Three Strikes and Walmart’s Out?
Walmart has embarked upon three iterations of its retail clinic model over the past 10-12 years. Given that Walmart has over 5,300 U.S. stores, and none of these iterations has attained more than 100 or so locations, the conclusion is it’s not consumer behavior to seek urgent care in Walmart.
Wal-Mart is the world’s largest and most successful retailer. So why haven’t they been able to duplicate that success in healthcare? Find out next, on Just Checking In.
Good evening! This is Alan Ayers and I am Just Checking In from Rockford, IL. So if you look at Wal-Mart in the United States, it is a retail powerhouse. They operate over 5,300 U.S. stores and a busy Wal-Mart Supercenter will see as many as 10,000 consumers in one single day. So about 10 or 12 years ago, when Wal-Mart announced that they would be opening clinics in their stores, the news was really quite revolutionary. While this first iteration of clinics in Wal-Mart entailed third-party, independent operators, effectively leasing space in Wal-Mart, with Wal-Mart reaping the benefits of OTC and pharmaceutical sales that would be generated from these clinics. Well, after reaching 100 or so clinic locations, within two years when the initial leases started to expire, these independent operators closed. And the reason why is that the independent operator had to make money at the point of service. They had to be profitable in the Wal-Mart clinic and these clinics never really achieved profitable volume. Meanwhile, all of the downstream – the sale of the $18 Robitussin, or the $20 Mucinex, or the prescriptions – was all going to Wal-Mart, benefitting Wal-Mart, not the independent clinic provider.
So, after this first iteration of clinics in Wal-Mart failed, Wal-Mart started to look around and ask, “Who can operate a clinic at a loss in Wal-Mart, but still provide Wal-Mart with the downstream OTC and pharmaceutical sales?” So Wal-Mart turned to hospitals and health systems. Hospitals and health systems are notorious for operating money-losing operations where they realize that they can make money elsewhere in the form of downstream revenue. So, in the case of a Wal-Mart clinic, the hospital system would build their brand. They would attract patients into the clinic who they would then refer to the hospitals affiliated primary care providers, specialists, and facilities. The Wal-Mart clinics operated by hospitals can also serve some Medicaid populations who may have been previously crowding the emergency room.
Well again, after a couple of years, the second iteration really got to no more than a 100-120 locations before they started to close. And again, the reason was that the volume just did not show up. In fact, I’m aware of a couple hospitals who wanted a retail location or wanted a walk-in location in an area, started in Wal-Mart and when the Wal-Mart lease expired, they actually moved out into the parking lot and opened a full service urgent care, which turned out to be the more appropriate operating model.
Well, Wal-Mart is not a company to give up, and so in their third iteration of healthcare, Wal-Mart would actually be the clinic owner and operator. So, if you look at a market like Dallas/Ft. Worth, in North Dallas, there are twenty or so (probably more than twenty) Wal-Mart Supercenters and a Wal-Mart Supercenter will employ 350-500 employees. So the very first clinic that Wal-Mart had opened in this third iteration, was located in Carrollton, TX. Within a 15-20 minute drive-time, Wal-Mart had about 10,000 employees. So by operating a clinic that would serve Wal-Mart employees, in effect, Wal-Mart had opened an employee near-site, or an on-site clinic that would also serve the general public with $40 cash-paid visits. Well, to this date, there are only sixteen clinics open in this third iteration of Wal-Mart clinics out of 5,300 Wal-Mart stores. I would say that the model has not been successful. To this date, the only insurances accepted in these centers is the Wal-Mart health plan, United Healthcare, and Medicare, which means that the payers really didn’t embrace the concept either.
So, if we look at this history of three iterations over a 10-12 year period, I believe the conclusion that we can reach is that Wal-Mart is not a significant threat to urgent care, but instead, because a clinic in Wal-Mart is so limited in services, that the opportunity where these clinics still exist today, would be as a referral source to urgent care. So any patient that goes into Wal-Mart seeking healthcare – if they need an x-ray maybe due to an ortho injury, or maybe due to rule out pneumonia – that’s a service that cannot be provided at these centers. They’re also limited in capabilities in terms of performing procedures, or serving certain payers like workers’ compensation, as well as limitations on the scope or the licensure of the NP or the PA working in the Wal-Mart clinic.
So, my advice with Wal-Mart clinics and any other retail clinic – including those in CVS and Walgreens – is that urgent care creates a relationship with the clinic, so that when a patient comes into the retail store and cannot be served, then that patient then gets referred to urgent care. Thus making the retail clinic not competition for urgent care, but rather a tremendous source of referrals.
If you have questions about urgent care, retail clinics, or anything else in the walk-in, on-demand healthcare space, we at Practice Velocity would be more than happy to assist you. And you can contact us using the information that appears on your screen. Once again, this is Alan Ayers Just Checking In from Rockford, IL.