2. HEALTHCARE
Walmart makes a point of stocking its shelves with
a little bit of everything. From food to clothes to
specialized garden tools, the retail giant has the
items its shoppers need to live a prepared daily
life—and now, Walmart plans to extend that one-
stop preparedness to meet its consumers’
healthcare needs. In late March, a report from the
Wall Street Journal revealed that the corporation
was in early negotiations with the Medicare
insurance colossus Humana.
The idea of an acquisition isn’t entirely
unexpected, given that the two companies
already collaborate on a Medicare prescription
drug plan. But an acquisition of this scale could
have an impact that makes a co-branded drug
venture look near-inconsequential. If Walmart’s
efforts to bring Humana into the fold succeed, the
retail conglomerate might just open the door to
affordable primary healthcare for millions of
Americans.
3. Let’s take a step back. While significant, this foray into public health isn’t unprecedented;
over the past year, retail competitors have made similar strides into the healthcare
industry. CVS, for example, began a deal for the managed healthcare services company
Aetna earlier this year for a whopping $69 billion. However, the difference between
Walmart’s reach for Humana and CVS’s planned acquisition of Aetna is a matter of size
and capability. The vast majority of Walmart’s near-4,700 branded and subsidiary
locations already have on-site pharmacies, and stores in a few states have begun offering
clinic services. Humana’s offerings would effectively complement what Walmart already
has: the insurance giant runs its own pharmacy benefits service and almost 200 clinics.
By merging with Humana, the retail giant could burgeon into a major primary care
provider and have a ready pool of dedicated patients. Humana currently provides
insurance to over 14 million Medicaid enrollees, all of whom could potentially turn to
Walmart as a one-stop shop for their healthcare needs.
A DEEPER LOOK
This is a game-changer for a number of reasons, not the least of which is that it removes
some significant patient barriers to primary care. Unfortunately, as one researcher puts it in
a paper published in a 2008 issue of JAMA Internal Medicine: “Simply being able to name a
usual source of medical care is not the same as having effective and timely access to that
same source of care.” The same study found that patients often can’t consult with their
physicians because of barriers such as extended waiting periods, scarce appointments, and
problems reaching their doctors via phone. This lack of access pushes primary care patients
to seek treatment in emergency rooms and urgent care centers. This is understandably
problematic: not only is the upfront cost more expensive for the patient, but the influx of
low-grade cases divert resources that emergency centers need for more extreme cases.
And make no mistake, there is an influx. In 2014, the CDC report found that approximately
32% of ER patients are seen for under 15 minutes—and only 7.9% of all visits result in
hospital admission. This implies that the vast majority of cases could have—or perhaps
should have—been taken care of by a primary care provider.
WALMART + HUMANA
4. BUT THIS PROBLEM CAN BE RECTIFIED — AND WALMART’S
MERGER MIGHT JUST BE THE FIRST STEP TOWARDS A
SOLUTION. ACCORDING TO A 2009 STUDY PUBLISHED IN THE
BMC HEALTH RESEARCH JOURNAL, “54% OF PATIENTS
REPORTED CHOOSING [URGENT CARE] DUE TO NOT HAVING TO
MAKE AN APPOINTMENT, 51.2% BECAUSE IT WAS CONVENIENT,
43.9% BECAUSE OF SAME-DAY TEST RESULTS, 42.7% BECAUSE OF
ABILITY TO GET SAME-DAY MEDICATIONS.”
IN OTHER WORDS, PATIENTS CHOSE URGENT CARE BECAUSE IT
WAS CONVENIENT AND RELIABLE. THESE PATIENTS DIDN’T
NEED TO WORRY ABOUT THE PAY THEY WOULD LOSE BY
TAKING HOURS OFF OF WORK, OR ABOUT FINDING A PHARMACY
TO TAKE THEIR INSURANCE. IF WALMART MERGES WITH
HUMANA AND BECOMES THE SIGNIFICANT PRIMARY CARE
PROVIDER IT HAS THE POTENTIAL TO BE, IT COULD OVERCOME
THE BARRIERS THAT TRADITIONAL PRIMARY CARE CENTERS
FACE AND GIVE MILLIONS OF AMERICANS ACCESS TO QUALITY,
CONVENIENT CARE.
JON BELSHER
5. BUT WILL THE ACQUISITION GO
THROUGH? THE SITUATION IS
COMPLICATED.
Considered from a business perspective, this particular merger is somewhat of a mixed bag. Moving into healthcare would give
Walmart the chance to diversify its consumer base, gain an edge over its dollar store and pricier retail competitors, and profit from
the influx of patient-consumers. However, the move upward would come at a cost. Given that the market value for Humana
currently stands at $37 billion and that the final cost could be even higher after negotiations, the decision to merge isn’t an easy
one to make. To make matters more complex, the return value Walmart would receive could be years away. The change could be
invaluable to Walmart as an organization and primary care patients as a whole, but it’s easy to see why the final decision to move
forward will be a difficult one given the financial situation.
6. But from a healthcare
provider’s perspective, I have to
hope that this acquisition will
go through, and that patients
will have the access they need.
We’re in the early stages yet,
but Walmart-Humana deal
might just be the Hail Mary
that moves us towards a
convenient and affordable
primary care system.