Healthcare Technology Featured Article

January 21, 2013

Walmart Continues Foray into Healthcare Business with Clinics and Health Insurance Sales Plans

As far as healthcare goes, Walmart is not necessarily the first company that comes to mind. However, the massive retailer is looking to change this by expanding its healthcare unit from just pharmacies and health product sales to now selling health insurance to small employers.

In addition, Walmart is looking to grow its short supply of in-store healthcare clinics so eventually there will be one in each store all across the country.

Walmart already makes a significant portion of its revenue via healthcare, so the expansion makes economic sense; with healthcare accounting for 17.9 percent of the U.S. economy in 2011, amounting to approximately $2.7 trillion, Walmart is smart to pursue this line of business further.

In fact, it may come as a surprise to some that Walmart is considered the fourth-largest pharmacy in the United States. Now the retailer is looking to follow in the footsteps of some of the other leading pharmacies and add a health insurance exchange feature.

The new offering would essentially work as a marketplace optimized for small business.

“It would allow small employers to piggyback Walmart,” said Marcus Osborne, Walmart’s vice president of health and wellness. “We haven’t got it all figured out, but it’s one of the things we’re looking at.”

In 2011 the idea of Walmart as a pharmacy was somewhat hard to swallow, especially with the amount of initial denial coming from the company.

Eventually the idea began to make sense, however, as Dr. Mark Fendrick, a professor of internal medicine and health management policy at the University of Michigan explained in an interview from 2011-- “For those in areas of the country where there are not enough primary care providers, proximity to a retail store like Walmart should offer opportunities to expand access.”

At first the reasoning behind the addition of health care services to Walmart was simply to boost customers and sales.

“Even if the clinic isn’t a major profit center, it’ll bring in people who are their prime demographic target: families. Once they’re there, they’ll find a countless array of other things to buy, so if you think of it as a way to attract customers, my guess is it’ll be very successful,” said Robert Field, a professor of law, health management and policy at Drexel University, also in a 2011 interview.

Two years later, however, the numbers have proven that Walmart can certainly carve itself a place in the healthcare industry, and in fact the division is a major profit draw for the company.

If all goes according to plan, Walmart’s health clinics will be able to offer full primary care services in five to seven years. The company is planning initially to focus on rural and urban areas with a lack of medical treatment options, as stated, but has plans to expand past these regions in the future.

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