Walmart, the retail giant known for its low prices, has announced the closure of all its health-care clinics across the country. This move comes as a surprise and a reversal of Walmart’s plans to bring affordable healthcare to its customers. The company will also close its telehealth provider, which it acquired in 2021.
The closure will affect 51 clinic locations in Arkansas, Florida, Georgia, Illinois, and Texas. However, it will not impact Walmart’s pharmacies and vision centers. The decision to shut down the clinics was attributed to a broken business model, with Walmart citing a challenging reimbursement environment and escalating operating costs. The shortage of healthcare workers in the U.S. has also increased the company’s labor costs.
This announcement comes just a month after Walmart revealed its plan to double the size of its clinic footprint by opening 22 new locations this year and more in 2025. The closure of the clinics is another indication of how difficult it is to disrupt and improve the American healthcare system, which is expensive, complicated, and entrenched.
Walmart had entered the healthcare space in 2019 with its first Walmart Health clinic in Georgia. It gradually opened more clinics next to its big-box stores, offering services such as primary care, dental care, counseling, lab tests, X-rays, and more. The clinics provided these services at low prices, making healthcare more accessible to customers.
However, Walmart faced challenges and competition in the healthcare industry. Keeping store shelves stocked and locations staffed during the Covid-19 pandemic proved to be a hurdle. The company also struggled with high executive turnover and faced competition from CVS Health, Walgreens Boots Alliance, and Amazon, who all announced their own ambitions to enter the healthcare space. Amazon, in particular, acquired primary-care provider One Medical for $3.9 billion.
Despite Walmart’s ambitions in healthcare, the company shifted its focus to other higher-margin businesses such as advertising and its third-party marketplace. The closure of the clinics means that Walmart will return to its previous health services, operating its pharmacies and vision centers.
Walmart has not left its patients in the lurch, as it will continue to see patients with scheduled appointments until the clinics close. The company will also assist patients in finding alternative high-quality providers in their insurance networks. This closure marks another failed attempt by a high-profile company to disrupt the healthcare industry, following the disbandment of a joint venture between JPMorgan Chase, Berkshire Hathaway, and Amazon in 2021.
Walmart’s closure of its health-care clinics is not an isolated incident in the industry. Walgreens, another retail giant, has also closed several primary-care clinics to boost the profitability of its broader health-care division. The decline in value of its majority-owned VillageMD has also resulted in a nearly $6 billion charge for Walgreens. On the other hand, Amazon’s health clinic operator One Medical continues to expand with over 125 locations nationwide.
While Walmart has made other plays in the health-care space, including partnerships with insurers and health systems, it seems that the company is retreating from direct patient care. The closure of the clinics highlights the challenges faced by retail giants entering the complex and costly American healthcare system.
In conclusion, Walmart’s decision to close its health-care clinics and telehealth provider is a setback in its efforts to bring affordable healthcare to its customers. The company cited a broken business model, challenging reimbursement environment, escalating operating costs, and a shortage of healthcare workers as reasons for the closure. Despite Walmart’s ambitions in healthcare, it struggled to keep up with competition and faced challenges during the Covid-19 pandemic. This closure is another example of how difficult it is to disrupt and improve the American healthcare system.
