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Retail giants like Amazon, Walgreens, and CVS have made substantial investments in the healthcare industry, totaling billions of dollars. The US spent a staggering $4.5 trillion on healthcare services in 2022, representing over 17% of the GDP. However, the lack of pricing transparency and inefficiencies in the sector present opportunities for disruption.
Despite promises of lower costs and increased market share, Walmart’s recent decision to close its healthcare centers and telehealth operations highlights the challenges in reforming America’s healthcare system. Walmart’s plan to offer affordable healthcare services alongside retail offerings fell short, leading to the closure of numerous health clinics due to financial challenges.
Other retail players like Amazon, Walgreens, and CVS have also ventured into primary care practices to capitalize on the evolving payment models in the US healthcare system. The shift towards value-based care rewards providers for keeping patients healthy rather than for individual services, emphasizing the importance of preventive care.
While the potential for growth in value-based care is high, the complexities of running medical practices, including high operating costs and low profit margins, present challenges for retail health ventures. Walmart’s decision to exit the healthcare market serves as a cautionary tale for other retailers, especially in light of Walgreens’ recent struggles with its clinic investments.
Looking ahead, companies with established health insurance divisions, like UnitedHealth, are better positioned to capitalize on the growing healthcare market compared to traditional retailers. The future of healthcare lies in value-based care, and companies with the resources and expertise to navigate the evolving landscape will likely succeed in capturing a share of the $4.5 trillion industry.
For more information, contact pan.yuk@ft.com.