Wal-mart to be the biggest health retailer in the nation?

Hot off the press:

Walmart announced it would stop offering health insurance benefits to new part-time employees, the retailer sent out a request for information seeking partners to help it “dramatically … lower the cost of healthcare … by becoming the largest provider of primary healthcare services in the nation.”

Why would Wal-mart want to provide health care services?  Here are some reasons:

• Many health care services are high margin.
• With some exceptions (e.g., Kaiser), most current health care service providers do not take advantage of economies of scale, particularly with respect to information technology (IT) services.
• Wal-mart could take advantage of their current IT infrastructure to readily create EHR.  In fact, Walmart has offered commercial EHR software & services to healthcare providers since 2009.
• This effort builds on the success of walk-in clinics at stores like CVS (MinuteClinic).  These efforts increase brand loyalty (people usually have a good opinion of the places they get health care) and increases store traffic.  Further, between 2007 and 2009 retail clinic use increased 10-fold.
• Wal-mart recently dropped health insurance for its employees.  This could be a public relations mechanism to provide some care to these employees.
• Wal-mart recently dropped health insurance for its employees.  These people will need low cost primary medical care since insurance won’t cover these services.
• It could create a service provider which is national in scope an already has an existing distribution network.  Wal-mart has 3,800 stores nationwide that it can use to house these clinical services.
• Wal-mart already delivers prescriptions drugs through its low cost generics program and Medicare Part D drug plan.

The Wall Street Journal reports that Wal-mart is actively seeking partners for its health care expansion.  I would assume that Wal-mart with staff the clinics with low-cost nurse practitioners (NPs) and physician assistants (PAs).

Although some health reformers have aimed to bolster the role of primary care providers, Wal-mart’s actions may help NPs and PAs who provide primary care while putting competitive pressures on MDs who provide primary care.

Source:

• Ashwood, J.S. et al. “Trends in Retail Clinic Use Among the Commercially Insured” American Journal of Managed Care Vol. 17, No. 11 November 2011 e443-e448