Health care, ethics top Wal-Mart agenda
KANSAS CITY Being the world’s largest company and the largest U.S. employer means Wal-Mart must concern itself with a wide range of issues that historically were of little concern to the retail industry.
That reality was evident last night during a speech titled, “The Company of the Future,” ( click here to download )Wal-Mart president and ceo Lee Scott delivered to 7,000 of the retailer’s U.S. store managers assembled in Kansas City for an annual meeting. Scott announced high level goals and new initiatives in the areas of health care, energy efficiency and ethical sourcing. ( click here to watch video footage of Scott's speech )
Under the umbrella of reducing energy costs for customers, Scotts committed Wal-Mart to increasing sales of products that are more energy efficient and set specific targets. For example, he said flat screen televisions sold at Wal-Mart will be 30% more energy efficient by 2010 and that within two years all air conditioners sold will be Energy Star qualified. He also said the company plans to double the sales of products that make homes energy efficient such as weather stripping and will work with suppliers to improve the affordability of products that reduce customers’ use of energy.
As a corollary to the type of products sold, another key message shared involved the topic of ethical and environmentally responsible sourcing around the world with a special focus on China. Scott said Wal-Mart will work with its suppliers on certification and compliance agreements that require them to report to the company regularly. In addition, he said Wal-Mart will favor and perhaps even pay more for suppliers that meet its standards and share its commitment to quality and sustainability.
“Paying more in the short term for quality will mean paying less in the long term as a company,” according to a transcript of a speech Wal-Mart released Wednesday night. “Higher quality products will mean better value, fewer problems, fewer returns and greater trust with out customers.”
He specifically singled out China as an area of opportunity to improve vendor compliance with stricter standards. Wal-Mart will require suppliers who export from China to certify that they meet key standards and those standards will be included in supplier contracts.
Health care was the third area Scott focused on during his presentation to store managers. The future of health care at Wal-Mart will involve a heavy reliance on all things electronic as a means to improve overall efficiency, access to higher quality care and the accuracy of medical records and prescriptions.
The company this year expects to work with physicians and other providers to fill an estimated eight million electronically submitted prescriptions and within three years will provide all of its employees and their families with electronic medical records, according to Scott. He also said the company this year would contract with select employers in the U.S. to help them manage how they process and pay prescription costs and the initiative will save employers more than $100 million in 2008.
“What your company does best is exactly what the U.S. health care system needs the most,” according to a transcript of Scott’s speech. “It needs more affordability. It needs more accessibility. It needs to be more efficient. And it needs leaders with a genuine desire to work together for positive change.”
In areas such as health care, the environment and product sourcing Wal-Mart has been subject to increasing criticism the past five years. Initially and predictably, the company’s response to such criticism was defensive in nature. However, within the past few years, executives came to the realization that there was some truth to criticism and failing to adopt a more proactive and aggressive approach would be detrimental to the long-term prospects of a company that was already the world’s largest and as such faced higher expectations than others in the retail industry.
This was especially true in the health care arena where Wal-Mart occupies the unique position as the nation’s largest employer with nearly 1.4 million workers in addition to being a major health care provider through its network of pharmacies, eye care center and increasingly in-store clinics. To counter the criticism, Wal-Mart improved employee access to its health plans by introducing low cost, high deductible alternatives and reducing eligibility wait times. The result of those changes were revealed earlier this week when Wal-Mart disclosed that more than half of the company’s U.S. employees now receive health care coverage directly from the company and nearly 93% of its employees have some type of health care coverage.
“Just as in the last few years, we are pleased to see an increase in enrollment numbers,” said Linda Dillman, Wal-Mart’s evp of benefits and risk management. “With 690,970 associates and more than 1.1 million associates and dependants in total now covered by Wal-Mart’s plans, we can see that the improvements we’ve made are being embraced by our associates and their families.”
Going forward, Dillman will play a key role in executing Wal-Mart’s strategies regarding electronic health records and e-prescribing. She previously served as Wal-Mart’s cio. It is through the increased use of technology that Wal-Mart expects to reap substantial cost benefits in addition to the wide range of quality of care benefits that stem from providers being able to efficiently and accurately share patient care information and provide pharmacies with accurate prescriptions.
“Our approach will be base on taking out unnecessary costs while providing high quality health care products and services,” Scott told the Wal-Mart store managers.
Such sweeping generalizations were prevalent throughout his speech that reads more like Scott is running for president than running a retail company expected to generate revenues north of $375 billion for its fiscal year ending January 31.
Download Scott's full speech by clicking here . You can also visit Retailing Today's Digital Studio to view Scott's opening remarks .