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Walmart Walks


Walmart announced on Tuesday “the difficult decision” to close its 51 Walmart Health Centers and telehealth program after determining “there is not a sustainable business model for us to continue.”  

It blamed low payments and the high costs of operating the clinics.

The announcement was a surprise, coming after the company said a year ago that it planned to add more than two dozen health centers this year, mostly in Dallas and Houston, and to expand into Phoenix and Kansas City.

The closure comes a year and a half after Walmart kicked off a partnership with UnitedHealth Group to manage care for Medicare Advantage patients.

Walmart had tried earlier to enter the on-site clinic business, contracting with several vendors to run them.  But that didn’t work out well either.  A New York company called CheckUps, for example, abruptly notified the company in 2008 it was closing its 23 clinics.  Others followed.

Undaunted, Walmart tried again five years ago to enter the space by managing its own centers. 

Walmart is not alone in its struggles:  Walgreens had paid more than $5 billion to acquire a majority stake in VillageMD in 2020 and was planning to add hundreds more primary care clinics to its stores. But in March, the company announced it was closing 140 of the clinics and plans to shutter 20 more to “boost profitability.” 

Walgreens lost nearly $6 billion in its second quarter 2024 report, mainly because of a drop in the value of its VillageMD clinic business.  But executives say the latest closures are only a “temporary retreat” and that remaining clinics will remain open.

What is the sustainable business model?  In 2006, Walmart launched its very successful $4 generic prescription drug program, driving competitors to follow suit. That’s what it does best—negotiate low prices in exchange for big volume.  That model clearly hasn’t worked for its clinics.

In the near future, expect Walmart to add more services through its pharmacies, from vaccines to lab tests. If pharmacies and vision centers are not impacted by this week’s announcement and will remain open. 

Health care is hard.  Walmart, Amazon, and many other giants have tried to create a business model for care delivery.  One thing Walmart’s experience shows—and something policymakers should recognize—is that health care is very individual and hard to scale.  Many players, offering products and services in which they have expertise, is the best path forward.  Also, if payment rates get pushed too low, facilities have no option but to close.

More to come…


Grace-Marie Turner founded the Galen Institute, a public policy research organization, in 1995 to promote an informed debate over free-market ideas for health reform.