Lowe’s alliance with Cleveland Clinic likely first of many

While the national health care reform debate simmered, Lowe’s Companies Inc. struck an alliance with the Cleveland Clinic to better control the home improvement retailer’s rising costs.

Now, Lowe’s employees and their families can have their heart surgeries done at the Clinic, the nation’s top-ranked heart hospital and one that President Barack Obama has held up as a model for delivering efficient, cost-effective care.

The alliance was another way for Lowe’s to offer innovative–and cost-effective–health care for employees. The Mooresville, N.C., retailer recently started a mobile health screening program aimed at heading off future disease.

But the alliance also could be the first in a new business line that enables the Clinic to leverage its expertise and efficiencies over a national market through exclusive agreements–at pre-negotiated prices–with big employers. MedCity News talked to Michael McMillan (pdf), the Clinic’s executive director of market and network services, to find out more about the growth potential for this business line.

Q. What does the Clinic get out of the alliance with Lowe’s?

A. Our physicians in the medical group–the folks who do heart surgery–are interested in extending their practices and making their services available to as many patients as possible and to offer their great results, regardless of geography. So, the opportunity with Lowe’s was to work with an employer who had an innovative approach to benefit design that would allow that to happen.

Historically, the Clinic sees a lot of patients from outside the area. Forty percent of the patients who had heart surgery at the Clinic last year came from outside Northeast Ohio. People travel to the Cleveland Clinic for many kinds of procedures. This is an opportunity to build on that expertise and experience. The Lowe’s deal also enables the Clinic to compete on a national scale.

Q. How is it cost-effective for Lowe’s to transport its employees to Cleveland for heart surgeries?

A. The basic Cleveland Clinic value proposition is higher quality–meaning, better outcomes for the patients, fewer re-operations, fewer complications–leads to lower, long-term cost. If you’ve got to re-do an operation, you’re already in a much more expensive situation.

The second thing is the ability to aggregate the physician payments and the hospital payments into a package price. Because this is a medical group, the Cleveland Clinic can do this more easily, so it has an advantage over other organizations.

Q. Could you describe that advantage?

A. The physicians are employees of the medical group. The hospital, the physician services, the other clinical services are in one bucket, so we can offer a single price.  If you go elsewhere, typically the physicians and other clinicians are in private practices, so you have to organize to get a single package price. It’s difficult to do.

Q. What else attracted Lowe’s?

A. Because the physicians at the Cleveland Clinic are salaried, the physicians don’t have a direct financial incentive in recommending one form of treatment over another.

Q. How does that affect Lowe’s cost?

A. Think of it this way, if you’re a surgeon in a private practice, you don’t get paid unless you do surgery. There’s no direct financial incentive for Cleveland Clinic to do a surgical case, so recommendations are in the best interests of patients.

Q. President Obama has held up the Clinic as a model of efficient health care. How does that play out in the Lowe’s alliance?

A. There are three parts to that. One is the Cleveland Clinic is the largest provider of cardiac surgery in the world. There are enormous efficiencies gained from the experienced, specialized staff and the sheer volume of cases that the physicians and other clinicians perform.

The second is the group model of practice allows for care to be coordinated. All of the physicians are on the electronic medical record–the cardiologists, the pulmonologists, the anesthesiologist are all working together closely in the same area.

The third is that we have implemented formal process improvements, Lean Six Sigma-type processes, to help speed up the mechanics of providing the service.

Q. Does the Clinic expect to strike more such alliances?

A. We are anticipating more. We are in early discussions with other employers.

Q. Are there other pioneering business practices you’re developing in your office?

A. We’re doing a lot of things that other folks are doing: concepts like the medical home, better ways to coordinate care, the extension of electronic medical records, looking at building episodes of care to create efficiencies.

Q. Two weeks ago, the Clinic’s chief information officer, Dr. C. Martin Harris, announced “significant” results of a pilot with Microsoft Corp. to remotely monitor patients with chronic conditions like high blood pressure. Are you working on telemedical business models?

A. Absolutely. We have active programs in telemedicine and distance health in radiology and dermatology services.