On Tuesday, Walmart disclosed it will pull the plug on its health and virtual care delivery products as a result of high operational costs and ongoing reimbursement pressures.
“While our mission to help people save money and live better remains, today we are sharing the difficult decision to close Walmart Health and Walmart Health Virtual Care,” the company said Tuesday in a release. “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.”
The retailer had been developing its Walmart Health business since 2019, providing customers with primary care, dental care, behavioral health, lab testing, X-ray and audiology services via in-store clinics. It opened 28 of these health centers in March 2023, and had planned to operate more than 75 by the end of 2024.
The move follows Walgreens’ announcement last month that it is shuttering 160 VillageMD primary care clinics after incurring a $5.8 billion after-tax non-cash goodwill impairment charge related to its investment. These recent major busts, according to one expert, expose the challenges that providers of all sizes are facing when it comes to reimbursement and regulatory challenges in healthcare.
“It’s showing that the system is broken when the one of the largest companies in the world who’s prided itself on efficiencies through economies of scale, in Walmart, when they have to shut a services deployment,” Andre Ulloa, a partner and executive adviser for M&A Healthcare Advisors, told McKnight’s Home Care Daily Pulse in an interview.
Walmart cited a “challenging reimbursement environment and escalating operating costs” as the primary reasons for the health center closures. It will hold onto some of its health-related offerings, including pharmacy, nutrition and vision services, and it plans to explore new ways to promote healthy living, the company said.
“While we will no longer operate health centers, we will take what we learned as we provide trusted health and wellness services across the country through our nearly 4,600 Pharmacies and more than 3,000 Vision Centers,” Walmart said in a statement. “We will continue to innovate as we grow our core businesses and launch even more services like the Walmart Healthcare Research Institute and health programs to join our fresh food and OTC offerings in helping our customers live better.”
Ambitious plans
Walmart had big plans for its health business. It partnered with UnitedHealth Group’s Optum in late 2022 to deliver senior-focused value-based care through its Walmart Health platform. The deal was intended to last 10 years, Walmart said at the time.
Meanwhile, Walmart announced in October 2023 that it was expanding its Virtual Primary Care services through a partnership with telehealth firm Included Health. Though the retailer announced Wednesday that it has left the virtual care business, it said that provider partners such as Included will still serve existing patients.
“Included Health will still be providing virtual primary care services to Walmart employees, as previously indicated through their virtual primary care program,” a representative from Included Health told McKnight’s Home Care Daily Pulse, in an email. “This program will continue to serve as intended by providing preventive care, chronic care management, and mental health support as part of a virtual model for Walmart employees.”
