Embracing Disruption: How Walgreens’ Coordination Model Improves Employee Care Quality

Editor’s Note: The following is an adapted excerpt of a whitepaper called “Leading the Way: Employer Innovations in Health Coverage”, published by Oliver Wyman’s sister company, Mercer, and the American Benefits Council.

The tides are turning for the healthcare industry. New consumer preferences, innovative technological advancements, and unexpected entrants from outside healthcare dipping their toes – soon to perhaps be diving headfirst – into the market are just a few reasons large employers are suddenly reevaluating how to improve employee care outcomes – and save money while doing so. For instance, in one of the year's most notable examples of the above, the Amazon, JPMorgan Chase, and Berkshire Hathaway partnership aims to improve the employee care journey.

Along the same visionary track, the below case study of Walgreens is yet another example of how the development of a new care coordination model increases medical claim savings by referring patients to low-cost, yet high-quality providers.

Case Study: Walgreens Establishes Care-Coordination Model Within Carrier Partners

The Issue: Self-insured plan sponsors need to find better ways of keeping insurance costs low and care quality high. To help decrease the price of insurance, Walgreens focused on improving the efficiency of care delivery and improving service quality for their employees.

The Solution: Walgreens introduced a new care coordination model that offered monetary incentives for plan carriers and plan members. This model utilized care coordinators who preauthorized referred members, and had access to a given number of in-network, high-quality healthcare providers. If a member was referred to a certain provider to get an MRI at a cost of $2,000, the coordinator could refer the member to another quality provider who charged only $1,000. Financial incentives of up to $250 were awarded whenever a lower priced provider service was identified. Carriers also received a percentage of savings. Price comparison shopping was therefore the responsibility of the carrier/care coordinator, not the healthcare consumer.

The Results: Walgreens’ care coordination model is expected to see medical claim savings of up to 4 percent within its first year of operation. Seventy percent of the total yearly employee incentive budget was distributed within the first eight months of the model’s implementation. The potential overall savings is expected to increase when the program extends pre-authorization to all medical services.