Background

In 2019, Walmart launched Walmart Health as a standalone health clinic next to one of its stores in Georgia. The clinic offered primary care, labs, X-rays, dental, counseling, audiology, and other services. The company later expanded its health clinics into several other states, including Arkansas, Illinois, and Texas.

In 2023, Walmart Health continued its expansion by adding 17 new health clinics in the Jacksonville, Tampa, and Orlando metropolitan areas. The company also announced plans to expand into two new states, Arizona and Missouri, and the opening of 28 new clinics by the end of 2024.

Aside from its health clinics, Walmart Health also offered virtual care services to its customers. In 2021, the company acquired MeMD, a mental and medical telehealth provider.

"Telehealth offers a great opportunity to expand access and reach consumers where they are and complements our brick-and-mortar Walmart Health locations," said Cheryl Pegus, the company's EVP of health and wellness at the time. "Today people expect omnichannel access to care and adding telehealth to our Walmart Health care strategies allows us to provide in-person and digital care across our multiple assets and solutions."

Walmart to close health clinics, end telehealth services

In a reversal of its earlier expansion plans, Walmart on Tuesday announced that it will close all 51 of its health clinics in five states and end its virtual care platform.

"Through our experience managing Walmart Health centers and Walmart Health Virtual Care, we determined there is not a sustainable business model for us to continue," company executives said in a press release. "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," the executives added.

Clinics will continue to see patients with scheduled appointments until they close, people familiar with the matter said. The company will also help patients find high-quality providers in their insurance networks to ensure they can continue to receive care.

Going forward, Walmart said it will primarily focus its healthcare services on its pharmacies and vision centers. Currently, the company has 4,600 pharmacies and over 3,000 vision centers in stores across the country.

Commentary

Robert Field, a professor of health management and policy at Drexel University, said Walmart had many challenges with its health clinics, including a shortage of healthcare workers. He also noted that the company's strength in retail did not guarantee its success in the healthcare field.

"It is different from selling products, like toothpaste and breakfast cereal, and requires different kinds of expertise and management," Field said.

According to CNN, Walmart's health clinic closures may leave patients, particularly those with lower incomes or without insurance, with gaps in healthcare access.

"One of unique things was they were focused on stores located in underserved communities," Ateev Mehrotra, a professor of healthcare policy and medicine at Harvard Medical School. "It's disappointing that Walmart wasn't able to make it work because these patients need care and don't have as many options."

According to Mehrotra, Walmart's closures also reflect ongoing challenges for primary care providers in the United States. Currently, the Association of American Medical Colleges predicts that there will be a shortage of up to 55,000 primary care physicians in the next decade.

"This experience highlights the financial struggles that primary care has in general," Mehrotra said. "It really speaks to what primary clinics are facing."

Other retailers are also facing difficulties with their primary care offerings. For example, Walgreens has closed many of its VillageMD clinics in several markets over the last few months as part of a $1 billion cost-cutting initiative. Poor performance in Walgreens' healthcare division, which experienced $1.73 billion in operating losses in 2023, led the company to re-evaluate its original expansion plans.

Amazon has also cut "a few hundred roles" in its healthcare division, including its primary care company One Medical and its pharmacy services. However, even with these layoffs, the company said it expects to continue to grow its healthcare strategy.

According to Neil Lindsay, SVP at Amazon Health Services, the layoffs will allow the company to "invest in inventions and experiences that have a direct impact[...]on our customers and members of all ages." (Hudson, Modern Healthcare, 4/30; Rutherford et al., Bloomberg, 4/30; Constantino/Repko, CNBC, 4/30; Landi, Fierce Healthcare, 4/30; Meyersohn, CNN, 4/30)

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