Walmart shuts down healthcare clinics after $230Mn loss
ARKANSAS, UNITED STATES — Walmart recently announced the closure of its healthcare clinics after incurring losses of nearly $230 million.
The retail giant launched the initiative five years ago with the aim of providing primary care services in rural communities and creating a new revenue stream.
However, the venture failed to attract the necessary number of patients and faced rising operating costs and poor healthcare payments.
Operational challenges and strategic shifts
Several senior and director-level current and former Walmart employees who spoke with Endpoints News revealed that the clinics attracted only a small fraction of the expected patient volume.
Instead of operating 1,000 clinics by 2024 as originally planned, Walmart had opened only 51, primarily in Florida and Georgia.
The employees cited shifting strategies, over-investment in under-used resources, and a lack of ground-level support as key issues.
In its public announcement, Walmart blamed poor healthcare payments and rising operating costs for the lack of profitability.
“We’ve determined this is not a sustainable business model for us at this time,” the company stated
Employee insights and market context
Employees highlighted several operational inefficiencies, such as overstaffing in the compliance department, where dozens of employees were hired despite a lack of customers.
Two employees also informed Endpoints News that the company’s costly equipment, like X-ray machines, was rarely used. Additionally, Walmart was not equipped to accept referrals for X-rays from external doctors, which could have increased revenue.
Marketing efforts were inadequate, leaving many communities unaware of the clinics’ presence. One former senior employee noted that executive leadership was ill-prepared to tackle these issues, even suggesting that doctors hand out business cards in Walmart aisles.
Initial ambitions and strategic changes
Walmart Health initially focused on cash-paying customers, offering services like checkups, lab tests, and dental exams.
However, by late 2022, the strategy shifted under new leadership to focus on deals with health insurers, aiming for better margins and more predictable revenue streams.
A cornerstone of this effort was a partnership with UnitedHealthcare to deliver care to seniors in Medicare Advantage plans.
Despite these efforts, the initiative struggled to gain traction. By March 2024, there were only 932 Medicare Advantage patients, far short of the goal of 9,613 by January 2025.
Broader industry struggles
Walmart’s failure is not unique. Other retailers, including Amazon, Walgreens, and CVS Health, have also faced difficulties in the healthcare services market.
Amazon acquired One Medical after struggling with its healthcare ventures, while Walgreens shut down 160 VillageMD clinics. CVS Health is reportedly seeking a private equity partner for its Oak Street Health clinics.
Walmart plans to shut down its clinics by June 28, 2024. Despite the closure, the company remains committed to supporting healthcare needs through its pharmacy and vision centers.
“What we learned through Walmart Health centers will help us continue to innovate and support the healthcare needs of our communities,” Walmart stated. The closure marks the end of an ambitious but ultimately unsuccessful attempt to revolutionize primary care in rural America.
