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Walmart closes health centers, telehealth unit over rising costs
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
The clinics, conveniently located next to a Walmart Supercenter, were designed to give customers easier access to care by providing a range of health services all under one roof.
Walmart Inc is abandoning its plan to build out a network of low-cost health clinics due to escalating costs and reimbursement challenges. The retailer announced Tuesday that it will close all 51 health centers that it had opened in five states and shutter its telehealth business.
The clinics, conveniently located next to a Walmart Supercenter, were designed to give customers easier access to care by providing a range of health services all under one roof.
The company launched the initiative in 2019 and as recently as last year was promising to open more than 75 centers across the US by the end of 2024. The clinics offered medical, dental and behavioral health services ranging from X-rays to deep teeth cleanings.
Walmart declined to disclose how much money was invested into the business, or the revenue generated from the ventures. There is no specific date for the closures. Walmart declined to say how many jobs will be eliminated as a result of the changes but noted that the company hopes some employees will take roles in other parts of the business.
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Walmart has been expanding its health and wellness operations in recent years, in a bid to grab a bigger chunk of the nation’s $3.6 trillion in health spending. The company will now focus its health business on the nearly 4,600 pharmacies and more than 3,000 vision centers inside stores.
Retailers, health insurers, hospital systems and private equity investors have all poured money into primary-care clinics in recent years. Some of that interest was driven by the desire to enrol seniors in private Medicare Advantage plans and capture a portion of their insurance premiums. That’s the model behind CVS Health Corp.’s acquisition of Oak Street Health and Walgreens Boots Alliance Inc.’s interest in VillageMD.
Walmart was reportedly eyeing a similar strategy with a potential deal to take a stake in Medicare-focused clinic group ChenMed last year. But that deal hasn’t come to pass, and the US is tightening payments for private Medicare Advantage plans. Rival Walgreens also has faced a challenging journey as it pushes into patient care.
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It invested $5.2 billion in primary-care provider VillageMD, which allowed it to open hundreds of doctors’ offices in its drugstores. But it has since revealed plans to close 160 of the clinics. Last quarter it announced a $5.8 billion writedown related to VillageMD, suggesting that the asset was overvalued.
Walmart acquired a little-known virtual provider called MeMD in 2021 during a broader frenzy of investment in digital health as COVID-19 forced many health-care services to find ways of reaching patients remotely. But demand for virtual care ebbed after the pandemic when patients became more comfortable seeing their doctors in person.
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