This is subtly very interesting when attempting to understand just how screwed up our healthcare system is. Investment and policy relevant. Like the Middle East – hard to see how the right solution is implemented. Except free the Hostages.
Why hospital executives think Walmart Health failed
Giles Bruce
Health system leaders told Becker’s they’re not surprised by the failure of Walmart Health given the arduous economics of healthcare and the difficulty of providing primary care at scale.
Walmart said April 30 it would be closing its 51 Walmart Health Centers and virtual care offerings five years into its foray into healthcare. The company cited the “challenging reimbursement environment” and “escalating operating costs” that left its healthcare arm unprofitable.
“Walmart, like Walgreens and Amazon and others before them, are experiencing the reality that healthcare systems have had to contend with for years,” said David Sylvan, chief strategy and innovation officer of Cleveland-based University Hospitals. “A compressed reimbursement environment, operating and supply chain inflation, and of course, increased workforce costs, have all but eroded the majority of health systems’ margins in recent years.”
However, he noted, health systems can’t merely “exit stage left” when times get tough. “We remain responsible for our patients and populations and have to increasingly adopt or design creative strategies to remain solvent and viable,” he said.
The retail giant opened its first Walmart Health Center in Georgia in 2019. The roughly 6,000-square-foot clinics, located adjacent to Walmart stores across Arkansas, Florida, Illinois and Texas, featured primary, behavioral and dental care — as well as labs, X-rays and hearing services — under one roof. Walmart Health had been two-thirds of the way through its goal of opening 75 centers before shutting down.
Walmart aimed to fill a gap in healthcare access, by locating its health centers at its stores in mostly rural areas. But hiring clinicians was likely a challenge in those communities, while fee-for-service rural primary care is a low-margin business, said Ashis Barad, MD, chief digital information officer of Pittsburgh-based Allegheny Health Network.
“Rural health is local, and trust is paramount,” he said. “Virtual health in rural environments works best with your trusted care team.”
He said the move illustrates the resurgence in healthcare of partnerships and “focused factories,” or concentrating on niche markets. “It’s hard to be everything to everyone,” he said.
“Retail generally has a razor-thin profit margin. Walmart knows that, and they need to operate it at volume,” said Kiran Avancha, PhD, chief innovation officer of Scottsdale, Ariz.-based HonorHealth. “This proves that building a cost-efficient model that can deliver high-quality care with comprehensive access at volume is quite challenging.”
Other healthcare disruptors have been scaling back recently. Optum shuttered its virtual care business in April. Amazon laid off hundreds of employees at primary care subsidiary One Medical and Amazon Pharmacy in February. Walgreens has been closing dozens of VillageMD clinics.
Read the rest of the article at beckershospitalreview.com.
