Disruptors are finding expansion into healthcare a bumpy ride when it comes to the primary care business.
Walmart is delaying the opening of health centers in two regions amidst expansion in other states as it recalibrates its strategy pushing for a bigger market share.
The company’s change of plans comes as multiple retail giants deal are reconfiguring their approach to optimize networks and get the most out of their foray into healthcare.
In the case of Walmart, it planned to open more than 30 new centers in 2024 to nearly double its total number of locations to 75 by the end of this year. However, challenges with construction resources have forced it to now move the target for its 75 locations to the end of 2025.
Walmart still plans to open 22 new locations this year, including expanding its presence within Texas with 18 centers and entering the Kansas City market with four centers.
The delayed openings are happening with six locations planned for Phoenix and four locations planned in Oklahoma City.
Dr. David Carmouche, Walmart’s senior vice president of healthcare delivery, stated that the company’s outlook to expansion is deliberate.
“As we have from the beginning, we are taking a measured approach to growing our footprint, taking into account the unique needs of each community,” Carmouche said, according to Forbes.
Walmart’s health centers are located next to a Walmart Supercenter and offer access to primary care, dental, behavioral health, labs, x-ray, community health, and telehealth. Flexible scheduling options are available with care offered seven days a week at convenient hours.
Retailer hiccups
Walmart isn’t the only retailer dealing with some struggles in its efforts to grow its offerings in healthcare.
Walgreens, which has invested billions of dollars into primary care chain VillageMD, has shuttered 140 clinics as of March and said it plans to close 160 in total.
Underwhelming returns from VillageMD resulted in Walgreens reporting nearly $6 billion in net loss for the second quarter.
The lack of profitability of the primary care business model means that many disruptors that are entering the market are having to find ways to cut costs to prop up clinics.
Scaling primary care will remain a hurdle for retailers as they establish their hold on the market. This also means that traditional providers continue to have an advantage as the incumbents, though the growing presence of disruptors means hospitals and health systems must find ways to innovate to not get left behind.
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
Walmart announced it is delaying health centers in Phoenix and Oklahoma City, causing it to push back its plan of having 75 total locations to the end of 2025 instead of this year.
The issue isn’t isolated to Walmart as other retailers have had troubles with scalability and have had to reshape their strategy to mitigate costs stemming from primary care clinics.