Walmart is changing how we pay for healthcare: 5 things to know

With nearly 1.5 million employees across 4,700 stores, Bentonville, Ark.-based Walmart is the nation's largest private employer. And with nearly 1 million of those employees self-insured, it's also a heavy influencer on the U.S. healthcare market, according to a MarketWatch analysis.

Here are five things to know about Walmart's influence on healthcare payment:

1. Direct contracting between large employers and health systems is changing how healthcare is priced and paid for in the U.S. Employers are increasingly holding providers responsible for delivering better outcomes to their workers at lower prices.

2. Walmart's first partnership with a provider started roughly two decades ago for workers requiring organ transplants. Other partnerships have expanded to include flat rates for spine and cardiac surgeries, joint replacements, weight-loss procedures, and cancer care. Under one three-year program, eligible Walmart employees diagnosed with breast, lung or colorectal cancers can visit Rochester, Minn.-based Mayo Clinic for treatment, with Walmart covering all expenses.

3. "When we went into this, it's never been about costs. Because our belief was that we would see downstream savings," Lisa Woods, Walmart's senior director of U.S. healthcare, told MarketWatch. "We are seeing the impact by eliminating unnecessary surgeries and procedures." For example, of the 219 employees who received cancer treatment at Mayo, 15 percent received a different diagnosis at the medical center. Mayo physicians also altered 20 percent of patients' treatment plans, created a plan for 33 percent of patients, and made minor changes to treatment plans for 2 percent of patients.

4. Walmart's direct contracting also plays a role in healthcare's overall value-based care movement, according to the report. Walmart's direct contracting programs tend to pay providers a total rate for employee care. Therefore, providers are incentivized to ensure patients see better outcomes.

5. Walmart isn't the only large employer expanding direct contracts with medical providers. Major players like Boeing, Lowe's, General Motors, Whole Foods and Intel are growing their employee medical contracts with providers.

More articles on healthcare finance:
Kansas hospital to close by year's end
Memorial Sloan Kettering shifts fundraising focus as problems mount
CHS could face cash crunch after $262M settlement, Moody's warns
