Through innovation and realignment, Walmart targets frayed health system
The retail behemoth that is Wal-Mart Stores Inc. is fixing its sights on a new target: the nation’s overstretched and overly costly primary healthcare system. The result could be a major disruption of that system and the acceleration of health reform in America.
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Having already conquered general merchandise and food retailing, Walmart has now embarked on a mission to transform frontline health care. The goal: to stitch together all the facets of its health-and-wellness capabilities and apply its massive scale and consumer drawing power to become America’s chief destination, not only for retail health products and services, but also for lower-cost primary care.
“Our health-and-wellness experts are leading the way for the future of health care in our stores and beyond,” the company declared confidently in a recent report.
That vision wasn’t just hatched in a modern-day meeting of company leaders in Bentonville, Ark. Founder Sam Walton sowed the seeds for Walmart’s campaign to reinvent primary health care in the United States in the early 1990s at one of the last of the Saturday morning meetings with executives and department heads he was able to attend.
Dying of cancer and undergoing intensive treatments, “Mr. Sam” spoke at that meeting about the difficulties that even the wealthiest Americans faced in trying to navigate an expensive, opaque and difficult-to-access healthcare system. How tough must it be for lower-and middle-income Americans without a lot of resources, he wondered, and what could a company like Walmart do to improve patient access, lower costs and bring pricing transparency to health care?
Plenty, it turns out. Captured on video, Walton’s urgent appeal still serves to motivate company managers with its focus on Walmart’s mission as a low-cost provider of goods and services. “We view that as a defining moment,” said Paul Beahm, Walmart SVP health-and-wellness operations. “We sometimes show that as a reminder of what he challenged us with: How do you help save people money?”
Leveraging its unrivaled scale, massive purchasing power, nationwide market penetration and community outreach, the nation’s premier retailer has already accomplished some big breakthroughs. In the process, Walmart has already begun to alter the dynamics of U.S. health delivery:
The company permanently upended the lower end of the pharmaceutical pricing scale with its 2006 introduction of a $4 generic price point on hundreds of widely used medications, spurring a market-wide shift in multisource medications to commodity pricing.
As the nation’s dominant food retailer — its stores sell more groceries each week than its top three supermarket rivals combined — Walmart has saved U.S. families billions of dollars in lower prices for fruits and vegetables. More recently, it’s embarked on a nationwide campaign to encourage Americans to eat healthier by offering more nourishing food choices and more information about nutritional options.
Walmart’s more than 4,500 U.S. pharmacies already provide lower-cost prescriptions and a growing menu of clinical pharmacy and preventive-care services to millions of Americans, and its Orlando, Fla.-based specialty pharmacy division is licensed to serve chronically and seriously ill patients in all 50 states through “Centers of Excellence” specialized pharmacy providers.
With some 3,000 Vision Centers in its stores throughout the United States, Walmart is the nation’s largest supplier of vision care services and the largest manufacturer of corrective lenses.
Through its “Healthcare Begins Here” program and a partnership with DirectHealth.com, Walmart offers advice to shoppers on health plan options, with pharmacy-based licensed sales agents providing guidance on insurance plans and pharmacy benefits.
Now, the nation’s largest retailer is setting its sights on a grander and more comprehensive vision: to become nothing less than the nation’s go-to resource for primary, frontline health care and disease prevention. “We want to be Americans’ one-stop shop for their health and wellness needs,” said Labeed Diab, president of health-and-wellness for Walmart U.S. The goal, he added, is to position the company as “the number one provider of affordable healthcare in the country.”
The point of the spear for that new charge may be the dramatic reinvention of Walmart’s retail clinic business. The company opened 17 of the new Walmart Care Clinics last year, positioning them as a full-service, low-cost alternative to a visit with a primary care doctor for urgent and preventive care, as well as management of chronic diseases like diabetes and hypertension. By radically capping costs at just $40 per customer visit for any of the expanded services its nurse practitioners offer and its supervising physicians oversee, the new clinic concept, if expanded nationwide as expected, could help upend the current primary care model in many American communities.
Walmart’s pursuit of healthcare innovation is also changing the way it goes to market. Behind the scenes, the company is knocking down internal management silos and rethinking relationships among departmental managers and store categories in a top-to-bottom campaign to align all the components that contribute to its customers’ health and wellness.
The building blocks are already there. According to a company spokesperson, “In addition to over-the-counter medicines, prescriptions, blood pressure monitors and advice on health insurance, we have the majority of products customers actually need to live a healthy life, such as fresh produce, apparel, exercise equipment and wearable technology.”
In a real sense, Walmart is pursuing its own version of healthcare reform, regardless of what happens in either Congress or the Obama administration to either slow or speed up the pace of reform. “We recognize that our customers’ needs are changing, and we feel we are in a unique position to provide innovative solutions to help them better manage their health,” Diab said.
To that end, the chain is looking to leverage its massive purchasing and negotiating power with vendors and pharmacy benefit managers — which gives it the ability to lower prices on goods and healthcare services. “We are constantly looking for ways to leverage our size and scale to not only provide our customers with access to affordable products and services, but also drive down costs for employers and managed care companies,” Diab said. That means “working with the right companies, from insurance companies to medical providers, to bring our customers the lowest prices on the products and services they need to stay healthy.”
Walmart is also doing more to leverage its astonishing drawing power with American consumers.
“When you look at the box, whether it’s a small or large format, we have 140 million Americans who walk through our doors every single week,” Diab told DSN.
“With the offering and expansion of the assortment, we’re going to be able to capitalize on the traffic that [our pharmacy competitors] don’t have,” he added. “We know we have some work to do to get there.” It will take “a broadeni