News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
Sign In

Walmart’s Health and Wellness Chief Discusses Retail Giant’s Move to Healthcare/Telehealth Provider, a Step with Implications for Clinical Laboratory Testing

Retail giant now has primary care clinics at stores in five states, but the rollout has not gone smoothly

Healthcare is increasingly being driven by consumerism and one clear sign of this trend is Walmart’s ambitious plan to open health clinics at its retail locations. The retail giant set its plans in motion in 2019 with its first primary care site in a suburban Atlanta store, however, the rollout since then has presented certain challenges.

Nevertheless, the trend of placing nearly full-service primary care clinics in retail locations continues. Clinical laboratories in these areas need strategies to serve customers accessing healthcare through these new channels, particularly as Walmart and the national retail pharmacy chains continue to expand the clinical services offered in their retail stores.

“Consumer engagement is a huge part of healthcare, [yet it is also a] gap for us in healthcare,” cardiologist and Walmart VP of Health and Wellness Cheryl Pegus, MD, told Modern Healthcare. “Healthcare is incredibly complicated,” she added. “And where we are in healthcare today is not in having great treatments. It’s not in having evidence-based medicine. It’s understanding how we engage consumers.”

The company also entered the telehealth business with last year’s acquisition of multispecialty telehealth provider MeMD.

“Telehealth offers a great opportunity to expand access and reach consumers where they are and complements our brick-and-mortar Walmart Health locations,” said Pegus in a Walmart new release announcing the acquisition. “Today people expect omnichannel access to care and adding telehealth to our Walmart healthcare strategies allows us to provide in-person and digital care across our multiple assets and solutions.”

Currently, Walmart Health centers only operate in Georgia, Florida, Illinois, and Arkansas. But telehealth enables Walmart “to provide virtual healthcare across the country to anyone,” Pegus said. With both offerings, “we’re really attempting to allow people to get healthcare the way they need it without disrupting the rest of their life.” Many users of these services are Walmart “associates,” she added, using the company’s term for its retail employees.

Cheryl Pegus, MD
“In this country, about 25% of people don’t have a primary care physician,” cardiologist Cheryl Pegus, MD (above), Walmart’s VP of Health and Wellness, told Medscape. “So, your options for being able to solve in real time something that will help you, they’re quite limited. What we’re trying to do is give those options. We’re not trying to take away emergency rooms, or healthcare systems, or existing primary care. We’re asking, how do we expand that infrastructure so that people get care when they need it?” And this includes clinical laboratory testing, radiology, and telehealth services as well. (Photo copyright: Walmart.)

Large Portfolio of Healthcare Offerings

Pegus joined Walmart (NYSE:WMT) in December 2020 to oversee a portfolio that now includes more than 4,700 pharmacies and 3,400 Vision Centers, in addition to the telehealth operation and the Walmart Health centers. She was previously chief medical officer at Walgreens and Cambia Health Solutions and worked in private practice as a cardiologist.

The retail giant opened its first Walmart Health center in Dallas, Ga., an Atlanta suburb, in September 2019, followed by additional centers in Georgia, Arkansas, and Illinois.

Earlier this year, it opened five new clinics in northern and central Florida with plans for at least four more in the Jacksonville, Orlando, and Tampa areas, according to a press release. Each health center is adjacent to a Walmart retail location.

These centers offer a range of primary care medical services, including:

  • physicals,
  • injury care,
  • immunizations,
  • radiology, and
  • care for chronic health conditions.
One of the first health clinics established by Walmart
Pictured above is one of the first health clinics established by Walmart. This location is in a western Atlanta suburb. Note that the services advertised include more than just primary care. Also offered are “labs and X-ray,” along with dental, hearing, optometry, and counseling. Clinical laboratory managers and pathologists may want to monitor whether consumers embrace primary care delivered from clinics located in retail stores. (Photo copyright: Georgia Health News.)

As Dark Daily reported in May 2020, the Walmart Health centers also offer clinical laboratory testing at cut-rate prices, such as:

  • $10 for a lipid test,
  • $10 for Hemoglobin A1c, and
  • $20 for a strep test.

On the Walmart Health website, patients can enter their Zip code to view a list of Walmart Health clinics in their area, including links to price lists.

Walmart’s Expansion into Healthcare Not Without Problems

In “Walmart to Open 4,000 Healthcare ‘Supercenters’ by 2029 That Include ‘Comprehensive’ Clinical Laboratory Services,” Dark Daily covered how Walmart was poised to become a much bigger healthcare player with an expanded menu of clinical laboratory testing services including EKGs, vision care, dental care, and more for children and adults.

However, the company’s expansion into healthcare has not gone smoothly. In 2018, the Walmart board signed off on a plan to open 4,000 health centers by 2029, Insider reported. By the end of 2021, Walmart expected to have 125 health centers in operation, but as of June 2022, the Walmart Health website listed only 25 locations, mostly in Georgia.

Citing anonymous sources, Insider reported problems that include “leadership changes, competing business priorities brought on by the coronavirus pandemic, and the complexity of scaling a massive healthcare operation.”

In Sept. 2021, Insider further reported that the clinics were experiencing operational difficulties including hidden fees and billing problems. One culprit, the story suggested, was the company’s electronic health record (EHR) software. That same month, Walmart announced it would adopt the Epic health records system, beginning with the opening of new clinics in Florida locations.

Pegus’ arrival at Walmart appears to be part of a management shakeup. In January 2022, Insider reported that she had assembled a new executive team, with David Carmouche, MD, Senior VP, Omnichannel Care Offerings, overseeing the health centers and telehealth operations. By then, the original executives leading the rollout of the health centers had all left, Insider reported. Carmouche was previously an executive VP with Ochsner Health in New Orleans.

Partnership with Quest Diagnostics

Meanwhile, in January, Walmart announced a deal with Quest Diagnostics that allows consumers to order more than 50 lab tests through The Wellness Hub on, which is separate from the Walmart Health website. The tests cover “general health, digestive health, allergy, heart health, women’s health, and infectious disease,” according to a press release announcing the partnership.

Consumers can order at-home test kits for certain conditions or set up appointments for tests at Quest Patient Service Centers. The tests on the Walmart/QuestDirect website include:

  • COVID-19 Active Infection ($119+)
  • COVID-19 Antibody Test ($69)
  • Cholesterol Panel ($59)
  • Complete Blood Count ($59)
  • Comprehensive Metabolic Panel ($49)
  • CRP Inflammation Marker ($59)
  • Diabetes Management ($69+)
  • Diabetes Risk ($99+)
  • Food Allergy Test Panel ($209)
  • Chickenpox ($59)

The website also offers a combined Basic Health Profile with CBC, CMP, cholesterol panel, and urinalysis for $149. “Each purchase is reviewed and, if appropriate, ordered by a licensed physician,” the press release states.

What does all this mean for clinical laboratories? “They need to recognize that the Millennials and Gen Zs are driving a consumer revolution in healthcare,” said Robert Michel, Publisher and Editor-in-Chief of Dark Daily and its sister publication The Dark Report.

“Walmart was early to recognize and respond to this, in part because it employs 1.3 million Americans, many of whom are Gen Y and Gen Z and quick to use telehealth and similar virtual health services,” he added.

Clinical laboratory leaders need to understand this trend and develop strategies to attract and serve new patients who are willing to access healthcare virtually, while still needing to provide blood and other specimens for the lab tests ordered by their providers.

Stephen Beale

Related Information:

Q/A with Dr. Cheryl Pegus of Walmart: ‘Consumer Engagement Is a Huge Part of Healthcare’

Nine Numbers That Show How Big Walmart’s Role in Healthcare Is

Walmart Health Opens Two More Locations in Chicago

Change Makers: Dr Cheryl Pegus on How Walmart Is Rethinking Health

Walmart to Open Two Health Clinics in Rogers, Fort Smith

Walmart Deepens Healthcare Offering with Lab Test Partnership

Walmart Tests Leap into Healthcare Business by Opening Second Clinic

Walmart to Open 4,000 Healthcare ‘Supercenters’ by 2029 That Include ‘Comprehensive’ Clinical Laboratory Services

Families Are Choosing Home Healthcare Over Nursing Home Placements for Elderly Relatives Because of COVID-19

Occupancy rates at skilled nursing facilities remain well below pre-pandemic levels, a trend that weakens the financial health of nursing homes and means fewer test referrals to clinical laboratories that service them

COVID-19 is taking a financial bite out of the nursing home industry as seniors opt for home care rather than entering nursing facilities. If this trend becomes permanent, clinical laboratories may have to ramp up their ability to collect specimens from a growing population of patients who choose non-traditional healthcare settings. And as the SARS-CoV-2 pandemic stretches on, the exodus of seniors from nursing home facilities provides another example of how COVID-19 is altering consumers’ access to healthcare.

According to the most recent “AARP Nursing Home COVID-19 Dashboard Fact Sheets,” the COVID-19 pandemic “has swept the nation, killing more than 160,000 residents and staff of nursing homes and other long-term care facilities.”

Because COVID-19 has hit nursing home residents the hardest, many families have decided elderly parents may be safer living with relatives than in nursing homes that have proven vulnerable to widespread outbreaks. In addition, COVID-19-related lockdowns in skilled nursing facilities (SNFs) have provided families with additional motivation to choose home care for elderly relatives. 

For example, in “Should You Bring Mom Home from Assisted Living During the Pandemic?” retired Seattle physician Alison Webb, MD, told Kaiser Health News (KHN) she moved her 81-year-old father, who has moderate dementia, out of assisted living so he could be with grandchildren and enjoy gardening rather than remain in his senior facility, where COVID-19 protocols kept him sequestered from friends and family.

This is not an isolated example and may have a long-term impact on clinical laboratories that service skilled nursing facilities.

Patient Volume Falls Dramatically at Skilled Nursing Facilities

While hospital discharge rates are rebounding to near pre-pandemic levels, an Avalere Health analysis of Medicare fee-for-service claims found a “more drastic and lasting decline in patient volume” at skilled nursing facilities. In contrast, Avalere found home health has experienced a rebound in patient numbers beginning last May.

“In the early months of the COVID-19 outbreak in the US, we saw a substantial decrease in hospital discharges to both skilled nursing facilities and home health agencies,” said Heather Flynn, Consultant at Avalere, in an Avalere press release. “Hospital discharges are steadily moving back to pre-pandemic levels, but our analysis points to an uneven ‘return to normal’ across care settings.”

The graph above, taken from the Avalere press release, reveals “a stark decline in inpatient hospital discharges and discharges to both SNF and home health beginning in February 2020. The analysis further indicated that the skilled nursing industry has experienced a more drastic and lasting decline in patient volume relative to total hospital volume and discharges to home health (where rebounds were observed beginning in May). Of note, discharges to home health experienced a year-over-year increase in June 2020, at 4.6% greater discharge volume when compared to June 2019, while discharges to SNF remained notably below pre-pandemic levels at a 25.4% decrease in year-over-year discharges.” (Graphic copyright: Avalere Health.)

Bill Kauffman, CFA, Senior Principal at National Investment Center for Seniors Housing and Care (NIC), believes the skilled nursing industry may be experiencing a permanent prolonged reduction in occupancy levels.

“Skilled nursing facility occupancy typically slows in April after an uptick during the flu season, but we haven’t seen anything like this in recent memory,” Kauffman said in an NIC press release which announced nursing home occupancy had dropped to 78.9% last April, 2020, down 5.5% from 2019. “The long-term effect of COVID-19 on skilled nursing occupancy remains to be seen as the industry adjusts to a new normal.”

Since then, the occupancy rate in skilled nursing properties has fallen even further. The latest Skilled Nursing Monthly Report announced a new low of 74.2%.

Will Clinical Laboratories That Service Skilled Nursing Homes Be Affected?

Low occupancy rates may be pushing the nursery home industry toward a financial crisis. According to an August 2020 survey conducted by the American Health Care Association (AHCA) and National Center for Assisted Living (NCAL), 55% of the nation’s nursing homes are operating at a loss and 89% operate with a profit margin of 3% or less.

Mark Parkinson (above), President and CEO of the AHCA and former Governor of Kansas, maintains a successful COVID-19 vaccination rollout and lifting of nursing home visitation bans are keys to the industry’s recovery. “I think the census needs to recover about 1% a month. If we can recover 1% a month on a steady basis, that gets us to the end of 2021,” Parkinson told Skilled Nursing News. “And we’re still down, but we’re down 5% or 6%; we’re not down 13% or 14%. If we recover a half a percent, some businesses will be okay, but not all. If we only recover half a percent, we don’t get any more money, folks are going to have problems. If we don’t have any recovery on census … things are very, very bad.” (Photo copyright: Kansas Health Institute.)

There are signs the nursing home industry may have to contend with home healthcare becoming a permanent competitor for patients. In a news release last spring, the Mayo Clinic announced it was partnering with Medically Home of Boston to launch a virtual hospital-at-home model aimed at delivering “advanced care” from a network of paramedics, nurses, and support team in a home care setting.

The initiative means patients can receive a range of healthcare services in their homes that traditionally required a hospital setting. The services include:

  • Infusions,
  • Skilled nursing,
  • Clinical laboratory and imaging services,
  • Behavioral health and rehabilitation services.

While the initial program rollout will allow Mayo Clinic to free up ventilators and hospital space for COVID-19 patients, John Halamka, MD, an emergency medicine physician and President of Mayo Clinic Platform, told Modern Healthcare, “Next, we’ll look to forward-thinking organizations who believe like we do in that care should be more convenient and accessible.”

Discharge Doctors Now Choose Home Healthcare Over Skilled Nursing Facilities

Physicians also are embracing home care in greater numbers. As reported in Forbes, a 2020 William Blair survey showed 81% of physicians responsible for discharge planning would send patients to a home health agency rather than a skilled nursing facility. Pre-pandemic, only 54% of discharging physicians expressed a preference for home care, according to the survey.

Greg Chittim, Partner at Health Advances, an international strategy consulting firm headquartered in Boston, points to improvements in virtual technologies as the catalyst for home care’s growth.

“One of the silver linings of COVID-19 is the level of investment we are seeing in virtual care technologies,” Chittim told Forbes. “And beyond the technologies, providers and patients are building that comfort with traditional real-time communication. I think we have moved 10 years ahead in 10 months.”

As the COVID-19 pandemic rolls on and home health initiatives become more commonplace and grow in popularity, clinical laboratory managers may want to develop solutions that assist home healthcare providers with collecting and shipping patient specimens for testing.

—Andrea Downing Peck

Related Information:

Decline in Skilled Nursing Occupancy Continues Due to COVID-19 Pandemic

Hospital Discharges to Home Health Rebound While SNF Volumes Lag

Survey: Nursing Homes Incurring Significant Costs and Financial Hardship in Response to COVID-19

Mayo Clinic Launches Advanced Care at Home Model of Care

Mayo Clinic to Launch National Hospital-at-Home Model

Skilled Nursing Occupancy Reached New Low in November 2020

While Hospital Discharges to Home Health Rebound, SNFs See Drastic and Lasting Decline

Home Healthcare Is a Bright Light During COVID-19 with an Even Brighter Future

Ohio Healthcare Network Serving Amish and Anabaptist Communities Could Provide Blueprint for Hospital Price Transparency

This rural health system has nearly a decade of experience offering cash-only package pricing for medical services including, most recently, inpatient stays

While healthcare networks and hospital organizations nationwide argued over pricing transparency, Pomerene Hospital in Millersburg, Ohio, embraced the concept. The not-for-profit hospital developed packages of care that include “one all-inclusive price for tests, procedures, and episodes of care, rather than a lengthy list of itemized charges that didn’t even include professional fees” for its self-paying customers, Modern Healthcare reported.

Clinical laboratories and pathology groups that read Dark Daily know that on Jan. 1, 2021, a new Centers for Medicare and Medicaid Services (CMS) final rule (CMS-1717-F2) on price transparency goes into effect. It requires hospitals to publish their standard chargemaster prices, as well as payer-negotiated prices, online for customers to review.

A companion proposed rule (CMS‑9915‑P) will, if passed, require health plans and healthcare insurers to disclose covered healthcare costs to customers upon request, including “an estimate of such individual’s cost-sharing liability for covered items or services furnished by a particular provider.”

These rules have created a fire storm of controversy. Hospital systems and healthcare organizations like the American Hospital Association (AHA) argue that revealing payer-negotiated rates will undermine health networks’ negotiating power with insurers and increases hospital prices.

They may be right. But that hasn’t stopped one health network in rural Ohio from providing a blueprint on price transparency that could be a model for the rest of the nation—at least for one segment of its customer base.

Bundled Care Packages Increase Revenues at Pomerene

Pomerene is a not-for-profit healthcare provider established in 1919. Originally, the tiny hospital had “a six bed women’s ward, a three bed men’s ward, six private rooms, a three bed OB ward, and a nursery with five cribs. There were ten physicians on staff,” notes the hospital’s website.

Today, Pomerene has more than 325 employees, 80 physicians, and 55 licensed beds. The hospital has 30 departments on three floors and is one of the largest employers in Holmes County.

Pomerene has developed bundled care packages for more than 300 services—including inpatient care—for Amish and Anabaptist patients, as well as any other self-pay patients who pay their bills in full at the time of service, Modern Healthcare reported.

The initiative came in response to concerns raised by the area’s Amish and Anabaptist communities, which make up roughly 40% of the county’s population. They do not use commercial health insurance. Instead, they pay their medical bills out of pocket, and when they are unable to pay for medical services, benefit actions and church support fill the financial gaps.

Church members asked Pomerene for guaranteed bundled pricing. They did not want the uncertainty of hospital bills that might include lists of itemized charges, but not professional fees and other potential costs.

“We have our own healthcare,” a retired Amish carpenter (who asked that his name not be used) told Reuters. “They (hospitals) give you a bill. If you can’t pay it, your church will.”

Both religious groups also value thriftiness and are known to be fierce negotiators. In recent years, they lobbied Pomerene Hospital to include inpatient care in its all-inclusive pricing structure.

“We assume a certain level of risk with this financial arrangement,” Pomerene Hospital CEO Jason Justus, who at the time was Pomerene’s Chief Financial Officer, told Modern Healthcare. “But it’s about saying what we’ll do and doing what we say. That builds a great deal of trust in the community.” Justus took over as CEO in July, 2019, reported The Daily Record.

Jason Justus, CEO, is shown above to the right of Tony Snyder, former CEO of Pomerene Hospital until July of 2019. Initially, Snyder was concerned that posting the hospital’s prices would discourage the Amish from seeking care at his hospital. “They are shrewd business folks, they are price sensitive, and they will shop,” he told Modern Healthcare. “They don’t expect you to lose money, but they don’t want to be paying exorbitant margins.” Fortunately, price transparency had the opposite effect. “We were holding our breath,” Justus said. “We were optimistic it would work, and we were pleasantly surprised when it did.” (Photo copyright: The Daily Record.)

In total, nearly one-quarter of the hospital’s patient revenue comes from bundled-service packages, with 3,387 packages provided last year, Modern Healthcare reported. In 2018, Pomerene brought in $36,971,931 in operating revenue, according to Modern Healthcare Metrics.

Bundled Payments Drive Innovation

Bundled payments also have forced hospital administrators and staff at Pomerene to find innovative ways to cut costs by shortening patient stays. For example, Modern Healthcare reported that the length of hospital stay for childbirth, which at the time averaged two-to-four days, dropped to 24 hours after the hospital created a 24-hour package for obstetrical deliveries. Within 18 months, 80% of childbirth cases fit the 24-hour model.

“Here is free market economics at work,” said Robert Michel, Dark Daily’s Editor-in-Chief. “This hospital understands that it must meet the needs of this unique group of patients with good service and quality at a fair price. That understanding comes with an incentive for the hospital’s staff to identify and implement innovations to cut costs while improving quality.”

However, Pomerene Hospital’s policy of disclosing prices to patients in advance of services remains uncommon in the healthcare industry. “Outside of Medicare, bundled pricing is rare-to-nonexistent among full-service US hospitals, most of which say they don’t know their actual costs for providing care and, therefore, can’t offer such prices,” Modern Healthcare stated.

For competitive reasons, Pomerene does not publicly post its package prices and only prospective cash-paying patients are provided the cost breakdowns. That will most likely change following enactment of the CMS final rule.

Other Health Systems That Bundled Prices

Though Pomerene does not shares its price-packaging methods with other hospitals, its track record for attracting cash-paying patients made it an example to other hospitals serving similar religious communities.

The Medical Center at Scottsville in Kentucky followed Pomerene’s lead and discounted cash prices—paid upfront or before discharge—by 25% for 300 medical services, including childbirth and common surgical procedures. This was to attract the area’s Mennonite population, noted Quartz magazine.

“I will tell you they are very conscientious about cost. They are very business-savvy and will shop around,” Eric Hagan, Regional Vice President of Operations at Med Center Health and Administrator of the Medical Center at Scottsville, told Quartz.

Will Americans as a whole be just as eager to shop for medical services? The answer to that question may determine whether increased price transparency throughout healthcare, including clinical laboratory testing and anatomic pathology services, results in lowering their healthcare costs.

—Andrea Downing Peck

Related Information:

Hospital Develops Package Prices to Lure Cash-Paying Patients

The Amish Understand a Crucial Element of Modern Medicine that Most Americans Don’t

How Do Amish Choose a Hospital?

CY2020 Hospital Outpatient Prospective Payment System (OPPS) Policy Changes: Hospital Price Transparency Requirements (CMS-1717-F2)

As U.S. Struggles with Health Reform, the Amish Go their Own Way

Trump Administration Announces Historic Price Transparency Requirements to Increase Competition and Lower Healthcare Costs for All Americans

Smartphone Apps Enable Healthcare Consumers to Receive Primary Care without Traditional Office Visits, But How Will They Provide Needed Medical Laboratory Samples?

These virtual office visits use artificial intelligence and text messaging to allow real physicians to diagnose patients, write prescriptions, and order clinical laboratory tests

Clinical laboratories may soon be receiving test orders from physicians who never see their patients in person, instead evaluating and diagnosing them through a smartphone app. In response to major changes in the primary care industry—mostly driven by consumer demand—mobile app developers are introducing new methods for delivering primary care involving smartphones and artificial intelligence (AI).

Medical laboratories and pathology groups should prepare for consumers who expect their healthcare to be delivered in ways that don’t require a visit to a traditional medical office. One question is how patients using virtual primary care services will provide the specimens required for clinical laboratory tests that their primary care providers want performed?

Two companies on the forefront of such advances are 98point6 and K Health, and they provide a glimpse of primary care’s future. The two companies have developed smartphone apps that incorporate AI and the ability to interact with real physicians via text messaging.

Virtual Primary Care 24/7 Nationwide

Dark Daily has repeatedly reported that primary care in America is undergoing major changes driven by many factors including increasingly busy schedules, the popularity of rapid retail and urgent care clinics, consumer use of smartphones and the Internet to self-diagnose, and decreasing numbers of new doctors choosing primary care as a career path. 

Writing in Stat, two physicians who had just completed internal medicine residencies, explained their own decisions to leave primary care. In their article, titled, “We were inspired to become primary care physicians. Now we’re reconsidering a field in crisis,” Richard Joseph, MD, and Sohan Japa, MD, cited factors that include long hours, low compensation in comparison with specialty care, and deficiencies in primary care training. At the time of their writing they were senior residents in primary care-internal medicine at Brigham and Women’s Hospital in Boston.

They also pointed to a decline in office visits to primary care doctors. “Patients are increasingly choosing urgent care centers, smartphone apps, telemedicine, and workplace and retail clinics that are often staffed by nurse practitioners and physician assistants for their immediate health needs,” they wrote.

One solution to declining populations of primary care physicians is a smartphone app created by Seattle-based 98point6. The service involves “providing virtual text-based primary care across the entire country, 24/7 of everyday,” explained Brad Younggren, MD, an emergency physician and Chief Medical Officer at 98point6, in a YouTube interview. “It’s text-based delivery of care overlaid with an AI platform on top of it.”

The service launched on May 1, 2018, in 10 states and is now available nationwide, according to press releases. 98point6 offers the service through individual subscriptions or through deals with employers, health plans, health systems, and other provider organizations. The personal plan costs $20 for the first year and $120 for the second, plus $1 per “visit.”

Here’s how it works:

  • Subscribers use text messaging to interact with an “automated assistant” that incorporates artificial intelligence. While messaging, they can describe symptoms or ask questions about medical topics.

“After the automated assistant has gathered as many questions as it deems necessary, it hands [the information] off to a physician,” Younggren said. In most cases, all communication is via text messaging. However, the doctor may ask the subscriber to send a photo or participate in a video meeting.

  • The doctor then makes a diagnosis and treatment plan. Prescriptions can be sent to a local pharmacy and the subscriber can be referred to a clinical laboratory for tests. LabCorp or Quest Diagnostics are preferred providers, but subscribers can choose to have orders sent to independent labs as well, states the company’s website.

Younggren claims the company’s physicians can resolve more than 90% of the cases they encounter. If, however, they can’t resolve a case, they can refer the patient to a local physician. And because most of 98point6’s interactions with subscribers are text-based, that messaging serves as reference documentation for other doctors, he said.

“We’ve set out to dramatically augment the primary-care physician with deep technology by delivering an on-demand primary-care experience,” Robbie Cape (above), CEO and co-founder of 98point6, told Modern Healthcare. (Photo copyright: Seattle Business Magazine.)

The 98point6 physicians are full-time employees and work with the company’s technologists to improve the AI’s capabilities, Younggren said. The company claims its doctors can diagnose and treat more than 400 conditions, including: allergies, asthma, skin problems, coughs, flu, diabetes, high blood pressure, and infections. For medical emergencies, subscribers are advised to seek emergency help locally.

98point6 also can function as a front end for interacting with patients in health systems that have their own primary-care doctors, Younggren said. The company’s health system clients “don’t actually have a good digital primary care front end to deliver care,” he said. “So, we can essentially give them that, and then we can also get some detailed understanding of how to coordinate care within the health system to drive patients to the care that they need.” For example, this can include directing the patient to an appropriate sub-specialist.

Leveraging Patient Data to Answer Health Questions

K Health in New York City offers a similar service based on its own AI-enabled smartphone app. The app incorporates data gleaned from the records of more than two million anonymous patients in Israel over the past 20 years, explained company co-founder Ran Shaul, co-founder and Chief Product Officer, in a blog post.

The software asks users about their “chief complaint” and then compares the answers with data from similar cases. “We call this group your ‘People Like Me’ cohort,” Shaul wrote. “It shows you how doctors diagnosed those people and all the ways they were treated.”

The K Health app is free, but for a fee ranging from $14 for a one-time visit to $39 for an annual subscription, users can text with doctors, the company’s website states.

Unlike 98point6, K Health’s doctors are employed by “affiliated physician-owned professional corporations,” the company says, not K Health itself.

“The doctor you chat with will discuss a recommended treatment plan that may include a physical exam, lab tests, or radiology scans,” states K Health’s website. “They may send you directly for some of these tests, but others will require you to visit a local doctor.”

These are just the latest examples of new technologies and services devised to help patients receive primary care. How a patient who uses a smartphone app gets the necessary clinical laboratory tests performed is a question yet to be answered.

Clinical laboratory leaders will want to watch this shift in the delivery of primary care and look for opportunities to serve consumers who are getting primary care from nontraditional sources.

—Stephen Beale

Related Information:

Bringing Primary Care to Smartphones

We Were Inspired to Become Primary Care Physicians. Now We’re Reconsidering A Field in Crisis

How K Delivers Free Personalized Healthcare Information

Robbie Cape Wants Everyone to Have Access to Affordable Primary Care

98point6 Inc.’s Hot Health Care App Is Attracting Investors

Consumer Trend to Use Walk-In and Urgent Care Clinics Instead of Traditional Primary Care Offices Could Impact Clinical Laboratory Test Ordering/Revenue

JAMA Study Shows American’s with Primary Care Physicians Receive More High-Value Care, Even as Millennials Reject Traditional Healthcare Settings

As Primary Care Providers and Health Insurers Embrace Telehealth, How Will Clinical Laboratories Provide Medical Lab Testing Services?

Even Medicare Advisors Recognize the Trend to Treat Patients in Settings Other than Hospitals with New Recommendations to Congress

Shifts to new types of facilities where patients are treated provide clinical laboratories and pathology groups with new opportunities to add value to providers and patients

Two important trends have serious implications for the nation’s traditional hospitals. One is the ongoing shift of patient care from inpatient settings to outpatient providers. The other trend is to proactively manage patients so as to avoid the need for hospitalization. Both trends create challenges and opportunities for medical laboratories and anatomic pathology groups.

Thus, it is significant that one advisory group to the federal government on Medicare and health policy recognizes these trends with the recommendations it made to Congress. In June, the Medicare Payment Advisory Commission (MedPAC) released its “Medicare and the Health Care Delivery System” report to Congress. It includes proposals that support healthcare’s shift toward outpatient settings and away from in-hospital care. It also makes two recommendations that impact EDs based on their locations (rural versus urban) and proximity to parent hospitals.

MedPAC believes that shifting money/reimbursement toward different sites of care and for different services improves the ability of providers to be proactive and manage patients in ways that support earlier diagnosis and more active management of conditions—all in ways that help avoid acute events that would otherwise send patients to hospitals.

Thus, for clinical laboratories, the message with MedPAC is that other sites of service would get better reimbursement for the above reasons and would want lab services that support the objectives of their providers. And the recommended enrichment of reimbursement for ambulatory evaluation and similar management services would encourage providers to do a better job of ordering the right test and doing the right thing with the results. This gives labs an opportunity to add value.

Ensuring Access to ED Services in Rural Environments

MedPAC is a nonpartisan legislative branch agency that provides the US Congress with analysis and policy advice on the Medicare program. Most of the points the June report makes pertain to the Medicare program in general. However, chapter two of MedPAC’s report addresses payments to emergency departments specifically, including:

  • Increasing Medicare payment rates to isolated rural stand-alone EDs; and,
  • Decreasing payment rates to urban stand-alone EDs located near hospital-based emergency departments.

To ensure rural residents have access to ED services, MedPAC recommends allowing hospitals located more than 35 miles from another ED to convert to stand-alone EDs that would bill under the Outpatient Prospective Payment System (OPPS). Effectively they would become “outpatient-only” hospitals and would receive annual payments to assist with their fixed costs.

In contrast, MedPAC noted an oversupply of emergency services in urban areas, where stand-alone EDs—particularly those affiliated with nearby hospitals—may be shifting services from lower cost urgent care centers and physicians’ offices to higher cost 24/7 stand-alone EDs.

MedPAC reported that outpatient Medicare ED payments increased 72% per beneficiary between 2010 and 2016. A MedPAC press release attributed the growth in off-campus EDs in certain urban locations to “Medicare payment policy [rather] than unmet need for ED services.”

“I think [the MedPAC proposal] is a move in the right direction,” Renee Hsia, MD, MSc, Professor of Emergency Medicine and Institute of Health Policy Studies at the University of California-San Francisco, told Leaders in Health Care. “We have to understand there are limited resources, and the fixed costs for stand-alone EDs are lower.” Hsia co-authored a report titled, “Don’t Hate the Player; Hate the Game,” published in the Annals of Emergency Medicine. In it she argues that “freestanding EDs will continue to proliferate in areas in which there are few restrictions, potentially creating more supply than demand.” (Photo copyright: University of California San Francisco.)

75% of Freestanding EDs within Six Miles of Hospital EDs

In April, MedPAC published an analysis of five healthcare markets—Charlotte, Cincinnati, Denver, Dallas, and Jacksonville, Fla. In “Using Payment to Ensure Appropriate Access to and Use of Hospital Emergency Department Services,” MedPAC showed that 75% of the freestanding EDs were located within six miles of a hospital emergency room. The average drive time to the nearest hospital was 10.3 minutes.

In that report, MedPAC proposed cutting payment rates 30% for off-campus stand-alone EDs located within six miles of an on-campus hospital emergency room. This proposal means off-campus EDs, which have lower standby costs and typically treat patients with less acute medical problems, would receive Medicare payment rates on par with ED facilities open less than 24/7. If the rate change is enacted, MedPAC estimates Medicare would save between $50 million and $250 million annually.

MedPAC’s recommendation drew the ire of the American Hospital Association (AHA) and other hospital industry stakeholders who believe a payment cut could result in off-campus stand-alone EDs closing. The AHA in March submitted a “comment letter” to MedPAC Executive Director James E. Mathews, PhD, calling the proposal “unfounded and arbitrary.”

“The recommendation is not based on any analysis of Medicare beneficiaries, Medicare costs, or Medicare payments, and would make Medicare’s record underpayment of outpatient departments and hospitals even worse,” Joanna Hiatt Kim, Vice President of Policy at the AHA, told Modern Healthcare. “Even more troubling to us is that [the recommendation] has the potential to reduce patient access to care, particularly in vulnerable communities, following a year in which hospital EDs responded to record-setting natural disasters and flu infections.”

This latest report indicates MedPAC believes shifting reimbursement toward different sites of care and for different services improves the ability of providers to be proactive and manage patients in ways that support earlier diagnosis and active management of conditions.

Medical laboratories and anatomic pathology groups should use this opportunity to create lab services that support these objectives and add value to both providers and patients.

—Andrea Downing Peck

Related Information:

Report to the Congress: Medicare and the Health Care Delivery System

Medicare Payment Advisory Commission Releases Report on Medicare and the Health Care Delivery System

Using Payment to Ensure Access to and Use of Hospital Emergency Department Services

American Hospital Association Comment Letter

MedPAC Votes to Cut Payments for Free-Standing ERs

Congress Urged to Cut Medicare Payments to Many Stand-Alone ERs

Don’t Hate the Player; Hate the Game

MedPAC Issues June 2018 Report to Congress, Including Two Emergency Department Recommendations