What Can Be Learned From Walmart Closing All of Its Health Clinics?

In a recent announcement, retailer Walmart disclosed its decision to close down all 51 of its health clinics across five states and cease its virtual healthcare operations within the next 30-90 days. This move, attributed to financial challenges, raises pertinent questions about the viability of corporate ventures into the healthcare sector. However, the closures won’t affect the retailer’s over 4,600 pharmacies and over 3,000 vision centers.

Walmart first began to launch Walmart Health centers in 2019, providing affordable services in underserved areas. This announcement was unexpected for many, and the retailer noted it was a “difficult decision,” citing financial struggles that led to a “lack of profitability” and made the care business unsustainable.

This decision leaves a gap in healthcare access for lower-income and uninsured individuals, according to CNN, drawing attention to the broader struggles in primary care highlighted by experts like Ateev Mehrotra, a professor of healthcare policy and medicine at Harvard Medical School. “One of [the] unique things was they were focused on stores located in underserved communities,” Mehrotra stated. “It’s disappointing that Walmart wasn’t able to make it work because these patients need care and don’t have as many options.”

Despite Walmart’s successful retail operations, its foray into healthcare faced obstacles such as staffing shortages. The closure underscores the complexities of healthcare provision and the need for sustainable models to address nationwide demand for primary care.

The decision comes amidst a trend of retail giants, including Walmart, Walgreens, Amazon, and CVS, diversifying into healthcare services over the past few years. These companies initially saw opportunities in addressing the gaps within the U.S. healthcare system.

Marilee McInnis, a spokesperson for Walmart, told Reuters, “Healthcare is expensive to run. We were finding that the increased labor and operating costs environment, like with reimbursement, both public and private, made it difficult (to run the business) and obvious we had to close.” This admission highlights the intricate financial landscape of the healthcare industry, where profit margins are often razor-thin.

Walmart’s move is not an isolated incident. Competitor Walgreens recently announced plans to shut down 160 of its VillageMD primary care clinics after recording significant impairment charges. Similarly, Amazon disclosed job cuts across its healthcare units, including clinic operator One Medical, acquired for $3.5 billion last year.

These developments prompt a critical examination of the intersection between commerce and healthcare. While retail giants possess vast resources and extensive reach, their foray into healthcare has been met with mixed results. Questions linger about whether consumers prefer receiving healthcare services from traditional providers rather than retailers and whether such ventures can indeed be financially sustainable.

Walmart originally planned to double its health center locations, according to a press release from March 2023, so this decision marks a major shift away from its previous ambitions. At the time, David Carmouche, Walmart’s senior vice president of healthcare delivery, discussed the company’s vision to provide affordable healthcare services conveniently, leveraging its widespread presence.

However, Walmart’s decision to shutter its health clinics raises concerns about the accessibility of healthcare services, particularly for underserved communities. With approximately 90% of the U.S. population residing within 10 miles of a Walmart store, the closure of these clinics could exacerbate existing healthcare disparities.

As Walmart and other corporations recalibrate their strategies in the healthcare landscape, stakeholders must engage in a nuanced dialogue to ensure that healthcare remains accessible, equitable, and financially viable for all.