Image courtesy of Walmart
At the end of March, major news sources reported that retail giant Walmart was in early talks to acquire health insurer Humana. Walmart has attempted to succeed in the retail clinic and pharmacy markets for years, begging the question: would Walmart’s potential acquisition of Humana have an impact on the urgent care industry?
Practice Velocity experts weigh in on the potential implications for urgent care centers should Walmart and Humana strike a deal.
What We Know About a Potential Walmart/Humana Acquisition
Neither company has made an official announcement; the source of these reports has asked to remain anonymous, and both Walmart and Humana have declined to comment. According to The Wall Street Journal, the two companies have explored a variety of options, including
- a merger,
- a stronger partnership between the two companies and
- an acquisition.
It is currently unclear in which direction the companies will go. The news isn’t surprising, however, because Walmart and Humana already have a co-branded Medicare drug plan that offers consumers discounts on some prescription medications when they fill them at a Walmart or Sam’s Club. The relationship has allowed Walmart to steer patients to its pharmacies and has provided Humana a pool to sell its Medicare Advantage plans.
Walmart and Humana Fast Facts
Practice Velocity Experts Weigh In
While Walmart’s core consumer fits the demographics of a Medicare Advantage member – an aging, working class consumer with manageable health conditions such as diabetes, hypertension and COPD – that’s not the core demographic of an urgent care patient.
“Humana is mostly involved in administering Medicare plans, and because Medicare patients make up less than 10 percent of urgent care patients, this change is likely to have much more impact on primary care than urgent care,” says Dr. David Stern, CEO of Practice Velocity. “We expect that Humana will be much more interested in managing Medicare patients with complex problems. Typical urgent care visits for lacerations, colds and flu will likely not have much impact on Humana.”
From a billing standpoint, Monica Klosa, chief operating officer of PV Billing, doesn’t foresee any major issues that could negatively affect urgent care centers if Walmart and Humana strike a deal. “We would be more concerned about Humana offering lower reimbursement rates in light of a Walmart deal or possibly excluding an urgent care center from participation in its network, maybe due to a retail clinic they have in the area,” says Klosa.
Alan Ayers, Practice Velocity’s vice president of strategic initiatives, believes an acquisition would introduce “tremendous complexity” for Walmart’s Board of Directors. Before joining Practice Velocity, Ayers was a retail consultant for Accenture who took on Walmart projects and was later a vice president of Humana for five years.
“Retail and health insurance are radically different businesses,” says Ayers. “The risk is that retail is maturing, Walmart is maturing, and Walmart’s customer base is maturing. Taking the eye off the retail ‘golden goose’ could hurt Walmart, which is already struggling with competitive threats from the likes of Aldi and Amazon. Walmart’s strength is its global procurement and supply chain logistics that get the right goods to the right people across a massive retail footprint right when the consumer needs it. Health insurance, by contrast, is about identifying and managing risk, so the businesses’ capabilities are completely different. Past failures of global diversified conglomerates like ITT and GE indicate that businesses thrive best when they focus on one core competency.”
Ultimately, the experts at Practice Velocity say that, while a deal of this nature is fairly significant, primary care practices and retail clinics would feel the effects of this kind of deal much more than urgent care centers. Only time will tell whether these rumors will come to fruition.