BENTONVILLE, Arkansas - Walmart said on April 30 it will close all 51 of its health clinics and shut its virtual healthcare operations, saying it could not see it as a sustainable business model to continue.
“Healthcare is expensive to run. We were finding that the increased labour and operating costs environment – like with reimbursement, both public and private – made it difficult (to run the business) and obvious we had to close,” Walmart spokeswoman Marilee McInnis told Reuters.
The company said in a statement those challenges created an environment where it saw a “lack of profitability” that made the care business “unsustainable for us at this time”.
Companies such as Walmart, Walgreens, Amazon and CVS have expanded into providing healthcare services during the past five years, seeing opportunities in the highly fragmented US system.
But it has not been clear that consumers want such services from retailers or that they are profitable.
Walgreens, for instance, is planning to close 160 of its VillageMD primary care clinics after it recorded a US$5.8 billion (S$7.9 billion) impairment charge on its investment in VillageMD.
Amazon in February said it would cut a few hundred jobs across its healthcare units, including clinic operator One Medical that it acquired for US$3.5 billion in 2023.
And Walmart’s sudden decision to close all of its 51 health clinics and telehealth operations, marks a startling about-turn from its plan in 2023 to nearly double the number of these health centres across the US by 2024.
Walmart’s senior vice-president of Omnichannel Care, Mr David Carmouche, highlighted the company’s unique position to provide affordable healthcare services in March 2023.
Mr Carmouche stated that the company’s vision was to bring a “one-stop model of healthcare” to communities, addressing the cost and convenience barriers that many Americans face.
He also stated that it was in a unique position as 90 per cent of the US population is located within 10 miles (16km) of a Walmart, a statistic frequently cited by the company.
But industry watchers say Walmart’s move on April 30 was predictable.
Professor Craig Garthwaite at the Kellogg School of Management noted that success in the clinic space requires a solid economic model.
He said: “You can buy all the right ingredients – you still need a good recipe to cook the meal. This was sadly quite predictable – if a missed opportunity.”
Mr Arun Sundaram, a CFRA Research analyst, indicated that underlying industry issues and Medicare’s low reimbursement rates might have led to Walmart Health’s closure.
“With low reimbursement rates from Medicare, ensuring affordable and accessible healthcare becomes increasingly challenging,” he said.
The Bentonville, Arkansas-based company started its health clinics in Georgia in 2019, providing a range of services including primary care, dental care and telehealth.
By 2024, it had 51 clinics spread across five states including Texas and Florida. The centres are usually situated next to a Walmart Supercentre and house doctors and dentists.
Ms McInnis said all the stores will most likely close within the next 30 to 90 days, with all employees given the option to transfer to any Walmart or Sam’s Club store.
The company declined to disclose each health centre’s sales figures or potential losses from their closures.
D.A. Davidson and Citi analysts said they expected the impact of the closures to be immaterial.
Walmart said it would instead focus on its 3,000 vision centres and nearly 4,600 pharmacies located inside its stores, as it expands the clinical capabilities of the services they provide.
Walmart’s pharmacies, for instance, offer many of the clinical services its health centres provided including testing and treatment for respiratory illnesses like flu and strep throat. Walmart shares were down 1.3 per cent in morning trading on April 30.
