AYESHA RASCOE, HOST:
Walmart is getting out of the primary care business. The retail giant said Tuesday it's closing 51 clinics and shutting down its telehealth service, just five years after jumping into the industry and weeks after saying it was expanding into new markets. Bruce Japsen reports on health care for Forbes and joins us now. Welcome to the program.
BRUCE JAPSEN: Hey, thanks for having me, Ayesha.
RASCOE: So, when people walk into a Walmart, they'll usually find a pharmacy, maybe vision care, but these clinics that we're talking about were much more than that, right?
JAPSEN: Yes, they started about five years ago. And Walmart - a lot of people don't realize this, but Walmart has done some innovative things in health care over the years. Years ago, they had this market-moving move on $4 prescriptions. So they thought, you know what? We're - in the markets that we operate, which were at one time rural, we're going to expand and get into the health care business and start retail clinics. So the first clinic they opened in Dallas, Ga., which Dallas, Ga., maybe 20 years ago, was rural. Now it's a booming suburban market. They opened a 10,000-square-foot health center. It would have primary care doctors. It would have X-rays. It would have mental health support - all sorts of services, and it went well enough. They ended up in five states, and then just a month ago, they told me, yeah, we're expanding, you know, we're going. And then they reached out and said that they were getting out of it.
RASCOE: Yeah, well, so, what - 'cause, you know, Walmart is obviously legendary for maximizing its profit margins and keeping its eyes on the bottom line. So is this simply a question of profitability? Like, why did they go from announcing expansions to now saying they're going to shutter the whole thing?
JAPSEN: Well, that's a great question, because they basically said this - after the pandemic, we have a very tight labor market. In healthcare, you've had a lot of burnout and hospitals have had to pay a lot of money to attract and retain primary care providers. And Walmart basically said, for right now, they don't see a sustainable business model because health care costs are going up. In some cases, reimbursement is not keeping up. They're trying to go into the primary care business when they're competing against big hospitals and health care systems. And meanwhile, you know, Amazon, Walgreen, CVS - they're all going into - trying to go into this primary care market.
RASCOE: So where does this leave the communities where Walmart opened these clinics?
JAPSEN: Yeah, that's a great question, because, Ayesha, people like these retail clinics. You know, your doctor isn't off office - isn't often open on the weekends or after 5 or 6 'o clock. These clinics that Walmart is closing - and of course, Walgreens is closing and their partner Village MD are closing clinics as well - people love them because you can go and you can take your kid, you can take yourself, and you can get care for different things. What Walmart did say they're doing in the next 60 to 90 days, the next 90 days, is they're closing them. They're hoping and they think that in some of the markets, because the physicians were on contract. Generally, they said they were independent physicians and so forth. They're hoping that maybe the local hospital system or health care system will take it over. And then they'll have whatever market it is, the - hopefully, the local hospital or health care system might move in there or keep it going in some capacity.
RASCOE: So, and I mean, as you've mentioned, you know, Walmart is not the only big company that got into primary care. You know, you mentioned, you know, Walgreens and their clinics that are shutting down - Warren Buffett, Amazon's Jeff Bezos, and JP Morgan's Jamie Dimon teamed up to get into healthcare and their business called Haven lasted just three years. Is the American healthcare system just too complex for newcomers?
JAPSEN: Well, CVS had their earnings this week. And I asked their CEO - I said, are you sticking this out? Because they spent $10 billion on primary care clinics for seniors. And her answer was, it's complicated, but we're sticking in. Amazon has said they're committed to their primary care centers. But the company they bought, One Medical - it was losing money last year, and my guess is it's probably still losing money. But I think people say if we really are going to solve the spiraling healthcare cost equation in this country is primary care is where the cost is the cheapest, and you want to encourage people to get primary care services. It's just that the margins aren't as good.
RASCOE: That's Bruce Japsen of Forbes. Thank you so much for speaking with us.
JAPSEN: Thanks for having me. Transcript provided by NPR, Copyright NPR.
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