Walmart to close health centers, virtual care service in latest failed health care push

Walmart on Tuesday said it will close all of its health clinics nationwide, a stunning reversal of its plans to bring its low-price reputation to the dentist and doctor’s office along with the grocery aisle.

The big-box retailer said it would also shutter its telehealth provider, which it acquired for an undisclosed amount in 2021.

Walmart will close 51 clinic locations in Arkansas, Florida, Georgia, Illinois and Texas, plans that will not affect the company’s 4,600 pharmacies and more than 3,000 vision centers, the company said in a statement. The clinic will close within the next 45 to 90 days, two people familiar with the matter told CNBC.

Walmart blamed its plans to close clinics on a broken business model. In the statement, it described the move as “a difficult decision” but said it was unable to operate a profitable business due to the “difficult reimbursement environment and rising operating costs.”

The shortage of healthcare workers in the US has also increased the company’s labor costs, according to sources familiar with the matter.

The announcement comes just a month after Walmart said it planned to double the size of its clinical footprint by opening 22 new locations this year and more by 2025.

Walmart’s announcement is also another sign of the challenge of disrupting and radically improving American health care, an expensive, complicated and entrenched system of doctors, insurers, drugmakers and other players that costs the nation more of 4 trillion dollars annually.

Walmart opened its first Walmart Health clinic in Georgia in 2019 and has gradually opened more clinics next to its big-box stores. Customers, who would normally shop Walmart’s aisles for groceries or household items, could also stop by for a doctor’s or dentist’s appointment. or therapy session. The clinics also offered other services, such as flu tests, x-rays and stitches.

These health care services were priced low, such as $30 for an adult annual checkup, $45 for a 45-minute counseling session, or as little as $25 for an adult dental cleaning.

In a conference call in the fall of 2019, Walmart’s then-CFO Brett Biggs touted the company’s ambitions to investors. He referred to how Walmart had used its large size to lower the price of many common generic drugs to $4 at its pharmacies and planned to do the same for other parts of health care.

“It’s more than just testing and learning because we know this is a place where we can make a huge difference to how people live,” he told investors at the time. “When we think about ‘Save money, live better,’ we can do both with what we can do in health care. And so we think we’re going to be a big player in what happens in health care.”

However, in the following years, Walmart opened new clinics at a slow pace and faced new challenges and competitive dynamics, such as keeping its store shelves stocked and locations staffed during the Covid-19 pandemic. 19. Walmart struggled with high executive turnover and went through numerous Walmart Health leaders. And CVS Health, Walgreens Boots Alliance and Amazon announced their own ambitions to open or acquire medical practices. Amazon last year closed a $3.9 billion deal to buy primary care provider One Medical.

Meanwhile, on earnings calls and investor meetings, Walmart CEO Doug McMillon and other company leaders. it highlighted other emerging and higher-margin businesses, such as its growing advertising business and its third-party marketplace.

Going forward, Walmart will return to the health services it offered before the Walmart Health push: It will continue to operate its thousands of pharmacies and vision centers

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

Walmart Health marks the latest failed push into health care by a high-profile company, following the dissolution of a joint venture between JPMorgan Chase, Berkshire Hathaway i Amazon in 2021.

Before announcing the closings, Walmart was among a list of retail giants racing to increase their primary care presence as demand for convenient and affordable health care grows. Walmart grew its clinic business at a slower pace than its competitors, but some companies have struggled to balance their expansion plans with their swelling patient networks.

Walgreens said in March that it had closed 140 of its VillageMD primary care clinics and plans to close 20 more to boost profitability in its broader health care division. Walgreens also posted a charge of nearly $6 billion in the first quarter related to the impairment of VillageMD, which has generated disappointing returns since the company became a majority owner of the business in 2021.

In the meantime, AmazonHealth clinic operator One Medical now has more than 125 locations nationwide.

Walmart has made several plays in the healthcare space, including partnering with an insurer and health system in coordinated care in Florida. But Walmart will no longer see patients moving forward under that partnership, according to the two sources familiar with the matter.

Walmart bought a chronic disease management platform called CareZone in 2020 for an undisclosed amount.