By STEVE BRAWNER | Steve Brawner Communications, Inc.
If Walmart can’t make a buck operating a health care clinic, who can?
The world’s largest retailer announced Tuesday that it was throwing in the towel and shutting down its 51 Walmart Health centers across five states as well as its Walmart Health Virtual Care service.
In a news release announcing its decision, the company explained that “there is not a sustainable business model for us to continue.”
The news comes less than five years after the company announced in September 2019 that it was opening its first health center as part of “Our Goal of Becoming America’s Neighborhood Health Destination.” The first center in Dallas, Georgia, would provide primary care, lab work, and dental, optical, hearing and other services. A child could get an annual checkup for $20, while adults could get their teeth cleaned for $25.
The closure was doubly surprising because the company has been expanding its network until recently. As the Arkansas Democrat-Gazette reported, it had opened three clinics in Houston last month with others planned in the Dallas-Fort Worth region. Three clinics currently operate in Arkansas – in Rogers, Springdale, and Fort Smith.
Walmart will continue to operate nearly 4,600 pharmacies and more than 3,000 vision centers.
In the release, the company said of the closures, ”This is a difficult decision, and like others, the challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time.”
To which hospitals and health care clinics across America are saying, “We know!”
Let’s talk about those reimbursements. Health care providers serve three types of patients: those who have insurance; those who are covered through government programs like Medicare (for senior citizens) and Medicaid (the poor, people with disabilities and others); and uninsured patients. None of those three is an ideal situation for providers.
Insurance generally pays enough for health care providers to survive, but there’s a lot of back and forth requiring significant staff resources. Often the payment process takes a while to resolve itself.
Medicare and Medicaid, meanwhile, often do not cover the full costs of the services. Furthermore, providers and others in the state’s heath care community say the Medicare funding formula particularly shortchanges Arkansas. On the plus side, those programs tend to reimburse providers quickly.
Finally, uninsured patients often don’t (or can’t) pay for their care, forcing health care providers to eat the costs.
Walmart’s business model, of course, is not based on that kind of system. It makes its money at the point of sale at prices that are designed to get people back in its doors time and again.
Health care is an incredibly complex and challenging issue. There are many reasons why the United States spent 17.3% of its gross domestic product on health care in 2022 – $13,493 per person, according to the Centers for Medicare and Medicaid Services. That percentage is quite higher than the rest of the western world.
Walmart’s experience points to one of the challenges, which is that health care can’t exactly work like other parts of a free market economy.
If I shop for meat at Walmart or a grocery store, I might want steak but can only afford ground beef. That’s OK because ground beef serves the same purpose. (I think I prefer a hamburger over just about anything.) If someone can only afford hot dogs, at least they’re not going hungry.
But when I checked my wife into the hospital to give birth to our daughter in 2020, hot dog health care was unacceptable. It had to be steak – in fact, filet mignon. And who would not feel that way about their own wife and daughter?
How do we make the health care system work so that it’s affordable and fair? I don’t have a solution.
I was kind of hoping Walmart might.
Steve Brawner is a syndicated columnist published in 16 outlets in Arkansas. Email him at brawnersteve@mac.com. Follow him on X at @stevebrawner.
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