Medical alliance connects Mercy with Wal-Mart, Lowe's

Mercy Hospital Springfield has been working behind the scenes for years to become a destination for patients in need of specialized medical care, and now those efforts are beginning to pay dividends.

Following an agreement inked last fall to provide Wal-Mart Stores Inc. (NYSE: WMT) associates from across the country with spine care, Mercy was recently selected by a national business group as one of four centers nationwide to provide knee and hip replacement procedures for Wal-Mart and Lowe’s Cos. Inc. (NYSE: LOW) employees.

Organizers say more might be on the way.

The retailers are the first two members of the Pacific Business Group on Health Negotiating Alliance to participate in a newly formed multiple-purchaser collaborative dubbed the Employers Centers of Excellence Network. The network was formed with the goal to provide employees access to hip- and knee-replacement surgeries at no cost to them. The alliance is a subset of the 60-member, San Francisco-based Pacific Business Group on Health.

The agreement currently covers 1.5 million employees and their dependents enrolled in the companies’ medical plans. The potential patients are eligible for no-cost hip- and knee-replacement surgeries at four participating hospitals: Mercy Hospital Springfield; Johns Hopkins, Bayview Medical Center in Baltimore, Md.; Kaiser Permanente Orange County Irvine Medical Center in Irvine, Calif.; and Virginia Mason Medical Center in Seattle, Wash.

Mercy Hospital Springfield President Dr. Robert Steele said the arrangement has been many years in the making.

“We’ve seen this coming,” Steele said, pointing to what he sees as a demand for a centralized location where large employers could expect specialized procedures at a relatively low price.

Noting work to improve patient outcomes has led to the opportunity, Steele said the employers cover the hospital’s costs, but he declined to disclose the rates under the agreement.

Since Mercy began treating patients in the program in May, Steele said 60 Wal-Mart associates from as far away as South Carolina have come to Springfield for spinal procedures. The hip and knee replacements for Wal-Mart and Lowe’s employees will begin in January at the new Mercy Orthopedic Hospital at U.S. Highway 65 and Evans Road.

“Wal-Mart and Lowe’s are just first,” said David Globig, Mercy Springfield’s vice president of operations. “We anticipate this will grow over the next 12 to 36 months.”

Alliance organizers expect other member employers, such as Boeing, Cisco Systems and Chevron, to see the benefits.

“We would expect others to make similar announcements on a rolling basis,” said Kate Chenok, director of new initiatives for PBGH. Wal-Mart and Lowe’s are the first two to publicly announce their participation in the alliance, but PBGH Senior Manager Olivia Ross said there are employers who are at various stages on joining the network.

Ross said PBGH members must oversee at least 2,000 benefits-eligible individuals in California, and they cannot operate in the health care, insurance or related industries. She declined to disclose membership fees.

“Rather than a single employer working on its own, PBGH Negotiating Alliance serves as an opportunity for (employers) to come together to discuss, coordinate and collaborate. We are also deeply involved in the center-selection process,” Ross said, adding that patient outcomes were key to selections and Mercy popped on the radar through Wal-Mart.

“It’s not really a cost initiative. What we’ve found is that there are huge variations in quality. What we’ve done is try to find centers that have fewer negative outcomes. Those provide lower costs in the long run. For example, they would have lower revisions. If a procedure doesn’t go well, it might have to be redone and that can be expensive.”

Mercy’s Globig said orthopedic patient volumes are up 30 percent since the $115 million hospital opened its doors. He expects the effect on operations to be minimal next year.

“It will be a positive impact to the Springfield community as you have patients travel in, staying at our hotels and eating at our restaurants, but I don’t know if that is going to be 10 or 500 [patients per year],” he said. “These are no different than the 2,000 to 3,000 total knee and hip replacements per year that we do now. To have patients fly in from across the country, this is right in our wheelhouse. It’s what we do.”