Walmart Holding Talks To Sell Its Shuttered Medical Clinics

Walmart stunned the healthcare world when it suddenly announced the closure in April of its network of medical and dental offices once viewed internally as a blueprint for a promising future in the space.

But since then, Walmart has pitched potential buyers behind the scenes on taking over the Walmart Health clinics that the company has already started to shutter, Fortune has learned.

Some of the talks have involved health insurance companies, including Fortune 50 giant Humana, multiple sources familiar with the situation told Fortune. It is not clear if any of the talks are ongoing, but Walmart has made it clear through the process that it is attempting to recoup some of its massive investment in the clinics through a sale or other takeover arrangement. Spokespeople for both Walmart and Humana declined to comment.

The order of developments surrounding the closure and sale discussions of the Walmart Health clinics has puzzled some of those around the talks. On April 30, Walmart announced that it was ending its latest five-year healthcare experiment by closing its 51 clinics originally billed as “the first to put primary and urgent care, labs, X-ray and diagnostics, counseling, dental, optical, and hearing services all in one facility.”

 “A challenging reimbursement environment and escalating operating costs,” the company cited in the announcement.

As Fortune exclusively reported, the reality was likely more complicated than that. But at least some of the sale talks only occurred after the closure announcement, potentially reducing Walmart’s leverage in any sale talks since the whole world – including Walmart Health patients and employees – had started to move on. The Walmart Health clinics were scheduled to close on Friday, June 28.

Still, Walmart was able to recoup something when it announced last week the sale of its virtual care business, called MeMD, to the healthcare tech company Fabric for an undisclosed sum. But there was no announcement involving the physical clinics, which are typically located alongside Walmart stores.

Several types of insurance providers, known as “payers” in the industry, could make some sense for a deal for Walmart’s clinics. Some of these companies already run medical clinics of their own. Humana, for example, operates hundreds of primary care clinics for seniors through its CenterWell and Conviva businesses. Other health insurance companies that don’t could look to break into the space by taking over Walmart’s facilities and avoid having to build out their own clinics from the start.

Walmart’s interest in the space dates all the way back to at least 1991, when founder Sam Walton himself lamented to employees about the industry’s high costs.

“We’ve got to get the hospitals and doctors in line,” Walton told an audience of Walmart employees the year before he died. “We’ve got to get those charges under control.”

In the decades since, the company has gone through a variety of experiments in the sector as the company has struggled with executive turnover and a breakthrough strategy. In 2019, the company unveiled this latest initiative, with the launch of these mini supercenters of care that offered medical and dental appointments, plus X-rays and lab work, all under the same roof.

Walmart Health promised transparent and affordable pricing, just as Walton had requested at the meeting nearly 30 years before. Walmart Health focused its initial pitch on the affordability of its services for those lacking any or good insurance; doctor visits would cost $40 and dental appointments $50. But it didn’t take long for fissures in the model to emerge.

“There was so much opportunity to bring access to affordable health care to rural and underserved America and it’s gone,” a former Walmart Health marketing leader told Fortune in May.

But perhaps, another company will continue the attempt, with the same buildings but a new brand name on the front door.

Source: Fortune

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