The closure of Walmart Health highlights the challenges facing consumer healthcare

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Walmart announced last month that it would close its healthcare operations, specifically by closing all 51 health centers across the country in addition to virtual healthcare. The press release discussed how the company, although it believed it had made a significant impact during its time in healthcare, ultimately ‚Äúdetermined that there is no sustainable business model for [Walmart] Get on.”

This news was extremely disheartening to the broader healthcare community. Walmart Health centers launched in 2019 as a way to provide affordable and convenient access to care to millions of patients across the country. The most celebrated aspect of the launch was that Walmart would benefit from decades of experience in perfecting customer service and consumer reach. Industry experts hoped that by bringing these lessons to healthcare, a field known for poor customer engagement, Walmart could actually have a positive impact on access to care. However, the company experienced firsthand what virtually every healthcare organization has experienced over the past two decades: Conquering healthcare is no easy task.

While disappointing, news of Walmart Health’s closure wasn’t exactly surprising given the number of organizations that have experienced some similar challenges in recent years as they tackle various aspects of the healthcare value chain. In the context of telehealth services, Amazon shook up the news cycles when it announced in 2022 that it would be discontinuing its Care initiative. Neil Lindsay, now SVP of Health Services at Amazon, declared that “While our enrolled members have enjoyed many aspects of Amazon Care, it is not a sufficiently complete offering for the large enterprise customers we target and would not work in the long term.”

Another much-discussed example was Babylon Health, an integrated primary care and telehealth technology company. The company went public in 2021 with an initial public offering valued at nearly $4.2 billion and was touted as one of the most successful healthcare technology startups. However, just two years later, in 2023, it sought bankruptcy after suffering hundreds of millions of dollars in losses and failing to determine a viable future for its business model.

There are many more such examples, ranging from phasing out telehealth services to consolidating corporate entities, that are indicative of the broader state of healthcare and the challenges faced by new entrants to the market. One major reason simply has to do with health care finances. A key report was released last year and described how inflation was severely affecting hospital margins; As described, the healthcare system’s margins turned out to be ‚Äúrazor thin, near zero levels,‚ÄĚ which weakened active growth and expansion efforts. Another recent one report indicates that numerous factors have caused significant financial instability for healthcare organizations, including supply chain constraints, labor shortages, and overall increases in healthcare costs.

An even more tumultuous aspect of this battle is that while healthcare organizations face financial instability, consumers are bearing the brunt with rising costs and unaffordable medical costs. a study A study published earlier this year found that nearly 14 million people in the U.S. owe more than $1,000 in medical debt, while nearly 3 million owe more than $10,000. Collectively, people in the US have nearly $220 billion in outstanding medical debt. Patients are undoubtedly frustrated by the fact that many often have to choose between meeting their healthcare needs and paying their living expenses.

Stability in healthcare is therefore not easy, both from the perspective of viability and from the perspective of public perception. This is why companies like Walmart, despite their incredible community reach and deep retail roots, simply choose not to pursue this industry. This pattern of consolidation and cost cutting in healthcare is just beginning; Undoubtedly and unfortunately, given the economic headwinds and rising cost pressures, more will happen in the next decade.

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