Walmart signed a deal last month with Anthem, one of the nation’s largest insurers, to entice more Medicare enrollees to buy over-the-counter medications and health supplies at its stores. It recently tapped former Humana executive Sean Slovenski to lead its health and wellness division. And it was reportedly looking to buy PillPack before Amazon purchased the online pharmacy in June.
Walmart is one of the latest—and largest—retailers to expand its reach into the fast-growing and lucrative healthcare arena, which makes up 18% of the nation’s economy and is growing. Amazon is also ramping up its healthcare offerings, and CVS is purchasing Aetna to expand its services.
Walmart’s moves will help it gain a further foothold in this market and deepen its relationship with its 140 million weekly customers. It comes at a time when the mega-retailer is looking to fend off rivals, including Amazon.
Already one of the nation’s leading pharmacies, Walmart could look to provide more low-cost health services, including basic medical care through nurse practitioners, physician assistants or even doctors, experts predict.
Big discounters such as Walmart may also offer primary care, nutrition and weight counseling and chronic disease management, said Sam Glick, a partner in Oliver Wyman’s health and life sciences consulting practice. That’s one of the main advantages physical retailers have over their online competitors.
Expanded care was a key motivation behind Walmart’s reported negotiations with Humana earlier this year. The two were exploring a variety of options, including Walmart purchasing the health insurer, according to the Wall Street Journal.
What is healthcare’s allure for Walmart? Medical services typically have higher margins than store products. Since they are often provided in person, there is more opportunity for consumers to pick up other items while visiting the store. And usage is growing, especially as the United States’ population ages.
In particular, Walmart is eyeing both the Medicare and Medicaid markets since many of its customers are senior citizens and lower-income Americans. Its prices are generally lower than at pharmacy chains, such as CVS.
As Walmart expands its healthcare menu, it builds even more ties with its shoppers. Its deal with Anthem, for instance, lets the insurer’s Medicare Advantage customers use their plan benefits to purchase over-the-counter medicine, first aid supplies, support braces and pain relievers from a store.
And Walmart can market its healthy grocery items to certain Medicare Advantage enrollees since the federal government recently allowed insurers to cover such products as a supplemental benefit. This has given the company another advantage over pharmacy chains, which have much more limited food selections.
