Share story

Virginia Mason Medical Center, along with three other medical centers around the country, has struck a deal with Walmart and Lowe’s to provide hip- and knee-replacement surgeries to 1.4 million insured employees and dependents for no out-of-pocket costs.

The announcement Tuesday continues a trend of large employers forging fixed-price contracts for surgical procedures with specific medical centers with low rates of readmissions and complications.

In particular, this arrangement expands a similar contract announced last year between Walmart and Virginia Mason and other medical centers for heart, spinal and organ-transplant surgeries. Walmart for some time has had a similar program with the Mayo Clinic for organ transplants.

Such arrangements are attractive to employers because they provide “transparent and predictable costs,” said David Lansky, president and CEO of the Pacific Business Group on Health Negotiating Alliance.

Both Walmart and Lowe’s are looking for higher quality, lower-cost health care for employees, Lansky said in a statement, and the business group’s Employers Centers of Excellence Network has been designed to offer employers a model to achieve those goals.

Sally Welborn, senior vice president of global benefits at Walmart, said each of the medical centers chosen has a “proven record of practicing evidence-based medicine with above average positive patient outcomes in knee- and hip-replacement procedures.”

Ed Mabrie, spokesman for the business group, said other large employers are also planning to join the program.

Lowe’s has had such a fixed-price program with Cleveland Clinic since 2010 for heart surgeries. Cleveland Clinic, a pioneer in such arrangements, has since contracted with six other large employers, including Boeing and Walmart.

Dr. Gary Kaplan, Virginia Mason’s chairman and CEO, said the medical center, which typically is ranked among the nation’s top hospitals, has long focused on providing “high value outcomes and the lowest possible cost.”

The hospital’s low rates of readmissions and surgical-site infections, as well as high marks for patient satisfaction, were among the criteria considered by Walmart last year, Virginia Mason officials said then. Higher-than-typical claim costs, officials said, most often result from complications.

“The goal of this program is to cut down on readmissions,” said Randy Hargrove, spokesman for Walmart, which, like Lowe’s, is a self-insured company. “I think health plans haven’t focused enough on improving the quality of care, and I think we can accelerate that.”

The new arrangement, like similar programs, is voluntary for employees and dependents. But if they choose centers in the program, they won’t have to pay deductibles or coinsurance for consultations or procedures. It also provides travel, lodging and living expenses for the patient, who must be able to travel, and a caregiver.

Approximately 1.4 million employees and dependents at Walmart and Lowe’s are eligible for the program, said Ed Mabrie, the business group’s spokesman.

The other medical centers in the latest program include Johns Hopkins Bayview Medical Center in Baltimore, Md., Kaiser Permanente Orange County Irvine Medical Center in Irvine, Calif., and Mercy Hospital in Springfield, Mo.

Walmart, the country’s largest private employer, has been criticized by labor groups, who say it offers substandard wages and benefits to its employees. The Bentonville, Ark., company said more than half its workers participate in its health-care plan.

Worldwide, the company employs more than 2.2 million people, with stores in 27 countries.

Earlier this year, Walmart announced it would provide health-care benefits to its U.S. workers’ domestic partners, including those of the same sex, starting next year.

Lowe’s, the second-largest home-improvement retailer in the world, has more than 1,825 stores in the United States, Canada and Mexico.

Carol M. Ostrom: or 206-464-2249. On Twitter @costrom