ADAM: Hey everybody. Jason Nardella, Adam Peebles here shooting another Prescription for Growth video for you guys. Really excited to join you this week. We are shooting this video on October 9th. I say that because it has been a wild, wild week in healthcare. Many people are distracted right now with the election, with COVID, with everything else that is 2020. But very slowly and a little bit quiet, Walmart is starting to make a really big move into our space.

Actually, our CEO, Hal Andrews predicted this back in 2007. I'll submit a blog post below this video so that you guys can take a look at that, but we've known that they were going to get into the insurance space for quite some time. And so earlier this week, they officially announced a partnership with Clover Health. So Walmart and Clover have combined forces, and they're going to start rolling out a Medicare Advantage plan to the Georgia market.

So I really wanted Jason to come on today and specifically talk about what this means for hospitals across the country. We know it's not going to just stay in Georgia. We know that it's going to expand out quickly. So Jason, maybe you could walk us through... I know you put some stuff together and we can share that, but I'd love for you to talk us through what this move is, first off for those that may not be fully up to speed on it. And then secondarily, what this really means today and long-term for hospitals, particularly in a rural market, which is where Walmart has obviously a larger presence. So with that, let me turn it over to you and give us the 50,000 foot view of what this means for hospitals today.

JASON: As Adam mentioned, the big announcement this week is that Walmart is full on going into healthcare. So what did they announce and what is happening just within the past couple of weeks? First of all, they're going to quickly expand their pilot program of the Walmart Health. They started this in Georgia and it became such a success that they quickly fast tracked more expansion in the state of Georgia. Coming up by the end of the year will be extensions into the Chicago market. And then early next year is going to be the Florida market. This will not be the end of the expansion. This is only the beginning. And what they're offering for primary services right now or as your PCPs, obviously prescription growth planning as well as eye and dental services. So all things that we know have access problems within the healthcare community, all the things that we know that not only seniors need, but also just regular adults and children, just like us. So kind of big news there.

The other thing that they're doing is they're opening an insurance marketplace to help guide consumers to choose the right Medicare Advantage Plan. Right now they're just keeping it to Medicare Advantage, no word on if they're going to extend to other markets or other insurance products later. But the deal here is that if you can start to coach and you can start to engage the consumers on exactly what it is that they need and what they're looking for, Walmart believes that they can steer them to the right product that's going to save them the most money. Right? What does that do? That engenders a lot of trust with Walmart in the customer's eyes.

The other thing that they're doing, as soon as you open up a marketplace, what Amazon has taught us is you see what other people are doing, you see what other people are offering, and then you come out with your own product. And then you come in and you essentially can undercut or offer a product that is slightly better than what your competitors are offering to take that market share. That is what their plan is to do with Clover Health. That is an Medicare Advantage startup. They're in, I think, 47 markets right now with plans to not only do an IPO, but expand into more markets. They're going to be the chosen partner with Walmart to expand their own Medicare Advantage plans to start in the state of Georgia, but they're already licensed in all 50 States. And so we expect this to happen very quickly.

So if we go to the next slide, Adam, why is Walmart expanding into health? We've got three maps on the top. The first one is that US population, you can see where it's all really centered. The second one is where the Medicare Advantage concentration is. So again, the red dots on the map on the left is where the population is. The red and yellow dots over the concentration is for Medicare Advantage. There is a ton of overlap there as we can imagine. And then this last map is where Walmart's locations are. If you were to overlay all of them, and that takes a little bit more skill than I have with Photoshop, but if you were to overlay all of them, there would be a very neat graph of all of these things happening in the exact same neighborhoods and the exact same communities. So Walmart is going to use their real estate advantage, they're going to use their reach, to get out and to start to care for their community.

We've heard, there's been a ton of stories, the limited access to PCPs and other preventative services have been a big problem. Right? I was reading a couple articles in the Washington Post recently that said by 2023, by some estimates, we're going to have a demand for PCPs that are 21 to 55,000 of unmet PCPs needs in the market. So with all of that demand for that access to preventative care, well what is Walmart doing? Walmart's locations essentially are located so they think take care of 90% of the US population within 10 miles of Walmart. They're already in the communities and all they have to do is start to add some of this healthcare services in there to be able to take care of it.

Walmart, as famously as we know, has a very favorable cost structure. Right? And they have a significant purchase power. So unlike hospitals, unlike health systems currently, they're not going to be beholden to hospital license space regulations. They're not going to be beholden to only buying 50 chairs here or a hundred chairs here a hundred computers for an EMR. No, they could do this all at bulk and all at scale and have significant advantages in the cost to set up and to run these practices.

And the other thing is Walmart, also has to be came out with their new Walmart Plus and what they're trying to do with their brand strategy and engagement with the consumers. No longer are they trying to get into the game of you spending an hour in Walmart and going up and down the aisles, they've been really focused on the consumer experience so that they're going to start grouping all of their products together. So you can get in and out of Walmart really, really quickly. You're going to be able to navigate it. They're going to have signs in each Walmart that almost reminds you of an airport. All of this is to get more consumers in there and get them in there more often.

And if you're doing healthcare and you're having that relationship with Walmart, well now you're increasing the share of your customer's wallet. The more of that wallet you take, the more brand trust that you generate with your consumers, and then you also get priority within their budget. Right? So this is going to be another way for Walmart to expand their sales per square foot, which is a big retail metric, and also just really shore up a lot of the brand loyalty that their consumers have for them.

ADAM: Well, I think that's a great point, Jason, and just to jump in there for a second, I think that the old model was, I used to always be frustrated when I would go into Walmart that one item that you want is on one side of the building and the other one is on the other side, and they're still somewhat related. You kind of had your produce, and you kind of had your athletic, and kind of had your clothes, but it was still spread out. And they're definitely weren't the signs to help you easily navigate that. And now consumers are starting back where their Amazon-ified, I guess. So now they go to Amazon to buy one item and make that immediate purchase. So Walmart's making that progression.

Why go down that rabbit hole is because that's going to mean that more people are more frequently going into a Walmart as opposed to being once every two weeks or once every three weeks. Now they're going to go there every couple of days, potentially. They'll swing through to just grab something as opposed to having to go to Amazon. And now that's increasing the number of feet walking through Walmart, excuse me, that now might stop at their Walmart Health.

And so that's going to continue to be that hub for people to come in. And I think that this is something that hospitals don't have that advantage and healthcare providers don't have that advantage. 90% of the US population is within 10 miles of a Walmart, 90% of the US population isn't within 10 miles of a doctor. And so now they have that flexibility and that buying power, that the combination of those two make it a really powerful force. So yeah, I just wanted to point that out because it's so critical seeing how consumers are changing their buying patterns and how that's relating back to healthcare and Walmart's doing a great job of really capitalizing on that.

JASON: Really, really great points. And it just speaks to their broader strategy about what it is that they're trying to develop and what they want their Walmart stores and their brands to be known for.

ADAM: Exactly.

JASON: So what is Walmart going to be focused on? Patient experience, patient experience, patient experience. Right? That's it. I know it can be tough for some of us to think now like, "Oh, do I really want to go to a Walmart to see my doctor or to get my eyes checked or do my dental?" Well, if they've got convenient hours for you, if you can go when you're not in the middle of work, if you can go on the weekends when you've got more time. And if it's easy to get to, which we know as we just discussed, Walmart's within 10 miles of 90% of the population. Well, yeah, that's going to be a really big deal. Time is value. And the biggest thing that we can do as healthcare providers is understand what our consumers value is and try to maximize that as much as possible. So those convenient hours, those convenient locations are going to be a big selling point for them.

Telemedicine. The amount of scale that they have, they're going to be pushing a lot of telemedicine on folks. Is this just to make money? Is this just sort of a click thing? No, not at all. Again, this is to, in gentrify that patient experience. If you need more help, come into the Walmart, we can help you out there. If you need a prescription, come into the Walmart, we can fill that prescription for you. Again, providing access to the consumers where they want it. We're in sort of an on demand economy. And that's the really important thing.

Transparent billing. I mean, they're going to be advertising their prices for their services on a big neon sign. Right? Very, very different from the healthcare model now where you go to the doctor and you wait for a couple of weeks, you wait for a month. Does something come in the mail? Does something not? Do I own anything? I don't know. The billing practices in the current healthcare system are so opaque that it can be a real dissatisfier when you go to the doctor and then two months later, you're getting a bill for a couple of hundred bucks or 200 bucks or some lab is out of network and you've got to pay that out of pocket. This transparent billing that they're going to promote is really going to help really change the whole industry in such a way where people are going to have to start posting price. We've done a couple of series on it here about sort of what price transparency means and what that means for negotiations and for health systems. So that's going to be a big focus.

And this one-stop shop. Right? So you can now go to Walmart. You can fill your prescriptions, you can get your eyeglasses, you can do food, you can do banking, you can get a game for your kids. All of these things just encapsulating there what Adam just said, getting people to go in there more often is important to them. Right? They don't want the once a week or the once a month shoppers. It's not sort of the big store, Costco, Sam's Club model. They want people going in every day, every other day, and starting to use it as a gathering place within the community.

What's important here, what's the big takeaway on this slide? Every single one of those points that I just mentioned are areas of big struggle for current health systems. Right? We are not good at transparent billing. We have just picked up on telemedicine. I think some people are doing it better than others. Convenient hours and location is a big displeasure with providers and therefore have not been widely adopted by health systems. And the one-stop shop, I mean, yes, some folks have a pharmacy in their building and MOBs, but not everyone. Right. I know my prescription gets sent to a local CVS and I have to go somewhere after I leave my doctor to go and get a prescription if I need it. So these are all the factors and this is where Walmart's really going to try to differentiate and have that competitive advantage.

So what does this mean for existing health systems? The idea of supply side demand, which has been so big in healthcare, if I build it, they will come. Well, if you build it, will they come? You have a different competitor now. Right? You've got Walmart who might put in an x-ray, they might put in a lab, they might put in a CT scan depending on what their patient population needs and if it makes sense to them. So being really purposeful about what your assets are and where they are is going to be important. In my previous job, we always talked about access and trying to increase access to patients. Well, if every single Walmart's got doctors in there and they can see anywhere from 100 to 200 patients a day, do you need to bill another PCP office? Is that the access you want to create? We're not sure that that the juice is worth the squeeze in some of those areas.

And we just talked about those entrenched practice operations. They're going to have to evolve to cater more to the patient. So if Walmart is going to offer better hours, if Walmart's going to offer telemedicine, if Walmart is going to be able to either deliver your prescriptions right to your door, or have it right there in the shop when you're done. All of those are big factors that are going to be patient pleasers and consumer pleasers. So how are you as a health system going to compete against that? One idea might be concierge medicine. One idea might be taking a step up. What really actually doing following along and doing some of the things that Walmart is doing. Transparent billing and better billing practices is going to be a key differentiator always. But those are the types of things that you might want to be thinking about.

The last thing is you're going to have a competitor now with a significant negotiating power. When their Medicare Advantage product takes off and they've got a significant part of your community, well, they're going to start wanting to negotiate where those specialist services are. They're going to want to start negotiating what that stay in the hospital is going to be worth, or which PT folks they can go see. That's going to be a big... Their negotiating power is, I don't want to say historic, but it's their whole business model.

ADAM: Don't they have in Bentonville, they have places where they just bring vendors in just to negotiate price down. I mean, the thought that they're not going to do that same model that they've done for decades in consumer goods is asinine to think that they're not going to apply that same model to healthcare. I mean, they're going to bring people down to Arkansas and twist their arm until they get the rate that they want.

JASON: That is exactly right. That's exactly right. So this is what we think is coming down the pipe. This is something that for you to be thinking of, not just in two or three years, but the best plans are laid now and follow through soon. Right? I think the last thing that we just want to touch on, what can you start to do? How do you as a health system, what can you do now? You've got to know your market. You've got to know who's in your market, what they're doing, where they're doing it, what patients you want and care about. So you've got to know your consumers, front and forward. What are their age, what are their demographics? What are their psychographics? How do they relate to you? What are your thoughts of them?

And the last part of it is let's engage in some... Start looking at M&A, start looking at joint ventures to start consolidate desirable market positions. Right? As we just talked about in the previous slide, Walmart is going to have a significant negotiating advantages in a lot of places. Right? Until they don't. And this is where you've got to look down the road and say, "So they're going to do this. I need to be here." Right? And those are the types of positions that are really going to help benefit you down the road. Again, it might not be next year, might not be in the next six months, but that is a type of activity, that is the type of thoughts that you should be thinking of to set yourself up for success when more entrants come into your market. So that's kind of what we've got here. Adam, did I miss anything that you wanted to touch on?

ADAM: No, I think that's great. I mean, I think that this is just such a... The story is certainly not over, certainly going to continue to develop. It's going to be interesting to see how Walmart continues to flex their muscle once they work out some of those kinks in Georgia and then start to spread this across the country. I think that these points are exactly right, Jason. And I think that a lot of people think about this. They think about knowing your market, they think about knowing your consumers, they're curious about M&A or joint ventures, or they're active in that. But being able to know that and be preventative as you're thinking about it from an M&A standpoint or a site selection standpoint, understanding where... All hospitals across the country should be thinking about where is Walmart in relation to where … need to be thinking about what's the distance that someone's going to drive to Walmart, as opposed to what's the distance someone's going to drive to our facility.

And so that's a really important piece that I think is going to become more and more prevalent in hospital strategy today. So I think those are the big pieces we really wanted to hit on. We do have a couple of articles that we're going to post and we posted on the Weekly Roundup on our website. We'll also post that in our LinkedIn post, if you're watching it on LinkedIn right now. But engage with this. If you have questions, anything about the Walmart side, or specifically about your market and your consumers, we'd love to talk to you about it. Please feel free to reach out to Jason and I directly. And we'd love to answer any of those questions.

But with that, Jason and I are going to sign off. We'll be back next week with another Prescription for Growth video series for you guys. Hopefully you stay safe, happy, healthy, and then best of luck with your continued Fall and beautiful October. Take care and thank you very much, guys.

JASON: Thanks.