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January 31, 2020 03:35 PM

Walmart tests leap into healthcare business by opening second clinic

Harris Meyer
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    Walmart

    This week's opening of Walmart's second comprehensive primary care center in Georgia may signal a looming competitive threat to health systems and primary care providers, potentially creating new pressure to reduce prices.

    The giant retailer launched its latest Walmart Health center in Calhoun, a western suburb of Atlanta, offering primary and urgent care, labs, x-ray and diagnostics, mental health counseling, dental, optical and hearing services under one roof.

    Walmart says it will offer prices that are 30% to 50% lower than what people currently are paying at doctors' and dentists' offices. Walmart's price list says a primary care physician office visit costs $40, with annual checkups costing $30 for adults and $20 for children. Mental health counseling sessions cost $45, dental exams including X-rays start at $25, and routine vision exams cost $45.

    These clinics are the opening shots in what Walmart executives say may be a larger leap into the healthcare delivery business, with a focus on low, transparent pricing for key healthcare services. The freestanding centers, sized at about 1,500 square feet and located adjacent to Walmart stories, go well beyond the in-store clinics previously offered by Walmart, Walgreens, and CVS.

    "We think we can make an impactful difference in affordability, convenience, and, most importantly, accessibility for the Calhoun community," said Sean Slovenski, president of Walmart U.S. Health and Wellness, in a news release. "Now we're focused on a solution to provide affordable, integrated care that our customers want and deserve.

    Walmart

    The first freestanding Walmart Health center opened in Dallas, Georgia—about 30 miles northwest of Atlanta—in September. Walmart says appointments have been booked to capacity.

    "If this really gets momentum, legacy healthcare organizations would need to match these prices, and in some places, that will be extremely difficult," said Kenneth Kaufman, managing director of healthcare consulting firm KaufmanHall.

    Local providers in the Atlanta exurbs recognize that Walmart's new clinics may fill a need for more accessible primary care. They don't yet see Walmart as a threat.

    Dr. Rob Schreiner, executive vice president of WellStar Health System, which serves northern Georgia, said Walmart will offer a cheaper alternative for working-class families who may not have health insurance and may not have an established relationship with a primary care provider. It will be an attractive option, he added, because Walmart is a trusted brand.

    Will the competition prompt primary care physicians to lower their prices?

    "Almost certainly no," he predicted. "Rightly or wrongly, most local providers will believe they are providing a different, more comprehensive service with a longitudinal relationship and more attention to preventive care. Whether a mom and dad in a working-class family values that longitudinal, comprehensive care, they'll make that decision."

    Others are concerned about whether and how Walmart will integrate its services with traditional providers to enhance continuity of care.

    "The whole design of the clinic is curious to most of the doctors here," said Dr. Jeffrey Tharp, chief of WellStar's medicine service line who practices three miles from Walmart's clinic in Dallas, Georgia. "We are advocating integration into our network, for instance with patients who need a cardiologist coming from Walmart to WellStar,"

    Despite such mixed reactions, Walmart executives are bullish on their healthcare experiment. In November, CEO Doug McMillon said the company was "pleased with what we're seeing so far at (the) first location… I know we'll continue to learn as we open several more and design the ideal model to provide customers with better and unique solutions for their everyday healthcare needs."

    Walmart will be competing in this space with many other primary care providers that offer comprehensive, one-stop-shopping centers, including health systems and specialized primary care operators like One Medical, which went public Friday in an intial offering that raised $245 million. It's also competing with walk-in clinics inside CVS and Walgreens stores, though Walgreens is scaling back this business.

    Walmart's advantage, however, is that nearly 140 million people visit its stores weekly, and its stores are spread widely throughout rural, suburban, and exurban America.

    "Access in rural communities isn't great," Kaufman said. "It will be very interesting to see where Walmart puts these clinics."

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