The
waters
have
been
rough
for
telehealth
providers
and
retail
clinics
in
the
past
couple
years
—
to
know
that,
one
has
to
look
no
further
than
the
stock
prices
of
Teladoc
and
Amwell.
Yet,
amid
this
tempestuous
sea,
industry
observers
did
not
expect
the
crew
of
Walmart
to
raise
the
white
flag
of
defeat
on
its
healthcare
effort.
If
any
company
could
navigate
those
choppy
waters,
many
thought
it
would
be
Walmart,
given
how
successfully
the
retailer
has
maintained
its
presence
in
so
many
parts
of
the
American
urban
and
rural
hinterlands.
However,
on
Tuesday,
the
Arkansas-based
retail
mainstay
announced
that
it
is
shuttering
Walmart
Health
division
because
“there
is
not
a
sustainable
business
model”
for
the
venture
to
continue.
The
admission
only
reinforced
the
tired
but
potent
cliche
–
healthcare
is
hard.
Established
in
2019,
the
division
comprises
51
retail
primary
care
clinics
across
five
states
and
a
virtual
care
business.
On
Tuesday,
Walmart
announced
that
it
is
shuttering
this
division
because
“there
is
not
a
sustainable
business
model”
for
the
venture
to
continue.
“We
understand
this
change
affects
lives
—
the
patients
who
receive
care,
the
associates
and
providers
who
deliver
care
and
the
communities
who
supported
us
along
the
way.
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,”
Walmart
said
in
a
statement.
Unaffected
by
this
announcement
are
its
nearly
4,600
pharmacies
and
more
than
3,000
vision
centers
that
aren’t
part
of
the
Walmart
Health
division.
Walmart’s
decision
reflects
just
how
difficult
it
is
to
achieve
profitability
in
the
primary
care
and
telehealth
markets
—
and
how
this
challenge
is
being
exacerbated
by
rising
healthcare
costs,
labor
shortages
and
outdated
business
models.
Will
retail
entrants
ever
be
successful
in
their
efforts
to
integrate
into
healthcare?
Building
primary
care
clinics
from
scratch
has
always
been
a
slow
and
capital-intensive
route,
pointed
out
Rebecca
Springer,
lead
private
equity
analyst
at
PitchBook.
Looking
from
a
fee-for-service
lens,
primary
care
is
known
to
be
a
low-margin,
volume-oriented
specialty.
If
the
provider’s
goal
is
to
take
risk,
it
requires
an
“enormous
up-front
investment”
to
build
a
clinic
footprint
dense
enough
to
really
drive
down
healthcare
costs
across
a
population
—
as
well
as
make
sure
that
the
population
is
large
enough
to
be
actuarially
sound,
Springer
explained.
In
her
view,
there
are
three
main
questions
when
it
comes
to
retailers
in
primary
care
—
the
first
one
being:
Will
retailers
be
able
to
fully
integrate
and
profitably
run
healthcare
assets?
“The
jury’s
still
out
on
that
one,”
she
said.
“It’s
not
easy,
but
CVS
and
Amazon
may
succeed.”
That
may
well
be
true
down
the
road,
but
the
evidence
so
far
doesn’t
inspire
confidence
in
that
outcome.
Amazon
threw
in
the
towel
on
its
hybrid
primary
and
urgent
care
business
nearly
two
years
ago.
This
year,
CVS
Health
has
begun
shuttering
dozens
of
its
pharmacies
in
Target
stores,
and
Walgreens
announced
that
it
will
close
160
of
its
VillageMD
primary
clinics.
The
second
question
has
to
do
with
retail
healthcare
settings’
ability
to
support
the
kind
of
longitudinal
patient
relationships
needed
to
succeed
in
value-based
primary
care.
So
far,
we
haven’t
seen
much
evidence
of
this
at
scale,
Springer
stated.
The
final
question
is
whether
retail
healthcare
can
actually
achieve
a
more
holistic
view
of
the
patient
by
leveraging
consumer
data
—
and
we’re
“nowhere
close
to
answering
that
one,”
according
to
Springer.
She
noted
that
Walmart’s
decision
to
shutter
its
healthcare
unit
aligns
with
industry
trends.
“Scaling
back
retail
care
delivery
and
virtual
primary
care
has
become
as
‘trendy’
in
2024
as
accelerating
these
offerings
was
in
2021,”
she
remarked.
Headwinds
can
be
strong
Healthcare
labor
costs
are
increasing
drastically,
and
providers
are
leaving
the
industry
in
droves.
These
circumstances
restrict
retailers’
ability
to
deliver
care
that
is
convenient
and
highly
accessible
—
yet
that
is
their
key
value
proposition
for
consumers
—
noted
Arielle
Trzcinski,
a
principal
analyst
at
Forrester,
in
an
email
sent
to
MedCity
News.
“Administrative
burden
and
costs
from
health
insurers
have
also
increased,
with
some
large
health
systems
dropping
major
insurers
and
plans
in
response,”
she
added.
“Consumers
are
being
left
to
search
for
a
new
provider
that
is
in-network
mid-plan
year.
Retailers
that
bill
insurance
are
not
insulated
from
these
additional
issues.”
Additionally,
large
health
systems
have
more
opportunities
to
unlock
profitability
in
primary
care
than
retailers
do.
Primary
care
is
often
a
loss
leader
for
health
systems
—
but
this
category
serves
a
critical
role
as
a
feeder
of
patients
to
specialty
care
and
surgical
service
lines.
Without
those
higher
revenue
opportunities,
retailers
must
achieve
high
levels
of
adoption
and
volume
to
achieve
profitability,
Trzcinski
explained.
Clearly
that
didn’t
happen
at
Walmart
Health.
Another
healthcare
analyst
—
Kate
Festle,
a
partner
in
West
Monroe’s
healthcare
M&A
group
—
pointed
out
that
retail
clinics
tend
to
follow
an
encounter-centric
model
where
patient
interactions
with
the
clinician
are
confined
to
the
visit.
That
model
can
work
among
healthy
populations,
but
it
is
less
effective
for
chronic
condition
management
that
requires
higher-touch,
asynchronous
communication
between
visits,
Festle
said.
“Investment
in
care
coordination
technologies
is
possible
but
expensive
—
representing
another
cost
dilemma
for
retailers
focused
on
margin
expansion,”
she
remarked.
Primary
care
and
telehealth
are
unforgiving
markets
Similarly
to
the
retail
healthcare
market,
the
telehealth
market
hasn’t
fared
very
well
this
year.
Just
a
week
ago,
Optum
disclosed
its
plans
to
shut
down
its
virtual
care
unit.
And
two
of
the
country’s
largest
telehealth
providers
—
Teladoc
Health
and
Amwell
—
have
both
enacted
major
rounds
of
layoffs
this
year.
These
events,
along
with
the
Walmart
news,
reflect
the
realities
of
the
total
addressable
market
for
telehealth,
which
is
“effectively
zero,”
said
Sanjula
Jain,
Trilliant
Health’s
chief
research
officer.
“Healthcare
operators
tend
to
adopt
the
‘if
we
build
it,
they
will
come’
mentality
but
that
has
not
panned
out
when
it
comes
to
telehealth
utilization,”
she
declared.
Companies
that
want
to
enter
the
healthcare
delivery
market
need
to
know
that
facilitating
access
does
not
guarantee
adoption,
Jain
added.
She
noted
that
this
false
notion
is
why
we
continue
to
see
supply
exceed
demand.
According
to
the
fundamentals
of
economics,
prices
get
lower
when
supply
exceeds
demand.
In
some
instances,
lower
prices
can
create
more
demand
—
but
that
has
not
proven
to
be
the
case
in
the
telehealth
market,
Jain
pointed
out.
Old
models
simply
don’t
work
Admitting
that
Walmart’s
business
model
is
not
sustainable
underscores
a
larger
issue
plaguing
the
U.S.
healthcare
system,
said
Monica
Cepak,
CEO
of
Wisp,
a
telehealth
provider
that
offers
upfront
pricing
instead
of
working
with
insurers.
“Walmart
shuttering
its
in-store
clinics
and
discontinuing
its
telehealth
program
emphasizes
the
challenging
reimbursement
environment
and
escalating
operating
costs
many
healthcare
providers
are
struggling
with
today,”
she
stated.
In
doing
this,
Walmart
is
loudly
saying
that
these
existing
business
models
are
not
profitable.”
Ashok
Subramanian
—
CEO
of
Centivo,
a
health
plan
for
self-funded
employers
—
sees
things
differently.
To
him,
the
main
takeaway
from
Walmart
Health’s
shutdown
is
that
companies
need
to
stop
attempting
to
layer
new
solutions
on
top
of
the
existing
system.
This
approach
will
never
be
an
effective
way
to
deliver
coordinated
care
or
truly
improve
access,
he
wrote
in
an
email.
“Walmart
highlighted
a
‘broken
business’
model
as
the
reason
for
closing
its
brick-and-mortar
and
virtual
care
services.
What
is
actually
broken
is
the
entire
model
of
financing
uncoordinated,
fragmented
healthcare
services
at
uneven
prices
with
no
correlation
to
quality,”
he
explained.
What
does
this
mean
for
the
future
of
retail
healthcare?
Going
forward,
large
retailers
will
likely
start
thinking
about
their
role
in
healthcare
in
a
much
more
employer-focused
manner,
predicted
Springer
of
Pitchbook.
Just
as
retail
interest
in
primary
care
clinics
helped
drive
investment
in
the
space
a
few
years
ago,
she
thinks
there
will
soon
be
growing
investment
in
employer-facing
solutions
for
primary
care,
chronic
condition
management
and
benefits
navigation.
“[Employers]
have
national,
diverse
employee
populations,
and
like
all,
employers
are
facing
rising
healthcare
costs.
If
you
can
solve
it
for
your
employees,
maybe
you
can
roll
it
out
to
other
employers
too.
This
is
the
direction
Amazon
seems
to
be
taking,
and
Walmart
also
has
a
nationwide
program
for
its
employees
with
Included
Health
that
has
seen
some
early
success,”
Springer
remarked.
Included
Health
is
a
benefits
navigation
startup
that
sells
its
platform
to
employers.
Robin
Glass,
the
company’s
president,
wrote
in
an
email
that
she
doesn’t
think
the
Walmart
news
represents
a
bad
moment
for
telehealth
or
primary
care
providers.
Instead,
she
thinks
the
news
is
“a
clear
signal
of
an
appetite
to
clear
the
way
for
a
new
chapter
of
modern
healthcare.”
Ideally,
this
new
era
will
be
characterized
by
less
commodity
solutions
and
a
deeper
focus
on
longitudinal
support
for
patients,
Glass
wrote.
“This
is
good
news
for
consumers,
clinicians
and
for
companies
like
us
who’ve
been
building
a
more
robust
and
holistic
modern
healthcare
experience
-—
one
that
goes
beyond
being
convenient
and
transactional
to
highly
personalized
and
seamlessly
connected
to
all
of
healthcare’s
highest-quality
resources
and
settings.”
Another
healthcare
leader
—
Derek
Streat,
CEO
of
DexCare,
a
startup
offering
health
systems
a
platform
to
help
them
coordinate
and
manage
digital
care
—
noted
that
the
Walmart
news
is
a
cautionary
tale
of
the
complexities
that
affect
the
country’s
“fragile”
healthcare
system.
This
delicate
system
will
be
pressure
tested
as
more
people
live
with
chronic
conditions,
physician
burnout
reaches
crisis
levels,
more
Americans
reach
the
age
of
65,
Streat
explained.
To
get
ahead
of
these
challenges,
healthcare
providers
must
move
away
from
a
fragmented
view
of
care
and
toward
a
predicted
model,
he
declared.
This
approach
must
be
backed
by
technology
that
can
manage
how,
when
and
where
care
is
accessed,
he
added.
“The
fact
that
Walmart,
atop
the
Fortune
100,
cannot
make
a
buck
in
healthcare
should
be
a
wakeup
call
for
the
industry
at
large.
The
hurdle
is
not
technology,
but
changing
how
we
operate,”
Streat
said.
Photo:
ComicSans,
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