Innovators Worth Watching: Walmart Health

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Feb 25, 2020

Welcome to our “Innovators Worth Watching” series, spotlighting interesting and potentially disruptive players across a spectrum of industries.

These days it seems like everyone wants a slice of the healthcare innovation pie. New health solutions are not just coming from existing healthcare institutions, such as hospitals and insurance companies, but outside corporations. Walmart is one example of a new corporate entrant. 

Walmart already operates in-store retail clinics run by nurse practitioners in a number of locations, but now the healthcare entrant is taking its approach to accessible and cost-effective care a step further. Under the name Walmart Health, the retail giant has opened two standalone primary care clinics, the first last fall and the second just last month. The idea is to simplify healthcare by offering affordable, basic primary care services and by making pricing transparent from the beginning. 

Think of these clinics as the Chipotle of primary care. They offer a limited, streamlined set of medical services that are more substantive than the quick fixes of retail clinics, but not as expansive as the current model of  primary care. Like Chipotle, Walmart Health shows exactly what patients receive, and enables patients to pay for “add-ons” to their physicals (a small list of additional tests). They do the same for dental, optical, and mental health—providing the necessities, with add-on services available at an additional cost all under one roof. 

Health analysts already see tremendous potential in Walmart Health’s model of simple, transparent healthcare. But is this model of delivery disruptive to traditional primary care providers? We put Walmart Health through our six question test to find out. 

1. Does it target people whose only alternative is to buy nothing at all (nonconsumers) or who are overserved by existing offerings in the market?

Yes. By offering a streamlined version of primary care, Walmart appeals to those overserved by existing providers. This model targets people who need access to a basic annual physical, and maybe the occasional test or X-Ray, but do not have the time or the health knowledge to navigate an increasingly complex primary care landscape. By sacrificing some of the bells and whistles that come with traditional primary care services, these patients gain access to quick and simple care—without the cumbersome process of paperwork and long wait times that typically accompany a visit to the doctor’s office. 

However, the low, set prices of its services attract nonconsumers of traditional primary care as well—the uninsured. Speaking to Advisory Board, Walmart U.S. Health and Wellness President Sean Slovenski said, “We’re bringing people into the healthcare system that have not traditionally been in it and identifying their needs…we’re kind of creating an entire new market of customers.” 

2. Is the offering not as good as existing offerings as judged by historical measures of performance?

Yes. The typical basis of competition for primary care providers is forming a long relationship with a patient. It’s also solving myriad problems for the patient that often extend beyond basic primary care services, and in many cases, could be more efficiently addressed elsewhere. While Walmart Health may end up competing along these lines, currently that’s not its focus. 

3. Is the innovation simpler to use, more convenient, or more affordable than existing offerings?

Yes. The price of services at Walmart’s clinic are, on average, 30-50% lower than those of incumbent doctors and dentists. This drastic price drop not only makes care more affordable, but accessible to a wider range of patients.

Further, Walmart offers extended hours compared to traditional primary care offices, including being open on Sundays. In doing so, it’s made its clinics more convenient to many patients, such as those who may have a harder time getting away from work. 

4. Does the offering have a technology that enables it to improve and move upmarket?

Yes. The “technology” is Walmart’s retail knowledge, and proprietary data on consumer behaviors. For years, Walmart has maintained its status as a retail superpower, amassing a large following based on its brand loyalty, and disrupting department stores with its consistently low prices. Walmart is using its knowledge of what consumers want to design a healthcare practice made for people who truly need it. With this in mind, Walmart could improve on its model—either by knowing where to expand, or what services to expand to. 

5. Is the technology paired with an innovative business model that allows it to be sustainable?

Maybe. Walmart offers exceptionally low prices that allow many people to pay out of pocket (though they do accept most insurers), and it’s transparent in the prices for its basic services. These reasons, combined with its brand recognition, enable Walmart Health to appeal to a large number of people. 

Another indication that Walmart Health will be sustainable is its concerted effort to keep costs down. By only offering basic services, the clinics produce less overhead costs. And unlike its Care Clinics, which are Walmart’s in-store venture staffed fully by nurse practitioners, Walmart Health staff includes a wide spectrum of local health professionals, including doctors, dentists, and behavioral health specialists. According to Walmart CEO Doug McMillon, this partnership with local providers also helps to keep costs low. However, there are still only two clinics up and operating. Only time will tell if this model enables it to remain sustainable. 

6. Are existing providers motivated to ignore the new innovation and not feel threatened by it at the outset?

Yes. Existing providers do not find this simplified method of primary care a threat to their more comprehensive, longitudinal, and relationship-based practice. As a result, local providers don’t plan on lowering prices to compete with the healthcare entrant. While the clinics are an attractive option to many patients and certainly fill a gap, current providers ultimately doubt Walmart Health’s ability to fill the role of a long-term primary care provider. 

If Walmart’s model proves to be sustainable and scalable, it has tremendous disruptive potential. As this is a relatively new venture, only time will tell how successful Walmart will be in expanding both its clinic reach and its services. Regardless, Walmart is poised to play a sizable role in helping increase people’s access to primary care.

Jessica is a research associate at the Clayton Christensen Institute for Disruptive Innovation, where she focuses on business model innovation in healthcare, including new approaches to population health management and person-centered care delivery.