With the majority of Americans living just a few miles from a Walmart, how might independent clinical laboratories compete?
Retail giant Walmart (NYSE:WMT) plans to install 4,000 primary care “supercenters” in stores by 2029 that will include clinical laboratory testing services. This is on top of the dozens of Walmart Health locations already in operation in Georgia, Florida, Arkansas, Illinois, and Texas.
Clinical laboratories already have growing competition in the healthcare marketplace from pharmacy chains CVS (NYSE:CVS), Walgreens (NASDAQ:WBA), and Rite Aid (NYSE:RAD) which have installed in-store healthcare clinics in their retail locations—many of which offer limited, but common, medical laboratory services—as well as from existing Walmart Health locations.
Now, Walmart is poised to become a much bigger healthcare player. According to MedCity News, Walmart is “looking beyond traditional retail clinics as it seeks to create ‘supercenters’ with comprehensive healthcare services.”
Presumably, this includes an expanded menu of clinical laboratory testing services—along with the EKGs, vision care, dental care, and more—that Walmart Health locations currently provide for children and adults.
And though Becker’s Hospital Review reported in March that Walmart’s “plan is in flux,” the major national retailer continues to disrupt healthcare in significant ways.
We reported that Walmart Health’s list of services included:
Primary care,
Dental,
Counseling,
Clinical laboratory testing,
X-rays,
Health screening,
Optometry,
Hearing,
Fitness and nutrition, and
Health insurance education and enrollment.
However, the new Walmart Healthcare supercenters differ from Walmart Health clinics and the clinics operated by Walmart’s retail competitors Target, CVS, Walgreens, and Rite Aid.
Those clinics are designed to draw customers into existing retail setting. Walmart has a different goal with its healthcare supercenter concept.
“There’s a big difference between offering healthcare services to drive more people to your store and offering healthcare services because you’re in the healthcare business,” said former President of Health and Wellness for Walmart, Sean Slovenski, during a panel hosted by the American Telemedicine Association. “We’re in healthcare,” he continued, “We’re not in retail healthcare. We’re recruiting physicians in all of these areas and bringing them in.”
Providing Transparency with Clear, Consistent Pricing
In response to consumer demand for transparency, Walmart is taking a different approach to charging patients for healthcare services. The cost of an appointment for primary care is $40 for an adult and $20 for a child. The patient can choose to bill insurance or not, and people without insurance can pay out-of-pocket.
Prices for individual services are equally transparent. Explaining why Walmart is becoming a player in the healthcare industry, Marcus Osborne, Senior Vice President Walmart Health, told Fierce Healthcare, “It’s issues of affordability. That people can’t afford the care they need for themselves and their families. It’s issues of access … That really is the business that we’ve been in. Walmart’s business has been about helping people afford the things they need, getting them in a more accessible, convenient way, and doing it in ways that are simple. Healthcare’s no different in that regard.”
According to STAT, some 35 million Americans were uninsured in 2020. Thus, the idea of transparent pricing and walk-in affordable care should appeal to a sizable market. Walmart is banking on that. Considering that 90% of Americans live within 10 miles of a Walmart, the potential success of the healthcare supercenters becomes clear, Becker’s Hospital Review noted.
Walmart’s Other Healthcare Moves
In addition to opening 20 Walmart Health Centers, and its plans for 4,000 healthcare supercenters, Walmart has made other moves that indicate its intention to disrupt the healthcare industry.
Walmart Insurance Services, for example, partnered with eight payers during the open enrollment period in 2020 to sell its Medicare products. Through a partnership with Clover Health, a Preferred Provider Organization (PPO), and a Health Maintenance Organization (HMO) with a Medicare contract, Walmart made its insurance plans available to 500,000 people in Georgia, Becker’s Hospital Review reported.
“We’re going to have a consumer revolution in retail for point of care,” John Sculley, former Apple CEO and current chairman at RxAdvance (now called nirvanaHealth), told CNBC. “Why? Because if the Walmart tests are successful, and I suspect they will be, people will be able to go in and get these kinds of health services at a lower cost than if they had health insurance.”
“A lot of the opportunity is just about bringing what we’re doing to more people. I think about Walmart Health and what we launched a little over a year ago in Georgia and the impact we’ve seen in the communities where it launched. I think one of the biggest things to do is how do we continue to find ways to make that model work so we can reach more people with it in more communities,” Marcus Osborne (above), Senior Vice President Walmart Health, told Fierce Healthcare. Walmart certainly has experience in disruption. The retailer upended the grocery industry from the moment it entered the market, and it was the first to offer $4 prescriptions, which disrupted long-standing retail relationships consumers had with their pharmacies. Clinical laboratories should realize that Walmart will likely make similar waves in the healthcare sector. (Photo copyright: Consumer Goods Forum.)
How Will Clinical Laboratories Compete?
Change is constant. Clinical laboratories that cannot adapt to changing market forces are ill-equipped to withstand the coming “consumer revolution.” However, labs that have already begun to plan for more direct-to-consumer interactions will be better positioned to adjust as changes come.
“My goal is that we have done the work on Walmart Health as a model, to really get it to work from a consumer perspective and get it to work in a way that it scales effectively, that we are able to reach more people,” Osborne told Fierce Healthcare.
Clinical laboratory leaders should understand that this trend is being driven by consumer demand for convenience, lower costs, and price transparency. Labs that don’t prepare to address those forces will be left behind as Walmart provides what consumers want.
In another example of giving consumers more direct access to medical laboratory tests, Walmart believes that convenience and lower prices can help it capture market share
Retail giants continue to add healthcare services—including medical laboratory testing—to their wares. It’s a trend that pressures hospital systems, clinical laboratories, pathology groups, and primary care providers to compete for customers. And, while in most instances competition is good, many local and rural healthcare providers cannot reduce their costs enough to be competitive and stay in business.
This is true at Walmart (NYSE:WMT), which recently opened its second “Health Center” in Georgia and announced prices for general healthcare services 30% to 50% below what medical providers typically charge, reported Modern Healthcare.
The services offered at the new Walmart Health Center in Calhoun, a suburb of Atlanta, include:
Primary care
Dental
Counseling
Clinical laboratory testing
X-rays
Health screening
Optometry
Hearing
Fitness and nutrition
Health insurance education and enrollment
A Walmart news release states, “This state-of-the-art facility provides quality, affordable and accessible healthcare for members of the Calhoun community so they can get the right care at the right time … in one facility at affordable, transparent pricing regardless of a patient’s insurance status.”
The fact that Walmart posts “Labs” on the Health Center’s outdoor sign may indicate the retail giant considers easy access to clinical laboratory testing a selling point that will draw customers.
“By offering clinical laboratory testing in support of primary care and urgent care, Walmart may be able to lower prices for lab tests in any market that it enters,” said Robert Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and President of The Dark Intelligence Group.
The sign above on the exterior of Walmart Health Centers lists the services offered. By advertising “Labs” Walmart is confirming that growing numbers of consumers want to order their own lab tests and that the availability of lab tests gives its medical clinic a competitive advantage. (Photo copyright: Modern Healthcare.)
Healthcare Transparency and Lower Prices
The 1,500 square-foot free-standing Walmart Health Centers offer more services than the in-store Care Clinics installed in other Walmarts throughout Georgia, South Carolina, and Texas. For its healthcare services, Walmart established partnerships with “on-the-ground” health providers to offer affordable services.
“We have taken advantage of every lever that we can to bring the price of doing all of this down more than any hospital or group practice could humanly do. Our goal, just like in the stores, is to get the prices as low as we can,” Sean Slovenski, Senior Vice President and President of Walmart Health and Wellness, told Bloomberg Businessweek.
Some of the clinical laboratory prices prominently posted in the building and noted on the Health Center online price list include:
Meanwhile, the average cost to visit a primary care doctor is $106, according to Health Care Cost Institute data cited by Business Insider, which noted that Walmart’s rates “could be a steep mountain for traditional providers to climb.”
However, Rob Schreiner, Executive Vice President of WellStar Health System in Northern Georgia told Modern Healthcare that “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.”
Convenient Access to Quality Healthcare Services a Major Draw
At a freestanding Walmart Health Center, people can park near the entrance and walk a few steps to the entrance, rather than traversing aisles to a Care Clinic inside a Walmart Supercenter. And for many customers, finding a Walmart Health Center may not be as complicated or stressful as visiting doctors’ offices.
That seems to be Walmart’s goal—not simply using the Health Centers to increase traffic in its stores, Slovenski said. “We are trying to solve problems for our customers. We already have the volume,” he told Forbes. “We have the locations and the right people. We are creating a supercenter for basic healthcare services.”
Walmart’s arrangement with local healthcare providers differs from traditional primary care clinics staffed by doctors who are practice owners, or who are employed by nearby hospitals and health systems.
“The whole design of the clinic is curious to most of the doctors here [in Dallas, Ga.],” Jeffrey Tharp, MD, Chief Medicine Division Officer, WellStar Medical Group, told Modern Healthcare. “We are advocating integration into our network, for instance with patients who need a cardiologist coming from Walmart to WellStar.”
Clinical laboratory leaders may want to explore partnerships with Walmart and other retailers that are developing healthcare centers to deliver primary care services in places where masses of people shop for everyday items. Especially given that these big-box retailers remain open during healthcare crises like the COVID-19 pandemic.
