It's been a tough year for retail companies looking to lean into healthcare delivery.
In April, Walmart Health announced the closure of all 51 of its health centers across five states and the shutdown of its Walmart Health Virtual Care services. Walgreens has been closing dozens of VillageMD clinics and considering more ways to step back. CVS Health announced thousands of layoffs and has hired bankers for a strategic review of the company.
While these developments raise concerns about patient access, they also offer a moment of validation for health system leaders who are all too familiar with the complexities of navigating healthcare's volatile business and economic landscape.
However, it's crucial not to underestimate the potential impact of retailers in this space.
That's the message from Kaufman Hall Senior Vice President Scott Christensen. "Although it's true that these newer healthcare delivery entrants have both struggled, traditional provider organizations should not assume that healthcare is too difficult to disrupt, or that retail disruptors will continue to fail in the future," he wrote in an Oct. 10 post for the healthcare consulting firm.
Christensen notes that retail healthcare disruptors that incorporate insurance can present promising opportunities, and those that have struggled with primary care or delivery goals can still recover.
"Walmart and Walgreens have both revenue and physical footprints that dwarf even the largest health systems," he notes. "Although they can be held accountable by shareholders for accused healthcare missteps, they have access to capital and plenty of motivation to leverage their loyal consumer base to compete for a share of the growing healthcare delivery market."
Trial and error is part of Walmart's history, too, as evidenced by its foray into groceries in the mid-1980s. The company experimented with a proof-of-concept store format, launching a joint venture with a grocery chain that featured large, mall-like stores exceeding 220,000 square feet. Customers found these stores difficult to navigate, prompting Walmart to pivot to the Supercenter format in 1988, which now boasts over 3,400 locations nationwide, making Walmart the largest grocery store chain in the U.S., with nearly 60% of its sales coming from food and grocery items.
Find Mr. Christensen's commentary about the legacy healthcare providers and retailers navigating their way into healthcare here.