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Walmart's new venture into healthcare should not be underestimated

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Analysis: Why Walmart should be on your list of disrupters

Sep 13, 2019

By Chad Mulvany, FHFMA


Walmart next month will open a Walmart Health center in its Dallas, Georgia store, a company spokesperson said in a Retail Dive article. If Walmart isn’t on your list of disrupters with Optum/United Healthcare, CVS/Aetna and Humana/Kindred, it should be. Walmart, with more than 5,000 stores in the U.S., has explored purchasing a major health plan which suggests it sees opportunity in managing the total cost of care.


Retail Dive on Aug. 30 reported, Walmart next month will open a Walmart Health center in its store in Dallas, Georgia, a company spokesperson confirmed in an e-mail to Retail Dive.

"Walmart is committed to making healthcare more affordable and accessible for customers in the communities we serve," the spokesperson said in the Retail Dive article.


"The new Walmart Health center in our Dallas, Georgia, store will provide low, transparent pricing for key health services for local customers,” continues the article. “We look forward to sharing more details when the facility opens next month."


Retail Dive went on to say: “Walmart already runs healthcare clinics in several stores in some Southern states. But the new Georgia location, which is taking appointments starting Sept. 13, will add services like dental, mental health counseling, X-rays and audiology, according to a report from CNBC.”


Takeaway

If Walmart isn’t on your list of disrupters with Optum/United Healthcare, CVS/Aetna and Humana/Kindred, it should be. They are one of the more aggressive employers in terms of adopting value-based payment strategies. (Read my May 15 blog  “Walmart’s provider partnerships address cost reduction, patient experience and outcomes.”)  


So, if they expand to the store-clinic concept, it could further their efforts to reduce the total cost of care for their 1.5 million employees by reducing unnecessary referrals and helping manage chronic diseases.


But the real play here is Medicare Advantage (MA). MA penetration is less than 20% in 60% of rural counties versus. 32% of metropolitan counties. Approximately a year ago, there were rumors that Walmart and Humana were in merger discussions.


Walmart’s rural presence has advantages

Walmart has a strong presence in rural areas which would allow any com

bined organization to grow market share. And their more than 5,000 U.S. stores could become a hub to effectively manage chronic disease, which is more prevalent in rural areas, generating profitable membership growth.

Beyond the opportunity to profit if they can effectively manage MA lives, creating telehealth and in-store offerings will help make the Walmart brand stickier, reducing the risk that Amazon will take market share from their consumer goods and consumables lines of business.  


Chad Mulvany, FHFMA

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.


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