Will Walmart’s Influence on Health Care Be Constructive or Destructive?

By Paul Gallese, PT, MBA


Will Walmart’s plans to develop health care clinics within its stores be constructive or destructive to patient care in America?


I guess it depends on your point of view, but it’s hard to argue with lower, transparent prices and better access to care whether or not you have insurance. Whatever your opinion is, health care leaders should pay close attention to the market forces that are attracting Walmart and other retailers into the business of providing health care. Hospitals providing outpatient services would be wise to innovate to meet the customer needs Walmart is attempting to fulfill. The ability and willingness to innovate will be a cultural hallmark of healthcare organizations that will succeed in the coming decade.


It’s important to understand that Walmart looks at health care through a different lens than a hospital company. Walmart has succeeded because it has translated operational efficiencies and reduced supply chain costs into economic benefits for the consumer. Hospitals, on the other hand, make pricing and other business decisions according to asset turnover, return-on-investment models, and other methods distinctive to health care. To Walmart, health care is a commodity product viewed through a retail lens, and this point of view has resulted in great success for the company.


Health care providers are wary


Naturally, physicians are wary of Walmart’s plans, saying that the retail giant’s foray into health care is more “corporatization” of health care (Reno, 2019). Some say Walmart is going into health care for the money, not for patients, and the company’s influence may lead to lower standards for providers. For example, will Walmart’s health centers pursue accreditation and employ or contract with board-certified physicians? Walmart has stated its intention to grow its own staff by offering educational cost reimbursement to current employees. They will, of course, hire some healthcare providers from the community. Walmart’s performance on quality and safety measures will be closely watched.


The resistance against Walmart reminds me of when drug stories such as CVS, Rite Aid and Walgreens entered the clinical care space, or when medical groups paid according to capitation and covered lives shook up the status quo. These healthcare marketplace changes occur primarily because of consumer demand for lower costs and more convenient or quicker access to care. There is simply an overwhelming undersupply of physicians and ambulatory healthcare resources in most of the markets Walmart serves. Walmart is creating capacity where capacity is sorely needed.


Three things health care leaders can emulate now


Anyone in a leadership position with a health care provider can start making plans to emulate at least some of what Walmart is doing. Here are three things health care providers can do.


1. Fixed, transparent pricing. Health care consumers will more than likely respond favorably to Walmart’s plans to offer fixed, transparent pricing for basic medical, dental, eye care and mental health services such as primary care check-ups ($30, $20 for kids), flu tests ($20), and eye exams ($40). Not knowing what an appointment costs upfront is a common complaint among consumers now. Walmart’s published list of prices may put pressure on physicians’ practices to lower and publish their prices, too. Walmart’s prices are expected to be 30 to 50 percent less. While health savings accounts (HSAs) and high deductible health plans (HDHPs) were a window into the world of price transparency, the consumer still has very few opportunities to shop according to price in the current healthcare environment because prices are usually not published.


2. Access for the uninsured and underinsured. Another barrier Walmart plans to shatter is the one that prevents many uninsured or underinsured individuals from receiving care at local physicians’ offices. Walmart says their lower prices to enable those without insurance to afford care, and the store will accept insurance payments as well. Walmart also will offer financing options to consumers who want to pay for their care over time. It will be interesting to see how Walmart makes money from serving patients who have been unable to access many physicians’ practices. Will Walmart be able to contribute to improved health outcomes within this population?


3. Convenience and customer service. About 90 percent of the U.S. population lives within 10 miles of a Walmart store. Rural areas continue to experience a shortage of healthcare providers, and having a retail giant like Walmart commit to hiring providers to serve these areas could be a win-win for both providers and consumers. In North Carolina and South Carolina, the company will test a concierge service to address issues with billing, fix appointments, understand a diagnosis, and find a provider. In Colorado, Wisconsin and Minnesota, Walmart will expand a program that allows patients to video chat with a doctor from home for $4 per chat (Bose, 2019).


Marcus Osborne, Walmart’s vice president of health and wellness transformation, said the store’s health care clinics will strive to provide “the right experience and reputation to deliver the quality of care our customers deserve.” He said Walmart will serve walk-in customers, schedule appointments on weekends and offer extended hours, and make Walmart Health accessible for all by serving insured and self-pay patients. (Reno, 2019)


Health care providers still grappling with consumer demand for affordable prices


While the healthcare industry has slowed price inflation to some extent, health care has steadily become an increasing financial burden for the average consumer and employer. And even among those with generous insurance benefits, the coverage often shields them from taking a direct financial hit, thereby giving patients no incentive to comparison shop.

Walmart, Amazon and other retailers see the business opportunity of 10,000 Baby Boomers aging into Medicare coverage each day while huge brick and mortar stores simultaneously begin to empty as consumers continue to increase online purchases. Add these two dynamics together and Walmart’s current stores become excellent venues for the future of health care. The first of Walmart’s new clinics will fill 10,000-square-feet of space.


Yes, Walmart’s initial foray into health care is restricted to basic, relatively inexpensive services. But healthcare organizations and professionals providing more expensive and complex services should begin to worry about being disrupted because if they don’t answer in kind, there is little chance they can keep up. Do any of us think that Walmart is going to stop at primary care? Just wait until Walmart releases chronic care bundled pricing – I believe they are headed in this direction.



References


Bose, N. Walmart to test programs for U.S. workers to cut its healthcare costs. Reuters, Oct. 2, 2019.


Gallese, P. The innovator’s dilemma: will patient safety solutions come from current or new technologies? Sept. 17, 2019.


Reno, J. Is Walmart’s new full-service clinic the future of community healthcare? Healthline, Sept. 27, 2019.

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