Walmart Health: Fear the revolution or embrace the evolution?
Walmart’s recent announcement of bigger, more expansive medical/dental clinics certainly generated a lot of buzz and no shortage of consternation in the healthcare community. There were lots of bold predictions about how this would revolutionize healthcare and usher in a new era of healthcare consumerism that is sure to put traditional health providers out to pasture. If you follow my blog posts of late, you’ve probably already guessed that I have a somewhat more measured reaction.
This move by Walmart is more of an evolution, not a revolution and it just might be something traditional providers will want to embrace. At the very least, it’s not something that has to be feared. I’ll get to why in a minute, but first here is synopsis of the situation from Becker’s Hospital Review.
With the promise of low prices and convenient point-of-care delivery, Walmart's standalone health centers are set to create a "consumer revolution" in healthcare, according to former Apple CEO John Sculley.
In the past six months, Walmart has expanded its footprint in the primary care market, opening two standalone health clinics in Dallas, Ga., and Calhoun, Ga. The clinics offer various services, including primary care, urgent care, labs, X-rays and dental.
"We're going to have a consumer revolution in retail for point of care," Mr. Sculley on Feb. 26 told CNBC Make It. "Why? Because if the Walmart tests are successful, and I suspect they will be, people will be able to go in and get these kinds of health services at a lower cost than if they had health insurance."
Walmart Health's website says the clinics offer "quality medical care at low prices you'll love – no insurance required." Patients can have a medical checkup done for $30, a teeth cleaning for $25 and mental health consultations for $1 a minute, without insurance.
Here are a few reasons this news might actually be a good thing for healthcare in general and hospitals/healthcare systems specifically.
1. It could help close gaps in the care system
What jumped out to me for the story above is the phrase “no insurance required.” Serving vulnerable populations is difficult. If deployed at scale, these Walmart clinics could actually help close some caps for routine services that uninsured or underinsured often people put off. Those routine screenings could help improve population health and potentially keep people out of hospital emergency rooms where it’s not appropriate for them to get basic care and where costs create a financial burden.
In addition, for many communities the primary care pipeline is seriously blocked. This could provide a relief valve and allow traditional providers to manage a more realistic panel size and spend more time with their patients. There would be some revenue loss, but as above, potential improvements in the overall health of the community could prove to be a valuable offsetting benefit.
2. Referrals from Walmart clinics will have to go somewhere
If more people are getting basic care, including screenings, a greater number of health issues are likely to be identified. Those cases will need to be referred to specialists for follow-up care. That could be an opportunity for partnerships between Walmart and local providers that would open new revenue streams and again, it could prove to be a benefit to the overall health of the population.
3. People don’t make care decisions based on price alone
Pricing in healthcare is certainly a moving target these days and increasing costs are driving some changes in behavior. However, it remains to be seen how many people will be willing to sacrifice the care provided by well-known, proven healthcare entities just to save money. Using John Scully’s own industry as an example, there are plenty of cheaper alternatives to every product Apple makes. Many people do buy those cheaper products, but Apple continues to do very well for itself building off its brand cache. Healthcare – at least for some services – might not prove to be all that different in the long run.
4. Walmart has some things to prove
All the attention garnered about this announcement lately has only been focused on cost. Walmart will have to deliver quality care and that means recruiting, paying for and retaining good staff. Turnover in the healthcare industry as a whole is a huge challenge. Recruiting providers is also a major challenge as demand far outstrips supply. Walmart will face the same changes.
On the quality front, the care actually has to be effective over the long haul. Maintaining those high standards won’t be easy.
I am also curious as to how the $1 a minute mental health counseling is going to work. Do you just cut off the session when you hit what you can afford? Is there a minimum? Can someone get $3 of counseling? Would that be effective? Lots of questions on this service come up for me.
One final point here, but it’s significant. These clinics will have to be profitable and only Walmart knows how long, and just what it will take, to get there. This is not an altruistic effort and a healthy margin will be required to make it worth the effort for them to keep them going in the long run.
Overall, we’ll see what happens as only time will tell us if this idea holds up to its promise. I hope the traditional players will see this as an opportunity to improve their own patient/consumer experiences, figure out if this can plug holes in our overall healthcare delivery system and explore mutually beneficial partnerships. Obviously, Walmart and similar organizations see an opportunity to address the effect that insurance deductibles, co-pays and lack of insurance is having on the healthcare industry. How our industry responds will shed some light on the impact this will all have.
That sounds more like an evolution that a revolution to me. And evolving is not a bad thing at all.