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What the Walmart Exit from Primary Care Means

By JEFF GOLDSMITH

There has been a lot of commentary on the largest “disrupter” candidate in healthcare, retail giant Walmart, throwing in the towel on their primary care clinic and virtual health businesses. As someone who has watched “retail health” for close to forty years, Walmart’s decision did not surprise me. This is disciplined company that has chosen its niches in healthcare carefully. And the fact that they could not make primary care work with their customer base makes all the sense in the world.

I am a Walmart shopper.  I visit my local Walmart at least once a week, and buy all my commodity items there, where they are cheaper than anywhere else in town. I also buy my drugs at Walmart, and got all my immunizations (including four COVID shots) from their pharmacy. I love my local Walmart- linoleum, fluorescent lighting and all.

The shoppers in Walmart that I see every week are not “poor”. They are a cross section of the community I live in. If I am accused of a crime, they are the “jury of my peers” that I will see in court. What I see in Walmart:  signs of serious family financial stress, a product of a near twenty percent increase in the cost of everything since the pandemic began.  They are in Walmart for the same reason I am: they hate wasting money and their shopping dollar goes further in Walmart than anywhere else in the community. I will wager that every single uninsured person in the US, perhaps more than 32 million after the post-COVID Medicaid purge, is a Walmart shopper!

Walmart never articulated exactly the strategy behind its clinics. Primary care was never going to be profitable as a stand alone product, but rather was going to be a loss leader to something else:  more prescriptions for its pharmacy, (like CVS?),  more pull-through from products required by diagnoses, longer store visits. Or, as some suggested, Walmart’s clinics could have been a potential entry point into a yet-to-be-acquired Medicare Advantage plan (Humana or CIGNA were both in play), or a collaboration with MA giant, United Healthcare. Whatever the benefits expected, early losses far exceeded forecasts.

Walmart clearly underestimated the revenue cycle overhead associated with accepting Medicaid or Medicare, despite retaining OptumInsight to help with their revenue cycle issues. Walmart also likely overestimated both volumes and the cash yield on what they intended to be  $40 primary care visits. Many health plans unthinkingly apply a copayment to primary care visits, an increasingly potent demand destroyer in this inflationary age. That copay or the full $40 for the abovementioned uninsured folks was going to have to compete for increasingly scarce paycheck dollars with everything in that cart. In that competition, medical care is probably going to end up being deferred, until it becomes unavoidable.  And when it is unavoidable, they will go to the “unavoidable” healthcare place, their local hospital ED. 

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