“Walmart’s (health care) strategy is based on price competition. Patients know what services will cost before they walk into the physician’s office. Prices are rock-bottom.”

Health care “disruption” is well underway with most attention focused on paradigm-challenging players like: Amazon, Berkshire Hathaway and JPMorgan Chase forming an independent health care company for their employees; and the CVS Health Aetna Acquisition.

In the meantime, under-the-radar, Walmart’s strategy has been “based on the hospital inefficiency in innovation and the business theory of bundling and unbundling services.”

Now Walmart is leveraging its 1.5 million employees and 4,769 stores throughout the United States (90% of Americans live within 10 miles of a Walmart store) to launch its major health care initiatives.

“Walmart, the world’s biggest retailer, is moving deeper into the primary care and mental health market, opening a new clinic called Walmart Health in Georgia.

The company recently updated its website with a link to Walmart Health, describing its “newest location in Dallas, GA.” It also went online with the site “Walmarthealth.com,” where patients can set up appointments. Walmart is testing the concept with the initial clinic and could open more in the future, according to people familiar with the matter who asked not to be named because the plans are confidential.

The website indicates that first appointments are available on Sept. 13, and the company will offer primary care, dental, counseling, labs, X-rays and audiology, among other services…

The new clinic will have on-site health providers, including nurses, to offer consultations, immunizations and lab tests, people familiar with the matter said. Added services include hearing tests, 60-minute counseling sessions and vision tests.” (A)

“Walmart’s new Georgia location opening comes as rivals CVS Health and Walgreens Boots Alliance push further into outpatient healthcare services through various models. The retailers see 10,000 baby boomers aging into Medicare coverage each day and are also looking to fill emptying space in their brick and mortar stores in the face of changing consumer shopping habits driven by online retail giant Amazon, which is also exploring new ways to get into the healthcare business but has yet to offer face-to-face personalized healthcare services for customers.

This year, CVS has said its new health hub concept store will reach four U.S. metropolitan areas and 50 locations by the end of this year as part of a major expansion. CVS said the HealthHub rollout will grow to 1,500 locations by the end of 2021, or about 500 HealthHubs a year…

Walgreens has a joint venture with the big health insurer Humana, opening senior clinics in certain markets and the drugstore chain has a partnership with UnitedHealth Group’s MedExpress urgent care subsidiary that has opened centers that include X-rays and are staffed by physicians with a door connecting to an adjacent Walgreens store.

But Walmart says the new Walmart Health centers aren’t designed to increase foot traffic and customer volume into their stores… Walmart has a different approach.

“We are trying to solve problems for our customers,”… “We already have the volume. We have the locations and the right people.” (B)

“Here we see two rival strategies to marketing healthcare services. Walmart’s strategy is based on price competition. Patients know what services will cost before they walk into the physician’s office. Prices are rock-bottom. This directly benefits patients, who will come again. Word will get out. In contrast, the hospital’s strategy is based on billing insurance companies for services whose prices are not revealed to patients in advance. Patients have no economic incentive to seek lower-cost services elsewhere.

These two strategies reflect different organizational legal structures. Walmart is a profit-seeking corporation. Profit-seeking enterprises whose business plans seek a growing market, as Walmart’s business plan always has, are forced by price-sensitive consumers to compete by cutting costs and then lowering prices. In contrast, the hospital is a non-profit enterprise. By law, non-profit enterprises have no owners. Employees may not profit directly from innovations that lead to higher profits. In non-profits, everyone is salaried. There is therefore far less incentive to cut costs and reduce prices.” (C)

“As Walmart moves deeper into primary care, the retail giant wants to ensure there is a skilled healthcare workforce to fill critical roles in its 20 care clinics…

Walmart announced Tuesday its 1.5 million associates will be able to apply for one of seven bachelor’s degrees and two career diplomas in health-related fields for $1 a day through Live Better U, Walmart’s education benefit program…

The new degrees and certificate programs will provide Walmart employees with a path to higher-paying careers in the growing healthcare field, Walmart executives said..

The health and wellness courses include career diploma programs for pharmacy technicians and opticians through Penn Foster and seven bachelor’s degrees in health science, health and wellness and healthcare management/administration offered through Purdue University Global, Southern New Hampshire University, Bellevue University and Wilmington University.

The education program will arm employees with training to fill critical healthcare roles across Walmart and Sam’s Club, which includes more than 5,000 retail pharmacies, 3,000 vision centers and 400 hearing centers, the retailer said in a release. The upskilled workforce will help the retailer make quality healthcare more affordable and accessible to customers in the communities it serves.” (D) 

“What is health care’s allure for Walmart? Medical services typically have higher margins than store products. Since they are often provided in person, there is more opportunity for consumers to pick up other items while visiting the store. And usage is growing, especially as the United States’ population ages.

In particular, Walmart is eyeing both the Medicare and Medicaid markets since many of its customers are senior citizens and lower-income Americans. Its prices are generally lower than at pharmacy chains, such as CVS.

As Walmart expands its health care menu, it builds even more ties with its shoppers. Its deal with Anthem, for instance, lets the insurer’s Medicare Advantage customers use their plan benefits to purchase over-the-counter medicine, first aid supplies, support braces and pain relievers from a store.

And Walmart can market its healthy grocery items to certain Medicare Advantage enrollees since the federal government recently allowed insurers to cover such products as a supplemental benefit. This has given the company another advantage over pharmacy chains, which have much more limited food selections.

Also, the retailer’s locations blanket the nation. Many are in rural areas where there are few other health care options. Walmart often operates as a community center, with customers dropping in a few times a week. And it serves as a one-stop shop, where people could access medical services and pick up whatever other items they need.”  (E)

“On the heels of Walmart offering health clinics in certain locations, the big-box retailer is adding on a digital healthcare site—WalmartHealth.com—so consumers can make doctor, dentist, and behaviorial health medical appointments, in addition to scheduling hearing tests and immunizations…

There are some true loyalty-generating opportunities in extending your ambulatory offerings with select regional retail clinics, utilizing technology to improve your digital front door and provide real-time patient obligations.” (F)

Walmart’s Centers of Excellence program gives associates access to world-class specialists for:

Certain heart surgeries, like cardiac bypass and valve replacements. Certain spine surgeries, like spinal fusions and removal of spinal discs (discectomy). Hip and knee joint replacements. Breast, lung, colorectal, prostate, and blood cancers (including myeloma, lymphoma, and leukemia). Certain weight loss surgeries, like gastric bypass and gastric sleeve procedures. Organ and tissue transplants (except kidney, cornea, and intestinal), ventricular assist devices (VADs) and total artificial hearts, and CAR-T cell therapy. Outpatient radiology, which will be reviewed automatically through the pre-authorization program

Walmart has partnered with several world-class health systems across the country to serve the Centers of Excellence program, and a few of these include: Cleveland Clinic, in Cleveland, Ohio, for cardiac surgery. Johns Hopkins Hospital, in Baltimore, Maryland, for joint replacement surgery. Mayo Clinic in Minnesota, Florida and Arizona, for transplants and cancer care. Geisinger Medical Center, in Danville, Pennsylvania, for weight loss surgery. Mercy Springfield, in Springfield, Missouri, for spine surgery..

In addition to the full cost of treatment for many conditions, the benefit includes travel and lodging expenses for both the patient and a companion caregiver. Travel and lodging are not included for the weight-loss-surgery benefit.” (G)

“Geisinger has earned designation as a Radiology Center of Excellence by Covera Health, a New York City-based company that uses advanced clinical analytics to objectively measure quality in radiology.

With its new distinction, Geisinger joins a national program that integrates with self-funded insurers’ existing health networks to steer community members toward local radiology providers based on their diagnostic accuracy — not price — to curb misdiagnoses. Danville, Pa.-based Geisinger is also a member of Covera Health’s Quality Care Collaborative, in which participants receive practical, actionable feedback to improve their clinical practice.”  (H)

“Walmart’s retail strategy in health care is based on the hospital inefficiency in innovation and the business theory of bundling and unbundling services. The vast majority of hospital revenue is rooted in the fee-for-service business model: rather than make money for improving health (a reimbursement model that is much harder to design than it sounds), providers are paid more for the number of services provided — hampering incentives for innovation. Providers are thus incentivized to provide a high-volume, high-cost standard of care, squeezing money from insurance companies. In turn, those costs are passed down to consumers in the form of higher premiums. However, as hospital operational costs ballooned, health systems began to treat their departments like a public investment portfolio. They unbundled (divested from) low-end services that required all the same operating expenses but didn’t turn a profit.

Outpatient primary care is a prime unit to be unbundled from traditional health care delivery systems, i.e. hospitals, for two reasons:

Most patients that visit primary care physicians don’t need the resources of an expensive medical center on-hand for each visit, and would be better served by an experience that emphasized price, convenience, and attention.

Reimbursement rates for most primary care services, e.g. a blood pressure checkup or physical exam, are much lower than specialty care (imaging, biopsies, intensive procedures, etc) and thus provide a lower short-term return on invested capital…

This brings us to the biggest loser of Walmart’s foray into health care: traditional health systems. Walmart’s strategy notably doesn’t utilize any ownership of inpatient hospitals; all incentives are aligned to provide the highest value care at the lowest possible cost in outpatient settings, ultimately decreasing utilization of expensive health care services like inpatient hospitalizations. (I)

“After more than a decade of transforming health care for its roughly 1 million workers and huge and loyal customer base, Walmart plans to play an even larger role. Marcus Osborne, vice president of transformation and wellness for the retail giant, made that point clear in a recent talk with the Health Care Council of Chicago.

Osborne said Walmart will continue to expand its health care services for customers and employees until or unless the company “hits a third rail” by entering a space in which it can’t compete effectively. To date, he emphasized that every significant initiative the company has undertaken to address its customers’ top three health care concerns — cost, convenience and access — has delivered value for employees and customers and a return for the company.

He also reported that all projects that Wal-Mart Stores Inc. undertook over the last two years, including a pilot with its Boston-based partner Beacon Health to bring affordable, behavioral health care to customers, performed better than expected. He said Walmart’s most successful venture recently has been its partnership with Quest Diagnostics to provide in-store testing services to customers, providing a level of convenience that has increased patient compliance with their physicians’ directives by 50 percent or more.

Other topics Osborne addressed include: Access to care; Variation in clinical practice; Solving obesity; Scaling success. (J)

Sam’s Club, a retail warehouse club operated by Walmart, is teaming up with healthcare companies to offer four bundled healthcare service offerings for its members, ranging from $50 to $240 per year.

The pilot, called Care Accelerator, is in tandem with payer Humana and on-demand primary care app 98point6. Bundles vary in included services, but each offers free prescriptions on some generic medications, low-cost dental and vision services, prepaid health debit cards for use within the network and unlimited telehealth for $1 a visit.

The company stressed that Care Accelerator is not a health insurance plan. Participating Sam’s Club members will still have to pay their healthcare provider at the point of service, though it will be at a discounted rate.

The family bundle, for example, costs $240 a year and covers up to six family members. It includes access to preventive lab screenings for early detection of heart disease and diabetes, a 10% discount on hearing aids and up to a 30% discount on chiropractic, massage and acupuncture services.

By comparison, the “Starter A” bundle only includes free select generic medications, $1 telehealth visits, $60 eye exams and a $5 prepaid health debit card. Medications must be filled at Sam’s Club pharmacies and eye exams must be done at Sam’s Club, guaranteeing business for the retailer and its 566 pharmacy locations.” (K)


“Back in 2005, a memo from Walmart’s then-Vice President of Benefits, Susan Chambers, outlined a strategy for how the company could remove sick workers from the payrolls and avoid paying healthcare benefits. More recently, premiums on Walmart’s health plans have soared, and the company has cut eligibility considerably.

Starting in 2015, Walmart cut coverage for anyone working less than 30 hours per week.

In the last five years, the cost of Walmart’s cheapest healthcare plan has more than doubled.

Hundreds of thousands of Walmart workers and their family members qualify for publicly funded health insurance.

Walmart’s health care plans fail to cover hundreds of thousands of associates. In 2009, Walmart claimed that 52% of associates were covered under its healthcare plan. The company has refused to disclose coverage rates for its 1.5 million U.S. employees since then.

In recent years, Walmart has made it even more difficult for associates to get quality health care for themselves and their families. The company stopped offering health insurance to part-time employees working less than 24 hours per week in 2012, and starting in 2015, it cut coverage for anyone working less than 30 hours per week, including those who had previously been grandfathered in. In the last five years, the cost of Walmart’s cheapest healthcare plan has more than doubled. The cost of many of the company’s family plans has more than quadrupled over that time period.

For employees earning Walmart’s starting rate of $9.00/hour working an average of 34 hours per week, the deductible alone on Walmart’s cheapest plan for workers with children is over a third of the employee’s annual gross income.”  (L)



You are the CEO of a suburban community hospital, the only one in town, two block away from a big Walmart store that just opened a Walmart Health clinic.

Last year the hospital purchased a second MRI and started an interventional cardiology program. University Medical School, 50 miles away, has just opened a local cancer program satellite.

The Board is in a panic as Walmart is hiring your biggest physician admitters and senior technical staff. Admissions are falling.

There is a Board meeting next week.

Where do you start?


Compare WalmartCare with CVSCare, AppleCare, GoogleCare, MicrosoftCare, AmazonCare, and other nontraditional models.

Analysis: Impact of CVS, Walgreens, Walmart Retail Healthcare Expansion Strategies by Ethan Chernofsky  https://hitconsultant.net/2019/09/27/cvs-walgreens-walmart-retail-healthcare-expansion/#.XY-HDEZKhlA

If you want to discuss other ways of organizing this case for class discussion please contact me at jonathanmetsch@gmail.com

Some Resources For Faculty Preparation

Project Management. The hardest part of getting started….is getting started

“…what would it look like if Amazon CEO Jeff Bezos took the helm of a major integrated (health care) delivery system?”

Apple, Amazon, Google and Microsoft trajectories for healthcare http://doctordidyouwashyourhands.com/2018/07/apple-amazon-google-and-microsoft-trajectories-for-healthcare/

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