Walmart Pulls Plug on Health Centers and Virtual Care Service

Ambitious Healthcare Expansion Plans Derailed

USA: Retail giant Walmart has announced that it will be closing all 51 of its health centers and virtual care service offerings. The decision comes as a disappointment, given the company’s recent plans to aggressively expand its healthcare footprint across the United States.

Just last year, in March 2023, Walmart had unveiled ambitious plans to open an additional 28 health centers in 2024, primarily targeting the major metropolitan areas of Dallas, Houston, Phoenix, and Kansas City, Missouri. These new clinics were intended to complement the company’s existing network of health centers, which operated across five states.

Unsustainable Business Model Cited

However, Walmart has now concluded that “there is not a sustainable business model for us to continue” with these healthcare services, according to a statement released on Tuesday. The company cited escalating operating costs and a challenging reimbursement environment as key factors contributing to the lack of profitability.

Walmart Expands Healthcare Reach with Three New Centers in Texas

“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 company stated.

A Walmart spokeswoman elaborated on the reimbursement challenges, stating that the company faced difficulties securing adequate reimbursement “from all types of insurance.” This issue appears to have been a significant roadblock in achieving financial viability for the health centers and virtual care service.

Retailer Healthcare Struggles Persist

Walmart’s struggles to establish a successful healthcare business model are not unique among major retailers. Walgreens, another prominent player in the retail industry, recently announced the closure of 140 of its VillageMD primary care clinics, with plans to shutter an additional 20 locations in an effort to boost profitability. This move came after Walgreens recorded a staggering $5.8 billion after-tax impairment charge related to VillageMD in its most recent quarter.

While the United States faces a shortage of primary care physicians, building a network of primary care clinics has proven challenging even for well-established companies, according to healthcare researchers and analysts. Factors such as patient reluctance to leave existing doctors and potential hesitancy towards receiving care in a retail setting have contributed to the difficulties faced by retailers in this space.

Employee Transition and Continued Pharmacy Operations

As Walmart prepares to wind down its health centers and virtual care service, the company has assured that employees who worked at these facilities are eligible for transfer to any other Walmart or Sam’s Club location. Despite the setback in its healthcare initiatives, Walmart will continue to operate its extensive network of nearly 4,600 pharmacies and more than 3,000 vision centers across the United States.

The closure of Walmart’s health centers and virtual care service represents a significant retreat from the company’s healthcare ambitions, at least for the time being. As the retail industry grapples with the challenges of establishing sustainable healthcare models, Walmart’s decision serves as a reminder of the complexities involved in navigating the intricate landscape of healthcare delivery and reimbursement.