Healthcare Is a Frontier Not Even Walmart Could Conquer  — And It’s Not Looking Great For Others Either

The healthcare industry has proven to be a challenging environment for telehealth providers and retail clinics in recent years, as evidenced by the struggles of companies like Teladoc and Amwell. Despite this difficult landscape, many were surprised when retail giant Walmart announced the closure of its Walmart Health division. Established in 2019, the division included 51 retail primary care clinics across five states and a virtual care business.

In a statement, Walmart cited the challenging reimbursement environment and escalating operating costs as reasons for the closure, emphasizing the lack of profitability in the venture. This decision highlighted the ongoing difficulties in achieving profitability in primary care and telehealth markets, exacerbated by rising healthcare costs, labor shortages, and outdated business models.

The closure of Walmart Health raises questions about the future success of retail entrants in the healthcare industry. Building primary care clinics from scratch is a slow and capital-intensive process, with low margins and volume-oriented specialties making profitability challenging. Retailers face obstacles in achieving longitudinal patient relationships and leveraging consumer data for a holistic view of patient care.

Healthcare labor costs, administrative burdens from insurers, and competition from large health systems further complicate the profitability of retail healthcare settings. The encounter-centric model of retail clinics may not be effective for chronic condition management, requiring costly investments in care coordination technologies. The primary care and telehealth markets are unforgiving, with companies like Optum, Teladoc, and Amwell facing challenges and layoffs in recent times.

The closure of Walmart Health, along with other industry events, underscores the realities of the healthcare market. Simply facilitating access to healthcare services does not guarantee adoption, leading to oversupply in the market. Companies entering the healthcare delivery market must navigate these challenges to achieve sustainable success in an increasingly complex industry. Lower prices do not necessarily lead to increased demand in the telehealth market, as noted by industry experts. The closure of Walmart’s in-store clinics and telehealth program highlights the challenges faced by healthcare providers due to unsustainable business models. This event underscores the need for a shift away from existing systems that are not profitable.

CEO Ashok Subramanian believes that layering new solutions on top of the current healthcare system is ineffective. He emphasizes the need for coordinated care and improved access, rather than continuing with a broken business model. The closure of Walmart Health serves as a reminder of the need to reevaluate the financing and delivery of healthcare services.

Looking ahead, large retailers may focus more on employer-centered healthcare solutions. Investment in primary care, chronic condition management, and benefits navigation for employees is expected to increase. This shift towards employer-focused healthcare solutions is seen as a positive step towards modernizing the healthcare industry.

The closure of Walmart’s healthcare services highlights the complexities and challenges faced by the healthcare system. As the population ages and chronic conditions become more prevalent, healthcare providers must adopt a more integrated approach to care. Technology will play a crucial role in managing care access and delivery.

Overall, the failure of Walmart’s healthcare ventures should serve as a wake-up call for the industry to reevaluate its operations. The focus should be on implementing new models of care delivery that are supported by technology. This shift towards a more efficient and effective healthcare system will benefit consumers, clinicians, and healthcare companies alike.