Can Walmart change healthcare? – MedCity News

Can Walmart change healthcare? - MedCity News

With $40 primary care visits, $25 dental exams and $45 counseling appointments, Walmart quickly caught the attention of the healthcare industry. But with one of the masterminds between its healthcare strategy leaving, will it continue to build on its health clinics?
Sean Slovenski, Walmart’s vice president of health and wellness, announced his departure earlier this month. In a memo sent to employees earlier this month, CEO John Furner said the company would name his replacement in the coming weeks, the Wall Street Journal reported. Walmart did not respond to requests for comment on Slovenski’s departure.
It’s a familiar pattern. Haven Health, the Amazon-Berkshire-JPMorgan joint effort to offer healthcare at a reasonable cost, has struggled to keep its leadership. Best Buy’s health chief, who oversaw its acquisition of GreatCall, also stepped down recently, according to CNBC. 
Changing healthcare is hard,  even for a $373 billion retail behemoth like Walmart. But with four health centers already open, and several more in the works, could this time be different?
Forrester Senior Analyst Arielle Trzcinski said that Slovenski’s departure does not change her outlook of Walmart’s healthcare efforts.
“I think if anything, this gives them an opportunity to find someone with clinical experience or that has worked in the provider setting operationalizing digital health or virtual care,” she wrote in an email.
Building a prototypeBefore joining Walmart, Slovenski had worked for Humana after selling his online health coaching business to the insurer in 2010.
Eight years later, he jumped ship to the Bentonville, Arkansas company, and is credited for helping develop Walmart’s closely held plans for its health centers. By September 2019, the first location opened in Dallas, Georgia.
“We knew there was a need in the market for an integrated healthcare experience that was deeper than what the industry had talked about integration before,” said Shawn Nason, CEO of MOFi, a firm that worked closely with Walmart in designing the clinics. “You weren’t going to see Kaiser. Walmart wasn’t going to be in the insurance business. They’re not in the hospital business. What does that look like in between?”
(Though Walmart’s rumored talks to buy Humana never materialized, it has spun up a subsidiary to sell Medicare Advantage plans.)
The solution was to make a “healthcare supercenter” of sorts that would cover most of the basics:  primary care, dental, behavioral health, x-rays, optometry, audiology and pharmacy.
“All of those pieces under one roof, that’s just not heard of,” Nason said in a phone interview. “When the team broke the pricing model … I think that was a shock to the industry. And still is quite a shock to the industry.”
Though it accepts insurance, Walmart Health’s model is decidedly focused on cash pay, which could help cut down on administrative costs. And at its price, it can certainly give competitors a run for their money. But it remains to be seen whether the company will be able to maintain those prices and expand its “healthcare supercenters” at a meaningful scale.
For some retail health companies, such as CVS, providing healthcare services gives patients a chance to browse in the store a bit longer, and perhaps buy a few more items. But in Walmart’s case, Slovenski has emphasized, “We’re in healthcare. We’re not in retail healthcare.”
“At Walmart’s scale, incremental growth ideas simply don’t help. They need big new ideas that can add tens of billions in revenues,” said James Gardner, a retail health expert who has been closely following Walmart Health’s expansion.  “At the same time, Walmart surely realized that it has privileged assets that Amazon and others don’t — most notably, 3,600 Supercenters and 195 million weekly shoppers.”
So far, Walmart has confirmed at least nine planned locations for its Health Centers, on top of the four that are already open between Arkansas and Georgia. It has mainly focused on rural locations, but has confirmed plans to open health centers in the Jacksonville, Chicago and Atlanta areas.
“This is still kind of a prototype. There’s still a lot of learning going on at Walmart,”  Gardner said. “Before they can expand to 3,600 supercenters, they have to prove the business model. Not just in one market or one environment.”
The actual construction of the clinics is quick — they’re just an extension of existing Walmart Supercenters. But staffing them takes time. Unlike other retail models, Walmart isn’t contracting with existing provider groups, but is instead hiring its own primary care physicians, dentists and nurses.
Jacksonville, in particular, is an interesting choice. It’s a large metro in Florida, which has lots of patients with primary care needs, and also happens to be a big market for Walmart.
Leaving the door open for retailAt the same time, two major shifts are taking place in the healthcare industry. Fewer patients have a primary care physician, and more of them are seeking care at retail clinics.
According to a study published earlier this year in the Annals of Internal Medicine, primary care visits by adults under age 65 dropped by nearly 25% between 2008 and 2016, and the number of adults who hadn’t had a primary care visit in the last year increased from 38.1% to 46.4%. This may have something to do with the cost of healthcare.  In the last decade, families’ out-of-pocket expenses increased by 71%, and the number of patients enrolled in a high deductible plan more than doubled.
At the same time, more retail pharmacy customers are turning to in-store health services. A recent survey by JD Power found that 48% of customers used at least one health and wellness service this year, up 5% from 2019. These customers also spend roughly $11 more in-store than customers that don’t use these services.
“Retail health will continue to lead with a focus on improving price transparency and the ‘shopability’ of healthcare. … There are very few industries where we ask customers to get a service, that without that service could potentially be a difference of life and death, without knowing the cost ahead of time,” Forrester’s  Trzcinski wrote. “Furthermore, the variability of costs is rampant.  Consumers have complained about this issue for decades with little movement from the healthcare industry.  By ignoring consumer demand, healthcare has left the door open for retailers to enter this space.”
Walmart is not the only retailer aiming to lay claim to this market. Both CVS Health and Walgreens have charted expansion plans for their healthcare services. CVS is remodeling 1,500 of its locations into “HealthHUBs”, which have more space dedicated to health services. In addition to its usual MinuteClinics, CVS has emphasized services for patients with chronic conditions at these locations, such as sleep apnea assessments or consultations with nutritionists.
As of June, CVS had 205 such locations open across 22 states. In a recent earnings call, CEO Larry Merlo said the chain had seen a 15% increase in visits associated with services for chronic conditions at its HealthHUBs.
Walgreens announced a team-up with primary care company VillageMD, with plans to open between 500 and 700 primary care clinics attached to its stores in the next five years. After testing a pilot of the model in Houston, Walgreens decided to forward when it saw high patient satisfaction and improved medication adherence, with pharmacists working directly with patients’ primary care team.
Primary care practices, which have seen their income pinched during the pandemic, will likely face a future challenge from these retailers. Health systems, too, are rethinking their businesses, said Gurpreet Singh, a partner with PricewaterhouseCoopers and the leader of its health services segment.
“The flow has shifted away from the traditional health systems toward the more retail, convenience space,” he said in a phone interview. “That’s where a lot of academic medical centers have some concern. They’re getting squeezed — left with the highest risk, highest cost activities.”
In response, some health systems have been investing in tools and services that could make their practices more customer-friendly. Five years ago, about 25% to 30% of health systems had chief patient experience officers. Now, that number is 60%, Singh said.
They might also choose to work with retailers, who could refer patients out for specialty services. Slovenski previously said that Walmart currently makes referrals out to community providers, though it may look to expand into more specialties in the future.
MOFi’s Nason said he expects to see the push by retailers into primary care continue.  No matter who replaces Slovenski, he said Walmart has already made its impact felt.
“Did Walmart disrupt healthcare? Hell yes. [Walmart] did something that a lot of people have been talking about that they never did,” he said.
 
Photo credit: Walmart

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