After five years of operation, Walmart (NYSE: WMT) has decided to close its health centers and virtual care program.
The retail giant determined that Walmart Health, which included a variety of behavioral health programs, did not have a “sustainable business model for us to continue.”
The news could signal more considerable challenges ahead for retailers who have entered the health care market.
“Walmart is known for being the most efficient, the most scaled [retailer],” Corbin Petro, founder of Eleanor Health, health care advisor and board member, told Behavioral Health Business. “If anyone can do something profitably based solely on scale, it’s Walmart. They can figure it out. And the fact that they haven’t is really alarming. If they can’t figure it out, who can?”
Several retailers, including Walgreens (NASDAQ: WBA) and CVS (NYSE: CVS), have also opened health care programs at brick-and-mortar locations. But Walgreens has also struggled with its health care provider offering, recently closing 160 of its primary care provider VillageMD’s clinics.
Petro noted that organizations with a payer component, such as CVS, have had more success sustaining primary and behavioral health care efforts.
“When you think about innovation in behavioral and primary care, is the end zone where Aetna, Cigna, and Humana are the only ones going to see an acquisition as something that’s accretive? Part of that is probably because they control both sides. …They can lose money on those services but make it up because they drive volume to a low-cost service area. Maybe they lose a little bit of margin there, but then they make it up because they’re going to this low-cost surface area instead of a higher-cost one.”
Walmart Health offered medical, dental and behavioral health care to individuals aged 6 and up.
Patients were able to tap into Walmart Health services to access licensed and trained clinicians or psychiatrists in select locations. The services include counseling for depression, anxiety, stress, grief, relationship issues, alcohol use, ADHD and other conditions.
Walmart Health Virtual Care offered clients access to a psychiatrist or psychiatric nurse practitioner within 72 hours. Patients could virtually talk to a provider and develop a treatment plan that could include talk therapy, medication, and other psychosocial interventions.
One of Walmart Health’s core tenants was price transparency. The retailer listed prices on billboards at Walmart Health centers. In 2020, Walmart rolled out a program that allowed patients to speak with a behavioral health counselor for $1 a minute.
Price transparency may have appealed to patients without insurance, particularly those living in non-Medicaid expansion states, according to Petro.
“This is a way for patients to get some of the needed services in a really price transparent way and then go into Walmart and spend money,” she said.
Meanwhile, this commercial approach was a way for Walmart to build up its health care capabilities and broker value-based agreements with health plans, she said. This would have allowed Walmart to have a cash-pay and value-based care model.
“The problem with that approach is if you post prices on the wall that are lower than you’re getting reimbursed by a health plan, which technically you can’t do in Medicaid,… that then makes it hard for you to go from super low cash pay to insurance reimbursable services.”
Still, Walmart was able to dip into value-based care. In 2022, Walmart Health announced a partnership with UnitedHealth Group (NYSE: UNH) to roll out a value-based care model at 15 Walmart locations in January 2023. The partnership, slated to last 10 years, focused on serving seniors on Medicare Advantage (MA) plans.
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