Walmart is closing its Walmart Health centers and virtual care business, saying it doesn't see a ... [+]
Walmart is closing its Walmart Health centers and virtual care business, saying it doesn’t see a sustainable business model in primary care.
It’s the latest blow to the retail health clinic model, with the retail giant saying it will close its 51 Walmart Healt centers in five states and Walmart Health Virtual Care, which is the retailer’s telehealth business. The centers will close in the next 30 to 90 days, the company confirmed Tuesday.
Walmart didn’t disclose how much the shutdown will cost the company, which spent tens of millions of dollars over the last five years opening primary care centers that were typically more than 5,000 square feet in size and included an array of primary care services, dental and mental healthcare as well as X-rays, immunizations, and chronic condition management.
“The decision to close all 51 health centers across five states and shut down the virtual care offering was not easy,” Walmart said in a blog post on the company’s website. “We understand this change affects lives – the patients who receive care, the associates and providers who deliver care and the communities who supported us along the way. This is a difficult decision, and like others, the challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time.”
Just one month ago, Walmart said it planned to add 22 new locations in 2024, deepening its presence in Texas while opening new sites in Missouri. A sixth market, Arizona, was expected to see an expansion in 2025 where the company doesn’t yet operate Walmart Health facilities.
But Walmart executives said the business environment became increasingly more difficult to recruit healthcare professionals and physicians amid a U.S. healthcare staffing crisis and a tight labor market.
Other operators of primary care clinics are also facing staffing issues. For example, physician-owned primary care practices are still reeling from a loss of support staff since the beginning of the pandemic, down 40% per doctor since 2019, according to a report last year from the Medical Group Management Association.
Physician-owned practices had just 3.0 support staff per full-time equivalent physician in 2022 compared to 5.08 per doctor in 2019 as the Covid-19 pandemic and the so-called “great resignation” took their toll on doctor practices across the country. The MGMA study is a snapshot into the labor problems in healthcare, which has been hit hard by the ongoing economic trend of workers quitting their jobs, though studies show healthcare, education and hospitality industries have been hit the hardest. And Walmart Health executives found that the company isn’t immune from the healthcare staffing and labor crisis hitting employers.
Walmart’s decision to close its health centers and virtual care comes as Amazon grows its One Medical Clinics into new markets and CVS Health, which spent $10 billion last year to buy Oak Street health centers for seniors, adds to its portfolio of medical care provider operations with clinics that treat patients covered by Medicare and privatized Medicare Advantage.
But Walgreens, which made a multibillion-dollar investment in doctor-staffed clinic operator VillageMD, has struggled somewhat by expanding too fast and being unable to fill patient panels in certain markets it is now exiting. Walgreens last month reported a loss of nearly $6 billion in its second quarter due largely to the loss in value of its VillageMD investment.
In Walmart’s case, the retailer said it will now take what the company has learned and focus on “trusted health and wellness services across the country through our nearly 4,600 Pharmacies and more than 3,000 Vision Centers. For 40 years, we have provided these high quality, accessible and affordable points of care that are integral to their respective communities.”
The decision disclosed Tuesday comes five years after Walmart opened the first 10,000-square-foot Walmart Health facility that opened in Dallas, Georgia, where Walmart shoppers and patients in the community had reportedly taken to the concept and convinced Walmart executives to forge ahead. The newer Walmart Health centers are about 5,400 square feet, located inside Walmart Supercenters and featured Walmart Health’s full suite of health services, the company said. The range of services included primary care, dental care, behavioral health, labs and X-ray and Walmart Health Virtual Care telehealth services.
It’s possible that some physicians, dentists and other providers could remain inside the stores if they, for example, negotiate a partnership with a local hospital or health system. The medical care providers inside Walmarts are independent and generally have contracts to provide care outside of Walmart Health Centers as well, according to sources close to Walmart.
“Today and in the coming days, we are focused on continuity of care for patients and providing impacted associates with respect and assistance as we begin the closing process of the health care centers,” Walmart said in its blog post. “The associates and providers have made an incredible difference for their patients and communities, and they are a priority: all associates are eligible to transfer to any other Walmart or Sam’s Club location” and “all associates will be paid for 90 days, unless they transfer to another location during that time or leave the company.”
