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Wow is this disappointing. If not Walmart, then who?


  📍 Today in health, it Walmart shutters, it's healthcare business. Today, we're going to talk about what we can learn from this, what we can take from it. My name is Phil Russell. I'm a former CIO. For a 16 hospital system and creative this week health set of channels and events dedicated to transform healthcare. One connection at a time. We want to thank our show sponsors who are investigating, developing the next generation of health leaders.

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This is everywhere. Quite frankly, because it impacts. If so many cities, so many places, so it is literally everywhere. This is a AP report. It's on Yahoo finance. Walmart closed its 51 health centers and virtual care services. All right. So Walmart is closing its health centers and virtual care services.

After struggling to find success. With the offerings, the U S retailer said Tuesday. The Arkansas based company said that after managing the clinics and launched in 2019 and expanding his tele-health program, it concluded there is not a sustainable business model for us to continue. We will come back to that. Walmart had 51 health centers in five states with the goal of helping people to save on their healthcare needs. This is a difficult decision and like others, the challenging reimbursement environment and escalating operating costs. Creating a lack of profitability. That make the care business unsustainable for us at this time, the company said in the statement, okay. Let me see. I'm going to stop and comment on each of these as I go through.

There's not a sustainable business model for us to continue. This is one of those interesting things that I'm sure they did all the research ahead of time on this. First of all, they started in 2019. They went through a pandemic. They like everybody else. It's a very, was a very challenging time. For healthcare.

So that's the first thing. Second is they're trying to change people's buying patterns and buying habits. And whenever you're doing that, there has to be a long-term commitment. To anything, anything you're going to do that requires the changing of people's habits, how they acquire healthcare, how they seek out care. Tele-health you name it? It takes a long-term commitment in order for that to come to fruition.

So that's number two. I think the third thing. I'm getting into too many things here, but I think the third thing is that this is a very challenging business model and it's constantly changing. The reimbursements changes just about every year, especially. Due to the fact that they were going after the Medicare and Medicaid populations and those reimbursements literally fluctuate as they go.

And I think as Walmart gets into this, they see the. Insanity of the whole payment model. It's Hey, it's, we're going to give you a dollar for this care and then you deliver the care and then they say, yeah, we're going to reimburse you 75 cents. And wait a minute. That said you're going to reimburse me a dollar that's 75 cents. And they, they just do this crazy. It's a very challenging business model and probably not one they're comfortable with.

They're used to it's a dollar for a baby shampoo and they put it on the thing and they mark it up by 25 cents and it's a dollar 25 and somebody buys it and they've made 25 cents period minus overhead. And healthcare is quite frankly a lot more complex than that. So let's go back to these statements.

This is a difficult decision, like others, that challenging reimbursement environment. And escalating operating costs create a lack of profitability. That make the care business unsustainable for us at this time, the company said in the statement, I think the other thing is you saw labor costs dramatically increase over this period of time as well. So they probably built a business model based on one thing that the variables just keep changing on them. And that's what makes healthcare so challenging? Let's see, I spokesman said reimbursement proved challenging for, from all types of insurance.

I think that's true. Medicare and Medicaid are the two primary models that they went after. But I wouldn't doubt that every one of the major payers was very difficult. In fact, some of the major payers are their competitors, so at does now part of CVS. CVS is technically a competitor. You can go to CVS. For care, you can go also go to CVS for pharmacy and Walmart had the same model, and this is just the intricacies of this whole thing.

It's just. It's. It's maddening. It's kinda crazy. The plain clothes or the Walmart health centers comes after the company announced in March, 2023, that had planned to add more than two dozen health centers to some of its stores this year. At the time the company said that it was looking to open 28 centers in 20, 24, mostly in Dallas and Houston. It also was planning to expand into the Phoenix and Kansas city, Missouri areas. And I believe that they had those plans and those plans were in place.

I think the other thing is they're probably looking at their other core business during a tightening economy, or even a. A challenging economy from a retail perspective with inflation and the cost and whatnot. And essentially they said, look, we've got to shore up our core business. We're not going to continue down this path, especially with something as. Mercurial as healthcare.

It's just hard to pin it down and get their arms around it. By the way. I don't think this means that Walmart is still not a player in healthcare and I will come back to that. Walmart is among several retailers that have sought to build a presence with medical clinics and make healthcare more accessible, but some have struggled. They talk about Walgreens and their. Massive right down. On village MD after closure of 140 of its primary care clinics. C, is there anything else? Nothing else.

I really want to cover. And, And I guess the thing I want to point out here is food is a significant part of a healthcare. Pharmacies are a significant part of healthcare. They still have optometry, still a part of healthcare. And so you have 4,600 pharmacies in at Walmart facilities across the country.

They're still the largest employer. I think in the United States, I could be wrong on that, but they're definitely the largest employer in most cities. And most states, if you look across all the states that are the most consistent I employer in those states, so they are going to be a significant. Buyer of healthcare. They're probably, they probably have some of the most accurate information. On healthcare. Quality costs, outcomes. Of anybody out there just because they are such a large employer. And they have so much information that they've gathered over the years, they are going to still continue to be a player in healthcare. Biggest loser in this is rural health care. And you just lost another avenue for care in those places.

The question is who's going to step up and nobody's going to step up. If there is not a financial model around it. If there's not a business model around rural healthcare, it is going to have to be propped up by. Government funding or it's going to have to be propped up by a change in the allowance of the types of models we can offer in those locations.

So this has significant ramifications. In healthcare across the board. And it's from my perspective, very disappointing. I was very hopeful for this. But the writing was on the wall. When you saw, what was happening. With with Walgreens and now Walmart. And that's not the only one I CVS close clinics and others.

So this model doesn't seem to be taking off. You'd have to wonder Amazon's a big investments in those kinds of things. And it is big investments. Will it pay off or will they. Head in this same direction and realize that there's money in pharmacy, but there's not money. In primary care and telehealth. I don't know. If I see this happening in so many of these different areas, what makes Amazon's business model different? Good question. All right.

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