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The case studies against “if you build it, they will come” continue to pile on. This time, it’s Walmart with their Walmart Health & Wellness Clinics.
Walmart just announced that it would close all 51 Walmart Health locations and shut down the Walmart Health initiative, which also includes Walmart Health Virtual Care (telehealth). Since the COVID-19 lockdown was lifted in 2021, many retail organizations have seize the opportunity to address the access to healthcare challenge by entering the healthcare delivery space. Most have mimicked the CVS MinuteClinic model with virtual care as an added feature, but there are other “flavors” such as:
Best Buy Health entering the remote patient monitoring space by acquiring Current Health
Dollar General turning itself into a “healthcare destination” by offering health and wellness products
Albertsons Companies and Kroger Health launching their own versions of digital health platforms
Amazon, CVS Health, and Walgreens going a step further and acquiring primary care companies One Medical, Oak Street Health, and VillageMD, respectively
These retail organizations have quickly realized that achieving success in the healthcare industry is a formidable task. In hindsight, these initiatives may have seemed like no-brainers. There is a clear market need, and the foot traffic of potential consumers already exists, with many of them currently filling prescriptions and purchasing over-the-counter medications and home medical equipment from pharmacies at these retail outlets.
However, none of these organizations considered the nuances in healthcare and invested sufficiently in market research to validate product-market fit before launching. If they had, they would have uncovered some of the critical challenges in earning a profit from this business model, such as:
Where, when, and why do various population segments receive healthcare?
How does their current brand impact their reputation as a healthcare provider?
How limited healthcare services will negatively impact customer retention?
How limited capacity hinders achieving the critical mass necessary to break even?
Many large retail chains saw healthcare services as a potential cash cow that could increase their store footfall and average customer spending. However, they failed to correctly calculate how costly it is to run a healthcare clinic in the U.S.
As a side note, hospital emergency departments (ED) are about to get crowded again.
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