Walmart Shuts Down Health Clinics and Virtual Care Services

Walmart is closing all 51 of its health clinics and shutting down its virtual healthcare operations due to unsustainable business costs and lack of profitability. The closures will impact health centers in five states, with the process expected to take 45 to 90 days.

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Salman Akhtar
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Walmart Shuts Down Health Clinics and Virtual Care Services

Walmart Shuts Down Health Clinics and Virtual Care Services

Walmart announced on April 30, 2024, that it is closing all 51 of itshealth clinicsand shutting down its virtual health care operations. The retail giant cited unsustainable business costs and lack of profitability that were the primary reasons behind this significant retreat from its efforts to transform healthcare delivery.

Why this matters: The failure of Walmart's healthcare venture highlights the challenges of providing affordable and accessible healthcare, which has significant implications for the overall healthcare system and the millions of Americans who rely on retail clinics for primary care. This setback may also deter other retailers from entering the healthcare market, potentially limiting options for consumers.

Marilee McInnis, Walmart's spokeswoman, stated, "Healthcare is expensive to run. We were finding that the increased labor and operating costs environment, like with reimbursement, both public and private, made it difficult [to run the business] and obvious we had to close." The closures will impact health centers located in five states, including Texas and Florida, with the process expected to take 45 to 90 days.

The decision comes as a surprise, given Walmart's ambitious plans to nearly double the number of its health centers across the U.S. by 2024. David Carmouche, the company's Senior Vice President of Healthcare Delivery, had previously highlighted Walmart's unique position to provide affordable healthcare services. However, the challenging reimbursement environment and escalating operating costs have forced the retail giant to reconsider its strategy.

Industry experts are not surprised by Walmart's decision, citing the arduous economics of healthcare and the difficulty of providing primary care at scale. David Sylvan, chief strategy and innovation officer of University Hospitals, stated, "Walmart, like Walgreens and Amazon and others before them, are experiencing the reality that healthcare systems have had to contend with for years... A compressed reimbursement environment, operating and supply chain inflation, and of course, increased workforce costs..."

The closureof Walmart's health clinics raises questions about the viability of retail-led healthcare ventures, especially in a market characterized by high capital requirements and thin profit margins. Walgreens' recent $6 billion impairment charge on its investment in VillageMD and subsequent clinic closures further highlight the difficulties retailers face in making healthcare ventures profitable.

Despite these setbacks, the shift towards value-based care in the US, which rewards doctors for patient health outcomes rather than service volume, continues to attract investment from retailers, health insurers, and private equity firms alike. Walmart has announced that it will instead focus on its 3,000 vision centers and nearly 4,600 pharmacies located inside its stores, expanding the clinical capabilities of the services they provide.

Walmart's decision to exit the healthcare delivery business marks a significant setback for major retailers' efforts to transform the complex and costly healthcare system. The company's shift in focus to expanding clinical capabilities within its existing vision centers and pharmacies raises questions about how other retail giants will overcome the challenges of providing profitable healthcare services at scale.

Key Takeaways

  • Walmart closes 51 health clinics and virtual healthcare operations due to unsustainable costs.
  • The closure affects health centers in 5 states, including Texas and Florida.
  • Industry experts cite challenging reimbursement environment and escalating operating costs.
  • Walmart shifts focus to expanding clinical capabilities in 3,000 vision centers and 4,600 pharmacies.
  • The move raises questions about the viability of retail-led healthcare ventures.