Walmart in Healthcare: Round Two

Posted on February 1, 2013

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At the end of 2011, we heard Walmart express an interest in learning the healthcare market. Consider Walmart on training wheels in one of the most regulated, charged market environments in the free world.  Those outside healthcare probably thought ‘How quaint that the professed low-cost leader would show interest in its customers’ health.’  Those in healthcare hopefully doubled-down on strategy and tried to walk a mile in Walmart’s shoes:  what could they be up to?

Two weeks ago, we found out.  The Advisory Board reported Walmart intends to offer ‘full primary care services within five to seven years’.  Let’s pause a moment to allow the blood to return to the faces of hospitals and healthcare systems who continue to invest tens of millions of dollars to bolster their clinic networks over the past few years.  And for those who have yet to make a move…might it be too late?

Walmart is not a healthcare success slam-dunk.  Heck, nothing in healthcare is fait accompli.  The first concern that comes to mind is Walmart has no internal expertise in clinical care.  The second is that it has brand concerns to overcome with potential customers.  As a corollary, and strictly architecturally, it is not known for design quality or welcoming spaces.  We don’t know where or how just yet, but can Walmart create a place in which people trust their health?

After that, things start to tilt in Walmart’s favor.  What we do know is Walmart is an expert at logistics, low-cost delivery, pricing tactics, purchasing negotiation, has massive scale advantages, a gigantic daily clientele, generates billions of dollars in cash flow, and owns a lot of real estate.  Did I mention they are very competitive?

Business follows money, and there is a lot of money to be made in healthcare.  And honestly, those in healthcare are not that very good at keeping much of it, which is why Walmart thinks it can elbow its way in; it would not entertain this risk if there was not profit to be made.  If it was not clear before, healthcare is about to be disrupted by an innovative cadre of outsiders, big and small.

Consider the past hundred years a head start for the hospitals and healthcare systems already in business.  The clock is now ticking down from five years, when a new race begins.  As a consumer and architect for healthcare, I am very interested to see where this heads.

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