Wal-Mart Stores (WMT) doesn’t do small. In 2007 at the World Health Care Congress in Washington, then-Chief Executive Officer Lee Scott announced plans for the world’s largest retailer’s health-care expansion. He said Walmart would open as many as 2,000 in-store medical clinics by mid-2012, calling the strategy “a great opportunity for our business.” Today, Walmart has fewer than 130 clinics and is closing locations faster than it’s opening them.
Walmart lagged because it didn’t adequately promote clinics or integrate them with existing pharmacy operations, says Kenneth Berndt, who helped open and operate Walmart clinics in three states as director of business development for Bellin Health System, a health-care provider based in Green Bay, Wis. “People have to know you’re there,” says Berndt, now CEO of Danville (Pa.)-based Geisinger Careworks, the retail clinic division of Geisinger Health System. “They did not have enough traffic to successfully operate.”
The retail giant says it hasn’t given up. Walmart is “always looking for new ways to provide affordable health services and products to our customers,” including a program that offers prescription drugs for $4, Danit Marquardt, a Walmart spokeswoman, wrote in an e-mail. She didn’t answer questions about the clinic strategy or operations.
Unlike Target (TGT), CVS Caremark (CVS), and Walgreen (WAG), which run their own clinics, Walmart has leased space to independent operators, including Bellin Health. From 2010 to 2012, the company helped open and operate clinics in at least six Walmart stores in Idaho, Illinois, and Texas, Berndt says. Four have since closed, he says. Walmart didn’t advertise the clinics or allow outdoor signs for them, according to Berndt. “It didn’t seem to be what the administration of Walmart wanted,” he says. “They were a landlord, not a partner.”
Compounding the lack of foot traffic, Walmart’s pharmacies didn’t expedite prescriptions written during clinic visits, Berndt says. “People would come back to the clinic complaining they’d been waiting an hour,” he says. “When you’re sick, you just want to go home and get in bed. Next time, they’ll say, ‘Where can I get this done the quickest?’ ” In-store pharmacies at Berndt’s other clients, which include grocery chains, “fill them right away, and people are out of there in five minutes.” Walmart has reversed course on the opening of some new clinics and has 26 fewer nationwide today than it had a year ago, according to clinic consultant Merchant Medicine.
Walmart may have time to grab more of the market. As key parts of the Patient Protection and Affordable Care Act—Obamacare—phase in starting next year, some 30 million newly insured Americans will be looking for care amid a doctor shortage. Clinics, usually staffed by nurse practitioners or physician assistants, generally stay open evenings and on weekends when most doctors’ offices don’t. They can relieve some of the pressure on MDs by handling acute care for minor illnesses and injuries, giving vaccinations, and monitoring chronic diseases.
Walgreen and CVS, the two largest U.S. pharmacy chains, respectively, are opening more clinics, as is Target and grocery chain Kroger (KR). CVS, which has about 630 MinuteClinics, is opening about three a week, and aims to have 1,500 within four years. While the chains don’t report clinic results, CVS says its business has grown at a compound annual rate of 39 percent during the past six years.
Clinics can generate additional sales for a retailer because patients typically fill their prescriptions at the in-store pharmacy, and may stick around to buy other merchandise. Last week, Nicky Creamer, a 42-year-old stay-at-home mother of two, dropped by a CVS MinuteClinic in Chicago because she thought she might have strep throat. “It’s just so fast and easy instead of a doctor,” says Creamer, who lives around the corner from the store.
CVS CEO Larry Merlo told investors in early February that MinuteClinic sales had surged 38 percent compared with the fourth quarter of last year, and patient visits had reached record daily levels. “You can see why they’re investing,” says Tom Charland, CEO of Merchant Medicine. “It’s becoming a no-brainer for them. You start to ask yourself: Why are other major players sitting on the sidelines?”
Meanwhile, CVS is doubling down: About 85 percent of MinuteClinic patients use some type of insurance, and demand for clinics will grow as more Americans gain coverage, says MinuteClinic President Dr. Andrew Sussman. The Association of American Medical Colleges expects the U.S. to be short about 45,000 primary care physicians by 2020. Sussman figures clinics will serve as an overflow outlet to treat an aging U.S. populace. Walmart probably sees the same opportunity, but will need to play catch-up with CVS and others to stay in the game.