Walmart, one of the world’s largest retailers, has made a surprising decision to close all of its health clinics in the United States. The company cited financial challenges as the main reason behind this move, stating that the increasing labor and operating costs, along with reimbursement difficulties, made it unsustainable to continue operating these clinics.
This decision by Walmart reflects a broader trend in the healthcare industry, where retail giants such as Walgreens, Amazon, and CVS have expanded their services into providing healthcare. However, it remains unclear whether consumers truly want healthcare services from retailers and whether these ventures are profitable.
Walgreens, for example, recently announced plans to close 160 of its primary care clinics due to financial losses. Similarly, Amazon has decided to cut several hundred jobs in its healthcare units, including clinic operator One Medical, which it acquired for $3.5 billion last year. These examples illustrate the challenges that retailers face when venturing into the healthcare sector.
Interestingly, Walmart had previously expressed ambitions to expand its health centers across the country. Last year, Walmart’s Senior Vice President of Healthcare Delivery, David Carmouche, emphasized the company’s unique position to provide affordable healthcare services. He believed that Walmart’s extensive network of stores, with 90 percent of the U.S. population located within 10 miles of a Walmart, would give them a competitive advantage.
However, in a surprising turn of events, Walmart has now decided to close all 51 of its health clinics and virtual health care operations. This decision marks a significant departure from their previous plans. Mr. Carmouche acknowledged this shift in a LinkedIn post, expressing disappointment but also hinting at future discussions about the challenges specific to retail healthcare.
According to Craig Garthwaite, a professor at the Kellogg School of Management, success in the clinic space requires a solid economic model. He compares it to cooking a meal – having all the right ingredients is not enough; one needs a good recipe. Sadly, he believes that Walmart’s closure of its health clinics was predictable and a missed opportunity.
Investors, like Charles Sizemore, expressed their disappointment with Walmart’s decision, as they viewed health centers as a differentiating factor that could drive foot traffic. Sizemore acknowledges that the economics of running health clinics in the current environment simply don’t work.
Walmart’s health clinics, which started in Georgia in 2019 and expanded to five states by 2024, offered a range of services including primary care, dental care, and telehealth. The clinics were strategically located next to Walmart Supercenters and employed doctors and dentists.
The company plans to close all the clinics within the next 45 to 90 days, with employees given the option to transfer to other Walmart or Sam’s Club stores. Walmart has not disclosed the sales figures or potential losses associated with the closure of these health centers.
Despite the closure of its health clinics, Walmart remains committed to its vision of providing healthcare services. The company intends to focus on its vision centers and pharmacies located inside its stores. These pharmacies already offer many of the clinical services provided by the health clinics, including testing and treatment for respiratory illnesses.
In conclusion, Walmart’s decision to close all of its health clinics in the United States is a result of financial challenges and an unsustainable business model. This move reflects a broader trend among retailers venturing into healthcare services, facing difficulties in profitability and consumer demand. Although disappointed investors and supporters saw health centers as a differentiating factor, Walmart aims to continue expanding the clinical capabilities of its vision centers and pharmacies as it adapts to the ever-evolving healthcare landscape.
