Walmart is preparing to launch a massive push into healthcare, as the giant US retailer vies for a bigger slice of the $3.5 trillion US healthcare industry.
The retail giant plans to offer services such as primary care, counseling, home care, and dentistry, Sean Slovenski, Walmart’s president of health and wellness, told Business Insider. Walmart is starting by opening “prototype” health centers in northern Georgia that could quickly make Walmart into the largest provider of basic healthcare in the region, he said.
The goal, he said, is to do for healthcare what Walmart’s supercenter stores did for retail: offer a breadth of services conveniently and at a much cheaper price point than rivals. Slovenski said Walmart planned to offer the doctor visits, dental cleanings, and lab tests at prices that are about 30 to 50% below what people have been paying, in part by cutting out middlemen when possible and using Walmart’s massive size to negotiate. The clinics will also take insurance, he said.
“Walmart is a sleeping giant, and they’re putting together all the pieces to be able to move big in healthcare when they want to,” Dr. Lisa Bielamowicz, the cofounder of consulting firm Gist Healthcare, said.
Walmart joins retailers like CVS Health and Walgreens in bulking up its focus on healthcare. In part, that’s thanks to competition from Amazon, which is drawing millions of shoppers to its website and out of stores. Amazon also acquired the online pharmacy PillPack last year.
In 2018, CVS acquired the health insurer Aetna, combining nearly 10,000 pharmacies, a drug-benefits business, and one of the biggest US health insurers. It’s now turning about 1,500 of its stores into HealthHubs, which can provide a broad array of health services. Kroger, the biggest grocery store chain in the US, has also been working to increase its health offerings. It owns a chain of clinics and is seeking to get paid by health insurers for providing nutrition services.
Health centers are the ‘crown jewel’ of Walmart’s health ambitions
Walmart’s health push is starting with health centers in northern Georgia: one in Dallas opens on Friday and one in Calhoun will open in a few months. The company plans to open more locations in the region, though Slovenski declined to say where or give a timeline.
Alongside healthcare and dental services, the clinics plan to offer lab tests and behavioral healthcare. The company also plans to offer a telemedicine service and provide in-home care, in partnership with other companies.
“We see these as being a crown jewel of what we want to accomplish in the physical world, in the home, and in the virtual world as well,” Slovenski said.
Slovenski worked at the health insurer Humana earlier in his career and joined Walmart about a year ago.
After testing the offerings in these prototype health centers, Walmart plans to expand the model, Slovenski said. He wouldn’t say how many clinics Walmart would open or over what time period.
To expand the scope of healthcare it can offer, Walmart plans to have medical specialists set up shop occasionally at different sites. For instance, Slovenski said Walmart could have a mobile dermatology clinic or a mobile women’s health clinic set up at stores or clinics.
Walmart’s struggled with health clinics before
Walmart, which has more than 5,000 retail locations in the US, has been eyeing healthcare for more than a decade and previously announced ambitious health plans. In 2007, for instance, then-CEO Lee Scott said Walmart would open as many as 2,000 clinics over the next five to seven years. Six years later, Walmart had about 130, Bloomberg News reported at the time. In 2014, Walmart announced another push into health clinics. But as of this year, the company has just 20 or so across three states.
Slovenski acknowledged Walmart’s past missteps and said the current push was a top priority for the company’s senior leadership, including US CEO Greg Foran and CEO Doug McMillon.
“Like a lot of the retailers, everyone’s eyes were bigger than their stomach when they bellied up to the buffet,” he said. “We finally got to the point this past year with the right strategy, the right team, and the right timing.”
Tom Charland, the CEO of Merchant Medicine, a consulting firm that tracks retail clinics, has watched Walmart try out different types of health clinics. Charland said he was skeptical of the latest attempt. As a whole, retailers such as CVS Health and Walgreens have been experimenting with taking on patients who are coming in for health needs more serious than a sore throat or a cough. But where retailers fit into that chronic care remains to be seen.
“Walmart’s success operating clinics in their stores leaves much to be desired,” Charland said. “Everybody is still trying to figure out the whole concept of a retailer participating in what I would call traditional healthcare.”
Walmart’s plan to be your go-to place for everything — including healthcare
Slovenski said the health clinics were part of a broader strategy of making Walmart’s stores a top place to go for a family’s needs. The retailer already offers eye care and earlier this year announced it would open in-store veterinary clinics as well.
Walmart has offered many generic prescriptions for $4 for years. In 2018, the retail chain teamed up with the health insurer Anthem to bring in more Medicare members to buy over-the-counter medications and health supplies at its stores, CNN reported at the time.
One goal of the new healthcare push is to integrate the health services into the other things that Walmart sells, including workout gear, fresh food, and medical equipment, he said. Similarly, Walmart plans to deliver groceries and prescription drugs, alongside home health visits, he said.
Walmart’s move is similar to strategies from other retailers that are looking for new in-store services to offer customers, according to analysts at Morgan Stanley. The analysts published their note after CNBC reported on Walmart’s plans to open an initial clinic.
Morgan Stanley also said Walmart could use the health centers to lower the costs of providing care for its own employees. The retailer employs about 1.5 million people in the US alone. Still, any benefits could take a long time to materialize, given the slow pace at which Walmart will likely expand the clinics, the analysts said.
Bielamowicz, the healthcare consultant, said Walmart’s healthcare moves raised new questions for her about whether the company would acquire or closely partner with a health insurer.
That’s because Walmart’s plans to lower the cost of healthcare and provide a wide variety of care to people will be very beneficial to health insurers, which will spend less on medical care as a result. Owning a health insurer would let Walmart capture more of those profits.
In 2018, The Wall Street Journal reported that Walmart was in early-stage talks to acquire the health insurer Humana. Other outlets later reported that the two companies were discussing the possibility of a closer partnership in areas such as home care. No deal has been announced.
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