Walmart has open two health care centers in Georgia and they plan on opening a third in the summer. Look Out.

In the past Walmart has focused on building massive Supercenters to break into the grocery sector. In fact this accounts for 56% of its $332 billion in U.S. sales in 2018, the most recent data available. However, Walmart has recently signaled that the health center expansion is a top growth initiatives for them. They have build two centers one in Calhoun,Ga and another in Dallas, Ga., they are the firsts in this experiment.

The nation’s health spending totals $3.6 trillion and Walmart intends to capitalize on the 150 million people coming through its 4,756 stores each week. It has already delivered about 4.4 million free health screenings over the past six years and can use this data as a window into ailments its shoppers grapple with, like diabetes. Walmart hasn’t said how many clinics it plans to build, but the move pits Walmart against rivals such as CVS Health Corp. and Inc.

Lets introduce you to health care, Walmart style.

This location is in Calhoun, Ga., a town of about 16,000 an hour north of Atlanta. Walmart “care hosts” take customers from the waiting area to one of 12 care rooms. Afterward, patients are steered to the in-store pharmacy, encouraged to visit the produce section for veggies, and even offered a complimentary Zumba class.

Visitors to the Calhoun Walmart can also get a $30 medical checkup or a $25 teeth cleaning, or talk about their anxieties with a counselor for $1 a minute. Other services are clearly listed on boards in the waiting room. Walk-ins are welcome, or appointments are booked online beforehand. No insurance required. It even offers lab tests on Sundays.

The centers are run by doctors, with plenty of exam rooms to support a steady stream of patients. Paperwork is minimal because most patients don't have or just don't use their insurance, and administrative functions such as scheduling and billing have been outsourced to a specialist called Zotec. (Walmart accepts insurance). In addition to medical, dental, and eye care, the centers also provide X-rays, hearing checks, and diagnostic lab tests for things like blood glucose and lipids.

“We have an opportunity to help the country and to build a stronger business,” Walmart Chief Executive Officer Doug McMillon told investors in December.

The clinics are having a positive effect on the uninsured. At the location in Dallas, an Atlanta suburb, it has been busy since opening in September and has drawn many uninsured patients even as far away as a 75-minute drive. “I knew it would be big because hey, this is Walmart,” Artis says. “But I didn’t know exactly what it was going to be.”

Sean Slovenski is currently Walmart’s president for U.S. health and wellness and oversees a $36 billion division that already fills upwards of 400 million prescriptions annually and operates 3,000 vision centers. He is pushing an upfront pricing model, a huge change from health care norms. “If you don’t know how much something is going to cost, that’s scary and intimidating,” says Alexandra Drane, a health-care entrepreneur who’s worked as a cashier at Walmart. “The first thing you see at Walmart Health is the price list.”

Walmart set those prices trying to reach the goal of offering services at half the cost of the normal health care system. They reached these prices by estimating the cost of common services, including copays and deductibles and then giving a big price cut. “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,” Slovenski says. “Our goal, just like in the stores, is to get the prices as low as we can.”

Slovenski won’t disclose how many patients have come through the Georgia centers, only saying that volume is “substantially higher than our expectations.” He says Walmart’s model lowers the cost of delivering service by about 40%, by reducing what he calls “all that administrative baloney.”

Dr. Janki Patel, who works in the Calhoun clinic, says she spends about 25% less time on paperwork than she did when she worked in rural hospitals around the Southeast. “I don’t feel rushed and can spend more time with patients,” she says. “Walmart is lifting that burden off of my shoulders.”

It’s also filling a void for many locals. In Dallas, a local nonprofit clinic staffed by volunteers is open only two days a week, from 8:30 a.m. to noon.

“The obvious retail implication of Walmart’s move is greater traffic to its stores,” says Simeon Gutman, an analyst at Morgan Stanley. Foot traffic is the lifeblood of any brick-and-mortar retailer.

“They have the ability to be one of the largest disruptive forces in health care by addressing some of health care’s major issues, including access to care in rural communities, price transparency, and even, to some extent, social determinants of health,” says Paul Schuhmacher, managing director of the health-care practice at AArete, a global management consulting firm. “We could be seeing as a norm people going into Walmart for their health care in a lot of communities in this country.”

Still, Walmart won’t become a health-care destination overnight, the third center will open this summer in Loganville, Ga.

About 11% of Americans polled by researcher CivicScience in September said they would “likely” visit a Walmart clinic. CVS plans to have 1,500 HealthHubs in place by the end of 2021 and can leverage its ownership of health insurer Aetna, which it bought in 2018, to funnel patients into those locations.

“It was clear from the get-go that this has to pay for itself,” Slovenski says. “It has to be a profitable business on its own.” He won’t say when that will happen. Gutman, the Morgan Stanley analyst, says “the potential impact on margins is unclear.”

“Everyone says, ‘Look out, Amazon is getting into health care,’ but it’s way more scary if Walmart really puts these pieces together,” says Chas Roades, co-founder of consultant Gist Healthcare. “Now they’re really getting serious about it.”

Read more here


Economics, Finance and Investing