Walmart May Throw Hat in the HC Ring

Posted on November 11, 2011

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According to NPR and Kaiser Health News, Walmart has distributed an RFP seeking a healthcare partner with chronic care management expertise. It is believed the big box retailer wants to mobilize on a more aggressive care model than the in-store clinics that exist in their stores.

Interestingly, Walmart has come under fire for reducing healthcare benefits to its employees as a cost-savings measure. I have always felt Walmart’s size lends itself to being ‘self-insured’ through its own system, where it creates and owns a network of clinics to manage the health of its massive employee network. By brining care to its employees in the form of self-owned and managed clinics, it would reduce the otherwise burdensome premiums.  After all, Walmart has figured out chronic disease is a problem worth attacking. The problem is that, although sizable, its employee network is likely too spread out to benefit from such an arrangement.

What Walmart does for its own employees is irrelevant to the point I want to make:  there is money in the kind of healthcare Walmart is researching or Walmart would not be getting involved. Do they have a disruptive new business model under wraps?  Is there a way to impose their supply chain rigor to healthcare to extract savings and pass that on to consumers? Right now healthcare experts are cautiously watching Walmart’s moves to figure out what kind of effect it will have, if any, on the overall market.

If Walmart chooses to attack even part of the healthcare market (chronic diseases like hypertension, diabetes and heart disease are potentially low-hanging fruit), it will have some sort of impact. Walmart may not have healthcare expertise, which is why it seeks a business partner, but it has something far more valuable that no hospitals have:  a national network located among hundreds of population centers, with logistics and execution excellence to burn.

There are many potential hurdles still for Walmart, including time.  The current federal healthcare reform adoption deadline 0f 2014 is cited as a point by which most Americans will have healthcare insurance and likely associated themselves with a hospital, network or system by then. Anyone who wants to be in the healthcare market will need to act now or be more-or-less locked out by 2014, unless legislation is overturned of course.

Walmart has nothing to gain from a scare tactic or bluff on this; if there is substance to these partnership feelers, keep your eye out for innovation in healthcare delivery on a very large scale.

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