Healthcare is hard. That is what retail and tech behemoths find out after they announce plans to disrupt the sector. After five years in the business, Walmart Inc. (NYSE: WMT) has had enough. It announced that it is closing 51 Walmart Health centers as well as Walmart Health Virtual Care.
The Arkansas-based retail giant said that due to a challenging reimbursement environment and escalating operating costs, it is not a sustainable business model to continue. The company will continue to operate 4,600 pharmacies and more than 3,000 vision centers.
As recently as last year, the division was in expansion mode. In March 2023, the organization announced it would expand to Missouri and Arizona in 2024.and open 28 new Walmart Health Center locations, nearly doubling the organization’s footprint.
Walmart also had partnered with Dayton, Ohio-based CareSource, a nonprofit managed care organization, to address racial health disparities. The three-year deal planned to combine Walmart’s position as a health and wellness services provider and CareSource’s role in administration and delivery of Medicaid, Medicare, and other health plan benefits.
"The decision to close all 51 health centers across five states and shut down the virtual care offering was not easy,” the company said in a statement. “We understand this change affects lives – the patients who receive care, the associates and providers who deliver care and the communities who supported us along the way.”
Walmart has not decided on specific dates for when each center will close but said it would share that information as soon as decisions are made.
The company said that its provider partners will continue to serve existing patients while clinics are open. "Through their respective employers, these providers will be paid for 90 days, after which eligible providers will receive transition payments.”
David Carmouche, M.D., who had previously led New Orleans-based Ochsner Health System’s value-based care delivery model, headed up Walmart’s national expansion into retail healthcare.
In a statement, Emarketer senior analyst Rajiv Leventhal called the move by Walmart unsurprising given retailers’ overall struggles in the care delivery space.
“It’s not Walmart’s first failed attempt at operating medical clinics, but it will likely be its last crack at it considering how badly it went—going from signing off on a plan in 2018 to build 4,000 primary care clinics to shutting down in 2024 after opening just 51,” Leventhal said. “The latest effort was littered with red flags throughout, from struggling with basic billing and payment functions to leadership changes and other operational obstacles.
“The news is a significant setback for retail health players, some of whom are now realizing that delivering retail-driven primary care may not be economically viable and certainly isn’t causing the disruption in local healthcare markets that many predicted,” he added.
