.Report
If the examples of people self-medicating is supposed to be an example of how health care demand is like toasters, this is absurd.
The broken foot still demands treatment; in some cases home care IS the health care most appropriate. The demand still exists.Report
So long as we agree that you’re using “demand” in a different way than I am, I’m good.Report
Sure.
I’m thinking of that old joke about the “All You Can Eat Special” at Fat Tony’s pizzeria.
You eat until some guy with a crooked nose comes over and says, “OK, dat’s all ya can eat.”
Could we agree that the NHS in Britain and the insurance model here in the US both adequately satisfy demand just in different ways?Report
Have we hammered out that it’s possible to require treatment but not seek it out due to the price being too high?
Because that’s one of my starting points and if you still can’t imagine that someone might not seek out treatment for an ailment that they have due to price reasons, I’m not sure that any discussion will be particularly fruitful.Report
How is not seeking out treatment because your insurance company wont cover it any different than not seeking out treatment because the NHS won’t cover it?
In both cases the medical need hasn’t changed, its just that the gatekeepers are operating in different ways.Report
{{Chip, the better argument is that insurance companies systemicatically deny payment for covered care as a way to increase profit, which is functionally indisuingishable from the NHS denying payment for covered care to balance their budget.}}Report
Chip, I’m asking: Have we hammered out that it’s possible to require treatment but not seek it out due to the price being too high?
Because that’s one of my starting points and if you still can’t imagine that someone might not seek out treatment for an ailment that they have due to price reasons, I’m not sure that any discussion will be particularly fruitful.Report
I never thought that was in question. Indeed, its one of the premises.Report
I never thought that was in question.
I guess I didn’t understand what you meant when you said “I’m puzzled by what an example of people choosing to not get treated would be.”Report
This is just silly.
A person in Britain chooses not to get a hip replacement.
Because the NHS won’t give him one, and he can’t afford to fly somewhere else.
But really, he is freely choosing not to get one.
And the supply and demand are in perfect balance.Report
So… you do know what an example of people choosing to not get treated would be? I’ll assume that the answer is yes.
Okay. Good.
Well, here’s why that’s important to me. My starting point is that price is a function of the rate of increase of supply versus the rate of increase of demand. If that’s the lens you look through the health care issue through, you will quickly see that we are in a situation where the price is going up a LOT… which means that we are in a situation where demand is rising faster than supply is rising.
And then, from there, just look at any given solution and see whether the solution does one of two things:
1) Increase Supply
2) Reduce Demand
If it does not do one of these two things, then it will not affect the price. Which is going up.
You with me?Report
Sure, I’m with you.
And I’m with you that raising prices can decrease demand.
But I also keeping pointing out that demand can also be reduced by a federal bureaucrat saying “Dat’s all ya can eat”.Report
Presumably to the elderly and other people who have reached a particular dollar amount of health care?
I imagine that bureaucrats telling people that they can’t have any more health care would free up the health care for other patients.
(I’d want us to have a much more healthy attitude toward pain management if we decide to go down that route, though and there are a lot of other routes that I think would be worth exploring first.)Report
“IF” we decide to go down that route?
Both Britain and the US have already gone down that route of rationed care, thereby freeing it up for other patients.
We just do it in different ways.Report
Okay.
Well, let’s say that we tell someone who has a lot of money “dat’s all youse can eat”.
What are they likely to do?
It seems to me that the answer would be “buy another seat at the restaurant and go back up to the buffet”.
Which means that reducing demand by kicking people out will only work but so much.
We’re going to have to address the price problem by increasing the supply.Report
Well in order for the analogy to hold, “buying another seat” would have to be something like hiring a private doctor or flying to another country but yeah, people in other countries do that all the time.
And you’re right, ultimately however rationing is done, the “need” (lets not call it demand) for healthcare is beyond our control so all we can do is work on the supply side.Report
Excellent.
It’s through this lens that I look at any given proposed policy.
Does this policy increase supply?
And that’s it. If the answer is “No” (or “No, but” or so on) then the policy won’t help with the fundamental problem.
There are a handful of answers that, instead of merely not helping bolster supply, actually increase demand. These answers make things worse.Report
Well, I’d say you’re being pretty fast and loose with the word “require” when you say “require treatment but not seek it out”.
I mean, according to the analogy, it’s absurd to say that anyone “requires” a toaster.
“We’ll remember Stan’s wit and charm, and his curmudgeonly ways, and the irony that he was brought down because he required a toaster he couldn’t afford.”Report
Stillwater, please tell me what word or term I should use to describe a desire for health care that is great enough for you and me to see a doctor but not great enough for a poor person to see one.
I will use that term.Report
Well, you should figure that out on your own since you’ve been the one blasting Chip for loose language. Personally, I think the word “requires” connotes something fatal, an absence which entails either the loss of an argument (the worst thing to happen at the OT) or the loss of a life (much less important obviously). Something like that.
But back to the point: if *you* are struggling to find the right language then maybe back off criticizing *Chip* for struggling to find the right language.Report
Here’s a little (sophistic!) trick everyone should be aware of:
The opponent of a view will demand the the proponent articulate their view in increasingly precise language fully well knowing that at some point language is an imperfect describer of not only mental states but also the real world. And then, when the proponent has agreed to provide some fine grained analysis, the opponent will flip the narrative and criticize the proponent for not only not understanding what they’re talking about but *also* not understanding the English language (which is always the worst crime!).
So much fun.Report
I wasn’t criticizing him. I was good so long as we were in agreement that we were using “demand” differently.
If we want precision for this, I’d be okay with a term that we agree on henceforth.
Got one?Report
Nah, I’ll let you come up with one on your own. You seem to be the one stuck in the middle here.
Add: here’s another sophistic trick: when accused of using a term ambiguously challenge your intelrocutor to propose a better one rather than provide one yourself. Sure, you look like a dick in terms of principle of charity in communicating with other, but you already know they disagree with you so have at it!Report
So how’s this? I’ll use the word “require” to describe a desire for health care that is great enough for you and me to see a doctor but not great enough for a poor person to see one.
I know that the term isn’t perfect, but I wish to avoid using the word “demand” except when I’m discussing “demand” as the thing that exists in the relationship to supply and price.
Good?Report
Or, you could cut Chip some slack for using the word “demand” in exactly the same way as you used the word “require”.
Fair?
I didn’t think so….Report
Again, I said back then that as long as we were in agreement that we were using the word differently, I was good.
But if we want to actually talk about this stuff meaningfully, I’d like to engage in the sophistic trick of agreeing on what we’re using the words to mean (and what we are deliberately *NOT* using the words to mean because we’re using them like *THIS* instead of like *THAT*).Report
“Again, I said that all Chip needed to do was use words as I use them, or when I use terms incorrecctly to provide me with better terms to more accurately reflect my onw thoughts. It’s HIS RESPONSIBILITY, not mine, to engage in effective communication, Stillwater.”Report
How’s this? I wrote an essay and I used words a particular way. I want to make explicit how I’m using them so we don’t get into this weird situation where someone is saying “demand” the way that I would use the term “would derive benefit from”.
If you don’t want to use the words the way that I’m using them, I’m okay with that.
But I’m not going to stop using the terms that I’m using as I’ve defined them so far.
And I’m okay with that too.Report
Yeah, you busted Chip for using “demand” in the exact same way you used “requires” when the topic terrain was identical.
“Yeah, that was pretty loose of me Stillwater. Now I understand a bit more what Chip was getting on about, that he’s not the blithering idiot I previously took him for…”Report
The blithering idiot is me, for thinking that it’d be fruitful to talk about how I was using the words the way I used them in the original essay and trying to define them.Report
Yup. I mean, you’re either *trying to communicate with Chip* or you aren’t.
Clearly, he has to do all the work for you to succeed in that endeavor.
Add: I mean, is this really so hard to understand? Colleges teach this shit in freshman communication classes. Presumably on the assumption that 18n year olds can learn what you won’t, Jaybird.
Christamighty.Report
“Clearly, he has to do all the work for you to succeed in that endeavor.”
I went out of my way to define my terms.
If he does not wish to use my terms the way I’m using them after I’ve defined them, I think I’ve done what I can to meet people halfway.
And, again, if he says “well, that’s not how I use the word”, I’m okay with that.
And I’m not going to stop using them the way I’ve tried to define them. (Well, in this comment thread, anyway. If you’d like to write an essay in which you wish to use them differently, that’s your prerogative.)Report
I went out of my way to define my terms.
The lack of self-awareness is mesmerizing. 🙂Report
I wrote an essay and I used words a particular way. I want to make explicit how I’m using them
“And then people rejected my use of my own words. But I defined them myself! HOW DARE THEY REJECT THE MEANINGS OF MY WORDS?”Report
The broken foot still demands treatment;
So now we’re up to three distinct meanings of the word “demand”.Report
I’m puzzled by what an example of people choosing to not get treated would be.
Are you familiar with the concept of a DNR?
People with terminal diseases often reach a point where they refuse further treatment.
Sometimes people opt not to get elective surgery because they really don’t want to get surgery and it’s not absolutely necessary.
There are also cases where there are different options for treatment, and one is more expensive than the other.
My point was that “demand” is a poor word to use precisely because its meaning as relates to health care is completely different than as relates to consumer goods.
This isn’t correct. You can model demand for health care just as you would model demand for any other consumer good or service. There really isn’t anything special about it.
I think you’re confusing economic demand with…let’s call it desire. Some people have a very strong desire for an appendectomy, whereas some people have none. Very few people desire two appendectomies.
I’m still not sure that health care is special in this sense. The above is also true of toasters. I will concede that most people with appendicitis have a stronger desire for an appendectomy than people without toasters have for toast, but this is a matter of degree. Yes, you’ll die if you don’t get that appendectomy, but the desire to remain alive is finite, which is why people routinely make decisions that reduce life expectancy.
Anyway, note that life-or-death emergency health care is a small minority of total health care spending. Most health care interventions are not a matter of immediate life-or-death, but of small effects on remaining life expectancy, or even quality of life. In this sense, these desires really are not so different from the desire for a toaster.
Ultimately, then, all you’re saying is that changes to the health care system don’t affect the incidence of disease and injuries (pre-treatment)? Putting moral hazard aside, sure, I guess that’s true. Nor does the system for distribution of toasters affect the desire for toasters. But “demand” is a technical term with a specific meaning, and it’s not that.Report
You’re saying the same thing, that “demand” can be reduced by restricting access.
Like, both the British NHS and Blue Cross can reduce the demand for hip replacements by eliminating coverage.
This is absolutely true, from an economic standpoint.
True, just silly and kind of pointless.Report
Demand is a function describing the number of units of a particular good or service the market is willing to buy at a given price. When the government gives people money to buy a particular product, that increases demand.
it only changes the number of people who are given the magic ticket to the hospital.
Yes, that’s an increase in demand.
Terminology aside, AFAIK it is not actually legal for a hospital to turn away an appendicitis patient for lack of ability to pay, so there is no magic ticket to the hospital.
Anyway, now that we know what “demand” means, it’s clear that government can have quite a bit of control over demand for health care. For example, it can identify the health care interventions that deliver low value in terms of dollars per expected QALY (quality-adjusted life year) and say that a) Medicare and Medicaid will not cover those treatments, and b) private insurers may offer a tier of plans that do not cover these treatments. This reduces demand for health care.
Or it can, as many European countries have done, ration non-urgent health care by queuing. We won’t pay for your hip replacement until you’ve waited this many months. If someone decides not to sign up, or dies in the queue, demand has been effectively reduced.Report
This is what I’m saying, though, that rationing the number of people admitted through the door doesn’t “solve” the problem of health care demand regardless of whether it is rationed by price or by government fiat.
Those people are still out there needing hip replacements and appendectomies.
But this also touches on my comments yesterday that we are avoiding the basic premise which assumes that everyone who needs health care should, or shouldn’t get it.Report
“solve” the problem of health care demand
For what it’s worth, I don’t see the problem as being one of health care demand.
I see the problem as being “the price is too high”. I’d call it a Price Problem.
And there are two ways to deal with that and only one of them has to do with lowering demand.
Increasing supply would also work. Walmart is doing what they can to add more options for people. There are other ways to increase supply and they include stuff like “making the FDA a lot less restrictive”. There’s a great little essay from Slate Star Codex that talks about insulin, for example. Jump down to part two. It talks about how Peru has cheaper insulin than the US.
Here’s the line that should give you pause: “Insulin is off-patent. It was discovered almost a hundred years ago. But somehow, all the insulin sold in the US is brand-name.”
The FDA, in this case, has requirements for “biologics” (the type of medication that Insulin is) that Peru does not have. Then he’s got a great question that I’ll pass along to you:
Which of those three options do you think is the case?
I came to the conclusion that it was #3. And that the FDA is too restrictive and that their being too restrictive is putting downward pressure on supply at exactly the same time that we have a Price Problem.Report
This is unequivically a good thing. The ability to meet inceased demand, arising from the US position as an economic leader, is in all ways wonderful. We need more and greater instances of throwing off the chains of gov’t allowed market capture.
It is always good to see examples of the free market.Report
This is the correct definition of demand: https://en.wikipedia.org/wiki/DemandReport
I got paywalled, so I haven’t read the article, but I’m curious as to how they can do this. Presumably they need actual doctors for legal reasons. So why are these doctors working at Walmart instead of working for substantially more money elsewhere? Has Walmart actually worked out the logistics in a way that dramatically improves efficiency, allowing them to pay doctors doctor money while charging patients nurse money?Report
Presumably they need actual doctors for legal reasons.
Or, depending on the scope of care, they only need licensed Nurse Practitioners.
At my wife’s business, where ownership and all care is provided by licensed nurse midwives, the only requisite for operating the facility is that it’s sponsored by an MD. I’m not sure about all the technical terms, but the requirement is basically that a certified MD signs off on the facility’s administration of care, thereby covering it under the umbrella of MD care, even though that person spends zero hours per week on site. So maybe something like that is going on.Report
So why are these doctors working at Walmart instead of working for substantially more money elsewhere?
I’d read some interesting stuff about Kaiser Permamante’s model, corroborated by people who work there, that MD’s are *very* willing to trade higher potential income for a regular salary with fixed hours.Report
I”d be interested in the demographics of that. Doctors are a “elite” job with high status. As heath care get changed I think the demographics will too…ie more women doctors vs men.Report
I’d say the fault lines are “more Nurse Practioners than MDs”, but I hear what you’re saying.
MD’s hate, fucking hate, NPs and equivalent. That’s a big barrier to change regardless of why.
Add: Maybe I misunderstood your comment Female Docs can be just as retrenched and dickish as male docs.Report
It could be that many of the doctors employed are doing their first MD job in the states. In other words, they are doctors who recently got their license in the states and needed a job PDQ, and for them there isn’t the stigma of poverty.Report
There are a number of issues in play but two big ones stick out. The first is that scope of practice is set at the state level. This means that different states have different rules about what different classes of providers can do and what level of supervision is required. Some jurisdictions have gone all in on NPs and theyre allowed unsupervised practice within a certain specialty. Others still require direct supervision by a licensed physician. There are also a bunch of gradients in between.
Another big issue is corporate practice of medicine, which is illegal in every state though exact rules can vary. This makes sense when you consider that physicians are professionals who have sworn oaths to put the interests of the patient above profits. Not sure about Walmart but the way a lot of these types of clinics operate will be to find a ‘friendly physician’ who agrees to create a company with a corporation (for a fee of course) where the corporation is a shareholder. The physician then takes on whatever supervisory roles and other medical decision-making requirements that are required for the entity to legally practice and the corporation will handle administration of the business side through whats usually called a ‘back office services’ contract. There’s a bit more to it but thats the basic idea.
So its not always the easiest thing in the world to set up but once you do its not a bad deal for providers with quality of life concerns. Less money but also better hours and relief from the business requirements of running a practice.Report
I admit, the main pushback I expect would have been something like this:
“Jaybird. Please describe the health care that *YOU*, personally, receive.”
“In the top half but not the top quarter. Let’s call it the Target Tier.”
“Ha! You get Target-level health care but you say that it’s good that these people are getting Walmart! CHECKMATE!”Report
More healthcare is unequivocally good so this is good news.Report
I’d read some interesting stuff about Kaiser Permamante’s model, corroborated by people who work there, that MD’s are *very* willing to trade higher potential income for a regular salary with fixed hours.ReportReport