Walmart to shut all health clinics in the US
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Is the Future of Retail Health Care Doomed?
Walmart's sudden exit from all 51 health clinics has sparked debates and disappointment across the industry. In this edition, we’ll explore what went wrong and what it means for the future of integrated healthcare.
Did Walmart bite off more than it could chew, or is this just a bump in the road to innovation?
But first, here is a small capsule of some crucial headlines in the HealthTech world.
News Roundup:
Walmart's Healthcare Retraction
Retail giant Walmart recently announced the closure of all 51 of its health clinics and the termination of its virtual healthcare services, citing unsustainability and increased operational costs. Earlier this month, Walmart decelerated its expansion plans for the centers, which offer inexpensive, fixed-cost medical services like primary and dental care. Walmart is now closing the clinics entirely due to the challenges of rising labor costs and reimbursement issues made the healthcare business "unsustainable."
Retailer's Foray into Healthcare: A Missed Opportunity?
Retailers such as Walmart, Walgreens, CVS, and Amazon have experimented with healthcare services, capitalizing on a fragmented U.S. healthcare system. However, profitability and consumer adoption have been challenging, with Walgreens and Amazon also scaling back healthcare operations. Despite being positioned as convenient and affordable options, these retail healthcare offerings have struggled to find a sustainable economic model. Industry experts, including Walmart's Senior Vice President of Healthcare Delivery David Carmouche, acknowledge the need for a solid economic model for success in the retail healthcare space.
Sector Spotlight: Future of Retail Health
Best Buy has been strategically targeting the aging population with its healthcare approach, as evidenced by its recent acquisitions:
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In 2018, they acquired GreatCall for $800M, which produces the Jitterbug series of "smartphones for seniors" as well as an emergency response service similar to LifeAlert. The following year, Best Buy acquired Critical Signal Technologies, which offers Remote Patient Monitoring at the core of their offerings and also focused on seniors. In 2021, Best Buy acquired Current Health for $400M, which produces an armband for remote monitoring of vital signs, including pulse, respiration, o2 saturation, temperature, and movement.
These acquisitions suggest a focus on the lucrative Medicare Advantage space, and Best Buy's latest collaboration with Atrium Health seems to tie these technologies together. Best Buy's Geeksquad will provide installation, setup, and training for patients, providing another value-added service. With these acquisitions and partnerships, Best Buy is clearly positioning itself as a major player in the healthcare technology space, specifically targeting the growing elderly population. While Best Buy may not have traditional experience in the healthcare industry, its expertise in technology and customer service makes it well-positioned to become a formidable competitor in this space.
INSIGHT: The retail health sector, though full of potential, requires a strategic approach to balance profits with patient care. As seen in Walmart's case, success hinges on an effective economic model and addressing rising operational costs. The sector may benefit from focusing on core strengths such as pharmacies while exploring innovative healthcare models.
"You can buy all the right ingredients - you still need a good recipe to cook the meal."
Craig Garthwaite, Professor and Director of Healthcare at the Kellogg School of Management.
Our Expert Take
I am disappointed by Industry professionals taking “victory laps” and spamming “I told you so” posts and comments all over my social media feed in response to Walmart's recent announcement about shutting down their health clinics. This made me pause and think - yes, Walmart tried something ambitious in healthcare and it didn't pan out this time. But isn’t that just part of business?
Remember Haven? The joint healthcare venture by Amazon, JPMorgan Chase & Co., and Berkshire Hathaway. Like many, I was disappointed when it folded as I am about Walmart. These initiatives are massive undertakings - not every swing is going to be a home run, yet it's crucial to recognize the courage to step up to the plate.
We often celebrate failure only in hindsight - once success occurs the past failure is retconned to seem a necessary part of a grand plan! When Marvel Comics filed for bankruptcy in 1996, business professionals were quick to criticize Marvel’s strategy, point to their overwhelming debt, and predict the end of the comic book era. However, after restructuring and focusing on leveraging its Intellectual Property, Marvel Entertainment launched successful projects like the X-Men and Spider-Man films, eventually leading to the multi-billion dollar Marvel Cinematic Universe and its $4 billion sale to Disney. Now the story becomes: Without its dramatic failures in the 90s, Marvel might not have undertaken the massive strategic overhaul that spurred such monumental success!
Failures in experimentation and attempts at disruption are not just setbacks - they are stepping stones to success. I'm honestly disappointed to see so many posts celebrating the demise of Walmart's clinics. I hope more people will take a step back and view this effort as part of a larger cycle of innovation and enterprise.
That's a wrap on this edition.
We'd love to hear your thoughts on it. Also, if there are any specific topics you'd like us to cover, feel free to let us know! We're always open to suggestions. [email protected]