A fascinating internal memo by Wal-Mart EVP M. Susan Chambers (at left) describes the company's healthcare cost crisis and outlines some "limited risk" and some "bold" steps to bring costs under control, make employees happier ... and improve Wal-Mart's public reputation in the face of increasing calls for new state and local regulations. The leaked document, written for the board of directors and based on studies with McKinsey & Company, is brutally honest: older, fatter, sicker, long-employed full-time workers are much more expensive than cheaper, younger, healthier part-time new hires -- but they are no more productive. Wal-Mart's employee benefit costs jumped from $2.8 billion to $4.2 billion in three years. The company earned $10.5 billion on sales of $285 billion last year. (See the recent article by Steven Greenhouse and Michael Barbaro from the New York Times.)
This Tuesday at 10 am EST, Brian Lehrer, host of a talk show on New York's public radio station WNYC, will present "Who Pays for Healthcare?" discussing the memo with an economist and his New York audience (see box below). No doubt, there will be plenty of public radio hand-wringing about the evil corporation where 5% of employees resort to Medicaid, but memo fairly outlines Wal-Mart's relative position in the overall labor market as well as the stingier retail sect, steps like:
- Health Savings Accounts that reward medical consumerism and build assets year-to-year,
- wellness training programs to stop going to the hospital emergency room and to better use doctor visits and prescriptions,
- discounts for healthier foods,
- in-store clinics like MinuteClinic ,
- adding more physical activity to jobs to force some on-the-job exercise
Some of the memo's notes on workforce productivity and recruiting strategy will scare people who've never run a business, but the healthcare issues for the country's biggest employer are the ones every employer -- and every employee -- will face in the future. There's a lot of disruption on the way, maybe for the better.
The Brian Lehrer Show: Who Pays for Healthcare?
WNYC New York, Tuesday, December 13, 2005, 10AM on 93.9 FM and AM 820 , rebroadcast at 1AM on AM 820. Available on-line at WNYC.org.
Read the Wal-Mart memo Reviewing and Revising Wal-Mart’s Benefits Strategy: Memorandum to the Board of Directors from Susan Chambers [PDF]