Walmart On Tuesday, the company said it would close all health care clinics nationwide, a stunning reversal from plans to bring its reputation for low prices to dentists and doctors’ offices as well as grocery stores.
The major retailer said it will also shut down its telemedicine provider. acquired The amount for 2021 was undisclosed.
Walmart said in a news release that it will close 51 clinics in Arkansas, Florida, Georgia, Illinois and Texas, a plan that will not affect the company’s 4,600 pharmacies and more than 3,000 vision clinics. center. Two people familiar with the matter told CNBC that the clinic will close within the next 45 to 90 days.
Walmart blamed its plan to close clinics on a failing business model. In a press release, the company described the move as “a difficult decision” but said it was unable to operate a profitable business due to a “challenging reimbursement environment and rising operating costs.”
According to people familiar with the matter, the shortage of medical personnel in the United States has also increased the company’s labor costs.
Walmart’s announcement comes just one month after Plans to double size It will expand its clinic footprint by opening 22 new clinics this year and more in 2025.
Walmart’s announcement is also another sign of how challenging it is to disrupt and fundamentally improve American health care — a costly, complex and entrenched system of doctors, insurers, drug manufacturers and other players , costing the country a heavy price Over $4 trillion One year.
Walmart opened its first Walmart Health Clinic in Georgia in 2019 and has gradually opened more clinics next to its larger stores. Customers who normally shop for groceries or household items on Walmart shelves can also stop by for a doctor or dentist appointment or treatment. The clinics also offer other services such as flu testing, X-rays and sutures.
These health care services are available at low prices, such as an annual exam for adults for $30, a 45-minute consultation session for $45, or an adult dental cleaning for as little as $25.
At a conference in the fall of 2019, then-Walmart Chief Financial Officer Brett Biggs touted the company’s ambitions to investors.He mentioned how Walmart uses its massive scale to lower the prices of goods Many common generic drugs for as low as $4 in its pharmacies and plans to do the same in other parts of health care.
“It’s not just test and learn because we know this is a place that can have a huge impact on the way people live their lives,” he told investors at the time. “When we think about ‘save money, live better,’ we can leverage the power of the healthcare sector to do both. So we plan to be a significant player in the future growth of healthcare.”
Over the next few years, however, Walmart was slow to open new clinics and faced new challenges and competitive dynamics, including keeping store shelves stocked and staffed during the Covid-19 pandemic. Walmart has struggled with high executive turnover and has replaced many leaders in Walmart Health. CVS Health, Walgreens Boots Alliance and Amazon have all announced ambitions to open or acquire physician offices. Amazon last year completed a deal to acquire primary care provider One Medical for $3.9 billion.
Meanwhile, on earnings calls and investor meetings, Walmart CEO Doug McMillon and other company leaders instead Other emerging and high-margin businesses are highlighted, such as the growing advertising business and third-party markets.
Going forward, Walmart will restore the health services previously offered under its Walmart Health drive: thousands of pharmacies and Visual center.
Walmart said its clinics will continue to see walk-in patients until the closure, people familiar with the matter told CNBC. The company will also help patients find quality providers within its insurance network to ensure they continue to receive care, people familiar with the matter said.
Walmart Health marks the latest failed push into health care by a well-known company after its joint venture with Walmart and Walmart was dissolved. JPMorgan, Berkshire Hathaway and Amazon 2021.
Prior to announcing the closures, Walmart was one of a number of retail giants racing to build out primary care operations as demand for convenient and affordable health care grows. Walmart’s clinic business has been growing slower than rivals, but some companies have been trying to balance expansion plans with growing patient networks.
walgreens In March, the company said it had closed 140 VillageMD primary care clinics and planned to close 20 more in an effort to improve profitability in its broader health care segment. Walgreens also recorded nearly $6 billion in charges in the first quarter related to the decline in the value of VillageMD, which has posted disappointing returns since it became a majority owner of the business in 2021.
at the same time, AmazonIts health clinic operator One Medical currently has more than 125 locations across the country.
Walmart has made several other forays into health care, including a partnership with an insurance company and health system in Florida for care coordination. But Walmart will no longer see patients under the partnership moving forward, according to two people familiar with the matter.
Walmart purchase In 2020, it acquired a chronic disease management platform called CareZone for an undisclosed amount.
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