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[12 comments]

Walmart takes clinical approach to healthcare opportunity

August 8, 2014

With six in-store care clinics operating in South Carolina and Texas, and six more planned to open by year's end, Walmart has a long way to go before it catches up with CVS (1,500+ MinuteClinics), Walgreens (400+ healthcare clinics) or even Rite Aid (30 RediClinics inside H-E-B stores).

While the odds might intimidate others, Walmart is able to do the math, which shows that millions of Americans have been added to roles of the insured courtesy of the Affordable Care Act and many of those people work and/or shop in the thousands of stores the retailer operates across the U.S.

Employees and family members covered by Walmart's health insurance plans alone represent 1.1 million people, according to a Dallas Morning News report. A visit to a Walmart care clinic costs employees $4 a visit, while everyone else pays $40.

According to the Convenient Care Association, 33 percent of Americans live within 10 minutes of a retail healthcare clinic. Walmart, according to the New York Times, is opening clinics in areas where doctors are in relatively short supply.

"If they're rolling it out across the rural stores primarily, they're actually filling an important gap in the health care ecosystem," Skip Snow, a health care analyst at Forrester Research, told the Times.

One difference between Walmart's approach and that of others in the space, according to the Times report, is that the mass merchant is marketing its services as a primary healthcare provider for chronic ailments such as diabetes. The drug chains, on the other hand, offer chronic disease treatment while positioning clinics as a complementary service to traditional healthcare providers.

According to the Convenient Care Association, the nurse practitioners staffing in-store clinics are qualified to treat "common episodic ailments including cold/flu, rashes/skin irritation and muscle strains or sprains. CCC clinicians also provide immunizations, physicals and preventive health screenings."

A recent study by Walgreens found 17 percent of clinic trips were for preventive services, screenings and chronic illness visits, up from four percent in 2007. Return visits to Walgreens' Healthcare Clinic locations increased to 50 percent in 2013 from 15 percent in 2007.

Walgreens has seen an increase in visits from key demographic groups.

  • Visits for patients 17 and under for preventive services and vaccinations increased 180 percent;
  • Patients between 18 and 64 increased visits for health testing by 90 percent while preventive trips were up 66 percent;
  • Acute visits for seniors increased 84 percent.

 

Discussion Questions:

Do in-store clinics represent a significant business opportunity for Walmart? Do you see any issues with the chain's emphasis on its role as a primary healthcare provider?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is Walmart to engage in a significant ramp up of in-store clinics over the next five years?

Comments:

In-store clinics will bring a few more consumers into Walmart stores more often; however, I do not believe the clinics will have exactly the same impact for Walmart as they do for chain drug stores. I do believe that Walmart will do a great job with flu shots and other fast on-demand health services. However, I think for sore throats and bumps and bruises, chain drug will still be the preferred in-store environment for clinics.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

With its huge daily volume of consumer traffic, in-store clinics make sense for Walmart. Why give customers a reason to go somewhere else when Walmart can offer the same or better services, and all of the medications and products necessary to help its customers? Plus, Walmart is offering to become your primary health provider.

As long as Walmart can deliver the quality of service that customers expect, this could be a big win for the retail giant.

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Max Goldberg, President, Max Goldberg & Associates

Many customers see Walmart as their drug store, as evidenced by it ranking fourth in sales on Drug Store News' 2013 Top 50 Pharmacies list. This is even truer in rural markets where the other local pharmacy may be a long drive away. The same is true for medical care. Walmart locations in these markets are uniquely positioned to fulfill that role.

Will it make a significant difference in the company's overall sales/profits? Probably not, but it could make a significant difference in the lives of the people living in those markets.

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Steve Montgomery, President, b2b Solutions, LLC

Of course they do. But, as with everything, the devil is in the execution.

The only real hurdle is an "epic fail" resulting in sickness and/or death. But, that's a problem they all face.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

In 1990 the biggest industry in the U.S. was manufacturing. Today it is healthcare. Walmart is following the money. There will be no more growth in the core mass merchant business. Walmart is simply using it assets to expand their returns. This is a great move for all the same reasons it makes sense for the drug chains, except Walmart has an even bigger audience. (Hey, remember when everyone said Walmart would fail when it entered the pharmacy business?)

As for supporting this with primary care, it makes ultimate sense. Why offer less than what the customer actually needs?

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Gene Detroyer, Professor, Independent

Walmart has 330 million reasons to aggressively test company-owned heath care clinics in its retail stores, which it recently began piloting in Texas. With more than 1.1 million Americans working at Walmart, the retailer said it is facing an estimated $330 million in added health care cost this year as more workers have signed up for coverage in compliance with the Affordable Health Care Act. The retailer said it incurred $110 million in added costs during its first quarter alone.

These clinics are not just about driving store traffic, they are also about shaving health care costs as The City Wire reported in June.

Kim Souza, Editor, The City Wire

Of course, especially since Walmart is trying to position itself as a major player in healthcare. As popularity increases, there are the issues of attracting sick people to the same location where lots of other people are shopping, the ability to detect serious situations and get those people to other providers, and educating consumers to know when these clinics are appropriate and when they need to go somewhere else. These challenges exist for any in-store clinic.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

My concern about Walmart being able to pull this off is that there are so many locations, they might not be able to find the number of health providers needed to make it successful.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Most of the comments posted before mine have the essence of the answer. Yes/no: in-store clinics represent a significant business opportunity for Walmart, but I don't think they will tap into a larger audience than they already do. Most of the customers/clinic-users are already in the store shopping, so it may not bring too many new shoppers into the store; and, remember, while anyone's waiting for the clinic, they'll be shopping. I get my prescriptions filled at my local Walmart, for convenience and price, and because they are efficient in working with my HMO. Primary health care? That's a sticky one. I still prefer my HMO for flu shots and more, but perhaps Walmart would work as an ad hoc treatment center if it's open at hours that my HMO isn't.

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Naomi K. Shapiro, Strategic Market Communications, Upstream Commerce

The health and beauty aisles, and pharmacy and vision channels, already contribute a large proportion of revenues to Walmart. Add in the growth of organic and healthy foods, and Walmart is positioning to be a healthcare destination. We'll see this across the entire supermarket and grocery sector—with the addition of health screening kiosks and telehealth expanding virtual health consultations to customers. Consumers are looking for accessible, convenient formats to receive health care, and Walmart will be a player especially in areas that are primary-care underserved.

Jane Sarasohn-Kahn, Health Economist, THINK-Health

In-store clinics are a terrific customer retention strategy and are part of a larger opportunity. As customers wait to be seen, a good number will shop around and make the most of the trip. Prescriptions will be filled and impulse items purchased. It all adds up.

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Carol Spieckerman, President, newmarketbuilders

For a long time the pharmacy and optical businesses were mostly small and very lucrative private shops. This has changed for good, and the companies that share these two markets now see hospitals and physician practices as being easy pickings. Health care costs are skyrocketing and companies with the means to provide much of the consumers' health care needs at noticeably lower costs will easily expand into this new and very profitable market.

The next 20 to 40 years just may see big changes in the whole medical industry, with big corporations like those mentioned in this discussion controlling cost increases and incomes for the entire industry. Who knows what the end of the century might hold, as in offshore low-cost long term hospitalization, convalescence, elective surgeries and maybe even bypasses and transplants. Whatever happens, the medical industry will see a lot of change in the 21st century. And if Walmart can get in, they surely will.

'gjarnoldjr'

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