Concept and Consequence
By “disruptors,” the AHA means entities that would normally be seen as competitors to the hospital sector. However, these competitors can actually become partners in certain contexts. But who are these disruptors? According to the AHA, they are well-financed, long-established retail pharmacies, tech companies, online mega-retailers and payers. These newer market entrants to the healthcare delivery landscape include familiar names to consumers: Amazon, CVS Health, Walgreens, Walmart, UnitedHealth Group/Optum, Microsoft, Google and others. While these companies may have diverse and divergent goals, they all share a common interest: to expand their revenue streams and business opportunities into the healthcare space.
In 2023, these companies were involved in a number of multibillion-dollar mergers and acquisitions, adding new care locations across the nation. “Wall Street pundits and analysts continue to prognosticate on what this means and how things will shake out in the long run for these companies and traditional providers,” according to the report. Kenneth Kaufman, the longtime healthcare observer and chairman of consulting firm Kaufman Hall, summed up the disruption landscape back in 2018. According to Kaufman, these disruptor companies have three basic goals:
- Carve out healthcare segments with the lowest fixed costs and highest volumes.
- Engage a broad swath of consumers through a highly integrated, convenient digital and in-person experience.
- Combine health promotion, nonacute care and insurance in a way that aligns care and payment incentives and allows these companies to truly manage health and costs.
Case in Point
While we could provide a bird’s-eye summation of each of the above-referenced disruptor entities, it may be more helpful to do a deep dive on just one of them. Let’s take a look at America’s favorite go-to grocer/retailer: Walmart.
Walmart has been operating at a deliberate pace in providing health services to its customers. Rather than concentrating on huge acquisitions or expansive partnerships, it has steadily focused on adding virtual care, primary care clinics, diagnostic testing and other services designed to fit its low-cost identity.
Late last year, Walmart executed a new partnership with Orlando Health that is designed to improve care coordination and patient engagement. Under the deal, Walmart Health will work with Orlando Health to ensure continuity of care between care sites at the two organizations. The company is also focusing on improving access by partnering with Ambetter from Sunshine Health as a preferred provider in seven Florida counties. Currently, Walmart Health has 23 locations throughout the Sunshine State. The clinics offer primary care, labs, X-rays and electrocardiograms, behavioral health, dental and some specialty services.
The retailer has also begun partnering with RadNet, a national provider of cost-effective diagnostic imaging services, in an effort to launch what it calls MammogramNow. The first location in Milford, Delaware, opened at a Walmart Supercenter. The initiative aims to enhance breast health awareness and accessibility to care and includes the integration of DeepHealth technology into the Walmart Supercenter environment, providing women with convenient access to crucial breast cancer screening services.
In October, Walmart expanded its virtual primary care services. The company now offers the chance to establish long-term relationships with physicians nationwide through its virtual primary care network. The company stated last March that it will open medical clinics in Missouri and Arizona this year, while deepening its presence in Texas by expanding in the Dallas area and growing into Houston. Overall, the company plans to open 28 new Walmart Health Centers this year, which would bring the total number of locations to more than 75.
The medical centers, which are targeted toward patients with no or poor insurance coverage in underserved areas, are located next to or inside Walmart Supercenters. Despite this expansion, the number of Walmart Health locations is far behind the 5,300 retail locations the company has in the U.S., including nearly 3,600 Supercenters. The national retailer will rely on its extensive brick-and-mortar footprint, brand recognition and a series of partnerships to drive consumers to its health care locations. Along with the additional revenue its health centers generate, retail clinics can lead to increased script writing and front-of-store sales.
As Walmart continues to execute its growth plans in healthcare, analysts will be watching closely to see if the company begins to take a more aggressive approach to expansion, possibly through acquisitions. Walmart has been steadily building partnerships with healthcare organizations, working as a collaborator rather than a competitor to lower costs and improve quality. “The pace at which it is able to forge more of these relationships could help the retailer crack the code on ways to manage costs more effectively for its employee base of more than 2.1 million worldwide, of which 1.6 million are U.S.-based,” according to the AHA report.
We will watch with interest to see whether the company ends up developing more expansive relationships with hospitals and health systems across the country; and, remember, Walmart is just one of the big-name retailers now invading and reinventing the healthcare space.