- Surprise: COVID-19 test operations in Walmart parking lots may give Walmart’s healthcare ambitions an awareness boost.
- Data: Walmart’s primary care ambitions in its infancy: Only a dozen new jobs open every month compared to hundreds for its pharmacy and optometry operations.
- Opportunity: Everyday low prices for checkups and convenient locations may be a winning formula, especially for millions of Americans who refrain from accessing healthcare due to the costs, despite having insurance. Not to mention the millions who do not have insurance at all.
- Risks: Future growth may be impeded by the continued shortage of physicians, and the inability of nurse practitioners to operate without physician supervision in 28 states.
- Competition: Won’t be easy to beat. CVS plans to open 1,500 larger health clinics in addition to its existing 1,000+ MinuteClinics. Silicon Valley star One Medical offers a user-friendly app, telemedicine and Prime-like convenience.
- Outlook: Walmart will very likely become a major force in primary care services and threaten CVS’s margins considering our aging population. Its chances will greatly improve if it can also offer user-friendly telemedicine services, and more importantly, attract talent while facing a chronic shortage of primary care practitioners.
How serious is Walmart in growing primary care health services?
Walmart’s number of new job postings in primary care have ranged from 0 to 14 over the past months, compared to hundreds of new positions in optometry and pharmacy, its more established healthcare services.
It’s clear Walmart is still experimenting with primary care. Its latest initiative focuses on dedicated Health Centers away from store locations: Two have opened in Georgia with Bloomberg reporting a third to open later this year. Walmart has previously offered primary care in Care Clinics embedded in its stores.
There are 31 open job postings in primary care as of March 14th, 2020. Positions are found across GA, TX, AR, and FL. Florida and Texas are also where Walmart is heavily recruiting for pharmacy and optometry positions.
Chronic diseases fuel demand
The four southern states where Walmart has setup clinics have a populations with higher prevalence of chronic diseases requiring frequent primary care, such as for diabetes and arthritis. Other clinics are also targeting similar demographics. Thus is the case at CVS MinuteClinic expansion: “Dr. Alan Lotvin, CVS’ chief transformation officer, said CVS will initially target areas with the highest rates of chronic disease among Aetna members.”
FL, TX and GA, three of the four states where Walmart is recruiting primary care practitioners, are also projected to have the most severe shortages of Primary Care Physicians in the U.S. according to a report by the U.S. Department of Health and Human Services (HHS):
Projected Primary Care Physician Supply and Demand by State, 2025:
Source: U.S. Department of Health and Human Services
Nurses to lead the charge
There will likely be no shortage of demand for primary care where Walmart Health is setting up shop. The retail giant will however face the same challenges as any other healthcare provider: A shortage of primary care physicians. The American Association of Medical Colleges projects a shortage of 21,100 to 55,200 primary care physicians by 2032.
How will Walmart and other clinics face this challenge? With the help of primary care nurse practitioners (NP). There are 28,700 new NPs every year according to stats by the American Association of Nurse Practitioners, 69% of whom will specialize in primary care. This contrasts with only 841 new primary care physicians every year. HHS even projects the supply of NPs to overshadow demand by 2025 across the U.S.
It’s therefore no surprise that of the 31 positions Walmart has posted, 12 are for NPs and only 3 are for Physicians.
Next: From Experiment to Scale
NPs, however, cannot operate independently in 28 states, including all four in which Walmart operates clinics. They have to work under the supervision of a physician.
It wouldn’t be surprising to find Walmart lobbying for greater independence for NPs in the upcoming years. Allowing NPs to work without physician supervision is not only necessary for growth, it makes great business sense: Primary care NPs make $118K a year versus $214K for primary care physicians (Source: Zip Recruiter). That’s almost half the cost.
In turn, offering cheaper and more convenient health services will be a great competitive advantage in Walmart’s battle to further its retail domination. In a study published by the National Institute of Health, 24.1% of respondents reported high cost as a reason they avoid medical care, and another 15.6% reported time constraints. Walmart has the opportunity to solve both issues: Offer everyday low price healthcare while you conveniently pick up groceries. It could make a difference in the lives of millions of uninsured Americans, 45% of whom don’t have insurance because cost is too high. Even among the insured population, Walmart could help turn around the decline in primary care visits due to rising out-of-pocket costs.
The cherry on top may be that offering primary care services will also increase business for its pharmacies, conveniently located next door. 75% of primary care visits result in a drug prescription according to a paper by the NIH. And vice-versa, customers who discover they may need to see a primary care practitioner while picking up their medicine will likely visit its clinics.
COVID-19: Opportunity to Associate Walmart as a Healthcare Brand
Most people don’t yet associate Walmart with healthcare services, but it may be in luck: As part of coordinated COVID-19 testing operations, consumers will have the ability to get tested at Walmart drive-thru locations and perhaps pick up their groceries at the same time. This may very well give the retailer’s healthcare ambitions an unexpected marketing boost. Connect Healthcare to its brand. But so far, only a handful of drive-thru locations are open. It’d be a shame if Walmart fails to capitalize on the opportunity.
Fierce Competition from The Incumbent and a Startup
CVS is the incumbent in the space of retail primary care with over a thousand MinuteClinics across the country, and plans to open 1,500 bigger HealthHub clinics by 2021. It won’t be easy to dethrone. Especially as they’ve partnered with Target, another retail giant, to offer health services at convenient locations. CVS is also merging with Aetna, a top health insurer to further vertically integrate services, and potentially pass on lower costs to consumers.
But plenty of opportunities exist to disrupt, and bring innovation to primary care.
For one, existing Electronic Health Record (EHR) systems are broken: “For all the effort that goes into data gathering and entering, too often the data is ignored.” It’s a failure in design. EHRs fail to do what practitioners need them to do: Share information. Partly because EHR software are antiquated tools we haven’t re-designed for decades. Epic, the leading EHR software provider, still relies on programming languages developed in the 1960s.
Google has tried to break into the EHR field, but whether the public trust their health records to be handled by the world’s leading targeted advertiser remains to be seen. News media certainly have not given Google an easy time and have reported on many instances of Google “secretly” accessing patient records. Google maintains that health data is kept separate from other data.
One Silicon Valley startup is making headway in bringing 21st century tech and Amazon Prime type convenience to primary care: One Medical. It uses an in-house built EHR for its staff and offers patients a sleek 5-star app to manage their primary care appointments, refill meds and chat with practitioners via telemedicine. It also has a growing partner network of hospitals and health systems where users / patients can seek care with an ever larger roster of specialists – a great advantage over other clinics without as many partners. Partner hospitals will also gain access to One Medical’s patient records and vice-versa. The future seems promising. After hundreds of millions in funding from VCs (including Google), One Medical went public earlier this year.
Considering the surging demand for primary care among our aging population, Walmart has a real chance at threatening CVS’s margins. To win, it’ll need to fight hard at offering:
- Convenient Lab Tests: CVS clinics don’t yet offer comprehensive lab tests, which is inconvenient for those requiring one. Walmart on the other hand has partnered with Quest Diagnostics (one of the nation’s largest lab test providers) to offer lab tests on-location.
- Telemedicine: Many patients who’ve experienced telemedicine have enjoyed the convenience and decreased cost of care. In the age of Uber and Grubhub, having virtual access to primary care practitioners on a smartphone may prove essential, not a nice-to-have. One Medical has a lead here.
- Meaningful Work: A Shortage of physicians and nurses means primary care practitioners will have many choices of employment. Salary, benefits, and leadership ability will impact whether a NP will join Walmart, CVS or One Medical. According to Glassdoor, CVS and One Medical are on par as to quality of work, but reviewers approve of One Medical’s CEO much more than CVS’s CEO (~90% vs. ~50% approval respectively). Walmart clinics don’t have enough Glassdoor reviews data to compare, but as a retailer overall, they look a lot more like CVS.
It will be fascinating to observe who Walmart identifies as its primary competitor: CVS or One Medical? It will certainly influence how it aims to disrupt primary care.
It’s our opinion Walmart stands a great chance at becoming a major primary care provider due to both convenient locations and everyday low prices.