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Wal-Mart CEO Lays Out Plans to Help Other Employers Cut Health Care Costs

January 24, 2008
Related Topics: Medical Benefits Law, Benefit Design and Communication, Workforce Planning, Latest News
Wal-Mart chief executive and president Lee Scott said Wednesday, January 23, that the retailer plans to deepen its involvement in health care by contracting with employers to help them reduce prescription drug costs.

In an address to more than 7,000 store managers and suppliers gathered in Kansas City, Missouri, for the company’s annual start-of-the-year meeting, Scott says the company would redouble its efforts to improve the efficiency and reduce costs in health care, make environmental-friendly technologies affordable to customers and businesses, and exert greater pressure on its supply chain to meet higher ethical standards in the way it produces goods.

But it is in the area of health care that Scott believes Wal-Mart can have an immediate economic impact on employers across the U.S. that are struggling with the cost of health care. Building on its program to introduce $4 prescription drugs, Wal-Mart will focus on the confluence of technology and pharmacy benefits.

“This year we will be contracting with select employers in the U.S. to help them manage how they process and pay prescription claims,” he said in the text of his speech. “Our approach will be based on taking out unnecessary costs while providing high-quality health care products and services.”

Scott says Wal-Mart will save its employer customers $100 million this year.

The company plans to launch an initiative that will quadruple the number of electronic prescriptions filled by Wal-Mart in the U.S. to 8 million by the end of the year.

Without naming it, Scott mentioned the company’s involvement in a project to create electronic medical records for its employees. The Dossia project, launched in late 2006 by Wal-Mart, Pitney Bowes, BP, Intel and Applied Materials, was set back by a contract dispute with its original service provider, Portland, Oregon-based Omnimedix.

In September, Dossia announced it would start over with a new technology provider, the Children’s Hospital Informatics Program based at Children’s Hospital Boston, which has developed a personal health record called Indivo.

On Wednesday, Scott reiterated the company’s commitment to medical records, and said the company will provide the records to employees, retirees and their dependents by 2010.

Scott’s speech came a day after the company touted in a press release its efforts to insure more of its employees. The company said half its 1.1 million employees had health insurance through Wal-Mart and that in the past year the number of uninsured employees declined by 2.3 percent.

Burdened by bad publicity and public backlashes in locations across the country, Wal-Mart has made a concerted effort to improve its image in recent years.

The start-of-the-year meeting was open to outsiders for the first time on Wednesday. The speech, titled “The Company of the Future,” was an update on Scott’s vision laid out in his 2005 “21st Century Leadership” speech. Some critics of the company, like the group Wal-Mart Watch, said the retail giant had not made enough progress since then, while others, like the Natural Resources Defense Council, praised the company for embracing its role as a global leader with the economic leverage to make other companies and industries embrace an ethos that pairs cost efficiency with environmental sustainability.

—Jeremy Smerd

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