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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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What Walmart said & What Walmart Did: Not the same thing

Walmart surprised us all and changed its mind about primary care yesterday. It’s out.

Because so few people have seen it I want to show what Walmart‘s head of health care said just 18 months ago (Nov 2022). Today they are finally killing off the 6th different strategy they’ve had (maybe it was 4). I guess (unlike CVS & Walgreens) they don’t have to write down investment in Oak Street or VillageCare, but they never worked out that primary care is only profitable if it’s 1) very low overhead 2) a loss leader for more expensive services (as most hospitals run it) or 3) getting a cut of the $$ for stopping more expensive services (Oak Street, Chenmed, Kaiser).

At HLTH 18 months ago I interviewed Cheryl Pegus who was then running Walmart and I asked why anyone should trust them, given how often they changed. Sachin H. Jain, MD, MBA Jain answered for her and said, “because they have Cheryl!” — Cheryl then said, “at Walmart the commitment to delivering health care is bigger than anywhere I have ever worked”. “Right now I have 35 centers in 3 years I’ll have 100s”  see 11.00 onwards in the video below, although the whole thing is worth a look

Cheryl though left Walmart THE NEXT WEEK!

The Money’s in the Wrong Place. How to Fund Primary Care

By MATTHEW HOLT

I was invited on the Health Tech Talk Show by Kat McDavitt and Lisa Bari and I kinda ranted (go to 37.16 here) about why we don’t have primary care, and where we should find the money to fix it. I finally got around to writing it up. It’s a rant but a rant with a point!

We’re spending way too much money on stuff that is the wrong thing.

30 years ago, I was taught that we were going to have universal health care reform. And then we were going to have capitated at-risk entities. then below that, you have all these tech enabled services, which are going to make all this stuff work and it’s all going to be great, right?  

Go back, read your Advisory Board Company reports from 1994. It says all this.

But (deep breath here) — partly as a consequence of Obamacare & partly as a consequence of inertia in the system, and a lot because most people in health care actually work in public utilities or semi-public utilities because half the money comes from the government — instead of that, what we’ve got is this whole series of massive predominantly non-profit organizations which have made a fortune in the last decades. And they’ve stuck it all in hedge funds and now a bunch of them literally run actual hedge funds.

Ascension runs a hedge fund. They’ve got, depending who you believe, somewhere between 18 billion and 40 billion in their hedge fund. But even teeny guys are at it. There’s a hospital system in New Jersey called RWJ Barnabas. It’s around a 20 hospital system, with about $6 billion in revenue, and more than $2.5 billion in investments. I went and looked at their 990 (the tax form non-profits have to file). In a system like that–not a big player in the national scheme–how many people would you guess make more than a million dollars a year?

They actually put it on their 990 and they hope no one reads it, and no one does. The answer is 28 people – and another 14 make more than $750K a year. I don’t know who the 28th person is but they must be doing really important stuff to be paid a million dollars a year. Their executive compensation is more than the payroll of the Oakland A’s.

On the one hand, you have these organizations which are professing to be the health system serving the community, with their mission statements and all the worthy people on their boards, and on the other they literally paying millions to their management teams.

Go look at any one of these small regional hospital systems. The 990s are stuffed with people who, if they’re not making a million, they’re making $750,000. The CEOs are all making $2m up to $10 million in some cases more. But it also goes down a long way. It’s like the 1980s scene with Michael Douglas as Gordon Gecko in Wall Street criticizing all the 35 vice presidents in whatever that company was all making $200K a year.

Meanwhile, these are the same organizations that appear in the news frequently for setting debt collectors onto their incredibly poor patients who owe them thousands or sometimes just hundreds of dollars. In one case ProPublica dug up it was their own employees who owed them for hospital bills they couldn’t pay and their employer was docking their wages — from $12 an hour employees.

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WTF Health: Transcarent, Walmart & The “Re-making” of Healthcare Payers: Glen Tullman on the Power of Big Retail

By JESSICA DaMASSA, WTF HEALTH

Days after announcing their deal with Walmart, Transcarent’s Executive Chairman & CEO Glen Tullman and meet again (in-person!) to pick up our conversation right where it left off. For the details about the deal, see our last interview; for what the deal signifies for the disruption of the healthcare payer and the ultimate rise of the healthcare consumer, tune in now and take note.

The plot of Transcarent’s story is starting to take shape. Their conflict is with the “big middle” of healthcare where drugs are marked up, care needs pre-authorizations, and docs labeled “this is NOT a bill” are ridiculous artifacts of a payer-first healthcare experience.

“The system behind our healthcare today is working exactly as its designed: for payers. We want to re-design that,” says Glen. “It’s not, ‘how do we get through that better?’ That would be navigating. It’s ‘how do we go completely around that and re-design the experience?’”

Glen talks us through the leverage retailers like Walmart and Amazon really have to help take on non-innovative payers what role Transcarent is playing in all of this, and how startups like GoodRx, Ro, and Capsule who are successfully challenging PBMs are demonstrating that payment model innovation is possible.

And, while we wait for the next big deal to come from ‘healthcare’s best dealmaker, we’ve got some foreshadowing: a quick mention of Oscar Health that registered on my radar as interesting, along with some very specific details about how Transcarent will expand its offering next, looking at MSK, cancer care, behavioral health (particularly for teens), and bringing in more “human voices” for their members to turn to for advice.

Walmart Picks Transcarent: Tullman on First ‘Everyday Low Prices’ Offer for Self-Insured Employers

By JESSICA DaMASSA, WTF HEALTH

Walmart is looking to scale its healthcare business in a brand-new way: setting its sights on self-insured employers. Today the retail giant announced a go-to-market partnership with Transcarent that will make its “everyday low price” prescription drugs and healthcare services available to self-insured employers for the very first time. Transcarent’s Executive Chairman & CEO Glen Tullman drops in to give us the inside story on the deal with Walmart, what it means for the industry, and how it could once-and-for-all ignite the ‘disruption of the payer’ that we’ve been waiting for since JP Morgan, Berkshire Hathaway, and Amazon came together to found Haven.

Transcarent and Glen are hell-bent on re-making the healthcare payment model by eliminating as many middlemen as possible, reshaping the health and care experience along the way. So, what does this partnership with Walmart mean for that mission and for Transcarent? Is this “THE Deal” we’ll look back on as the one that catapulted Transcarent into a new phase of growth? Remember when Glen’s last company, Livongo, shot into the stratosphere after its deal with CVS Health? I ask Glen if he’s running the same play in a much bigger game and finally concede: Transcarent is NOT a healthcare navigator!

#Healthin2Point00, Episode 206 | Walmart buys MeMD, Science 37 SPACs out, Vim & Zoe

Today in #Healthin2Point00, Jessica is not impressed by my stock trading and it’s all Walmart’s fault (well, Amazon’s too)! Part of the reason for that is Walmart buying a no-name telehealth company–well it has a name but not one anyone knows. There’s a SPAC exit on the horizon for fast growing remote clinical trials company Science37, and funds for Vim which does scheduling (we think!), and Zoe which sells a diet so expensive you might actually stick to it!–Matthew Holt

Attention, Walmart Patients

By KIM BELLARD

When Walmart announced earlier this summer that it was opening an insurance agency to sell Medicare-related products and services plans, I thought, “that’s it?”  When Walmart announced later in the summer that it was partnering (first with Microsoft, then with Oracle) in the bid to buy TikTok, I thought, “well, isn’t that interesting?”  And when Walmart announced a few days ago that it was partnering with Clover Health to offer Medicare Advantage plans, I thought: “it’s about time.”

You know Walmart.  265 million people (worldwide) shop at its stores each week.  Ninety percent of Americans live within 10 miles of a Walmart store.  It is estimated that 95% of Americans shop at Walmart during the year.  In over 200 U.S. markets, it accounts for at least 50% of grocery sales.  It is the fifth largest pharmacy chain by revenue. 

And Walmart has been shaking up healthcare for some time.  Way back in 2006, it introduced its $4 Prescriptions program that upended pharmacy pricing.  In 2008, it started offering in-store retail clinics, initially in partnership with hospitals and now operates on its own

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PBM Startup Capital Rx Starts Prescription Drug Pricing Shake-Up with Walmart Partnership

By JESSICA DaMASSA, WTF HEALTH

A startup PBM? Partnered up with Walmart to bring “everyday low prices” to prescription drug pricing? Is this too good to be true? A.J. Loiacono, founder & CEO at Capital Rx, gives us a quick primer on “Pharmacy Benefit Managers” (PBMs) and why they’ve become known for the element of mystery they bring to prescription drug pricing. With three big PBMs (CVS’s Caremark, Express Scripts, and UnitedHealth’s OptumRx) controlling three quarters of the total market, it’s no surprise that VC-backed challenger companies in this space are rare. So, how does A.J. believe Capital Rx will shake things up? Learning about this new kind of tech-enabled, customer-focused PBM not only inspires hope for a clear future of prescription drug price transparency, but also makes one wonder about the new vision for American healthcare unfolding at Walmart.

Health in 2 Point 00, Episode 133 | PBMs galore, Genome Medical, & the FCC’s Rural Health Program

Episode 133 of Health in 2 Point 00 is brought to you by the letter P — that’s P for PBMs, of course. In this episode, Jess and I talk about Genome Medical extending their series B and getting another $14 million on top of the $23 million they already raised for their remote genetic counseling services, the FCC adding another $198 million to their rural health program, bringing the funding to a whopping total of $802 million, Anthem’s PBM IngenioRx acquiring pharmacy startup Zipdrug, and Capital Rx, a startup PBM, announced a deal with Walmart. —Matthew Holt

Health in 2 Point 00, Episode 128 | Proteus, Walmart, Kyruus, Headspace and CareAcademy

On Episode 128 of Health in 2 Point 00, Jess and I talk about Proteus filing for bankruptcy, Walmart buying the tech from CareZone for prescription drug management for an unconfirmed $200 million, Kyruus raising another $30 million for referrals and scheduling for large health systems, Headspace raising another $47.7 million, and CareAcademy raising $9.5 million in a Series A to provide online training for professional caregivers for seniors. —Matthew Holt