Healthcare attracts big retailers

Walmart, which became the world’s largest retailer by undercutting the competition on pricing, sees an enormous potential growth market in the expensive and opaque world of healthcare. 

“American consumers, among all issues, healthcare is the number one cause of concern. It’s not the economy or jobs or terrorism. It’s not immigration, regardless of what you see on CNN or Fox News,” says Marcus Osborne, vice president of health and wellness for Bentonville, Ark.-based Walmart, whose more than 11,300 stores draw more than 275 million customers every week. 

“We have half of American come into our stores every week,” Osborne says. “If the biggest need they have in their life is healthcare, then their perception is, ‘If I’m going to keep coming to you then you’d better address my problems.”  

Osborne made the comments last week at the Lake Nona Impact Forum, an annual innovation conference in Orlando. 

Walmart, which did $514 billion in sales last year, has been testing and adding an assortment of health and wellness services to its stores in recent years. The company has opened in-store primary care clinics, launched a joint venture, offered health-risk assessments and begun selling dental and vision services.

In 2017, the company launched a joint venture with Quest Diagnostics to add lab-testing services to its stores. A year later, it became the first retailer to begin selling behavioral and mental health services through a deal with Beacon Health. 

“The journey we’ve been on the last three-to-five years is testing the boundaries and trying determine what if any third rail exists for the delivery of health and wellness services at retail,” Osborne says. “We just wanted to see. And almost to a ‘T,’ every one of them we massively underestimated the consumer demand for those services.” 

One of the company’s first and most successful incursions into health and wellness is its $4 generic prescription program, which began more than a decade ago and led to big gains in Walmart’s pharmacy sales and market share. Osborne says the primary driver of that growth came from consumers who already had prescriptions but weren’t getting them filled because they couldn’t afford them or they simply didn’t know how much they would cost. 

“For us, this is about recognizing that there’s a massive under-consumption around health, around the basics,” he says. “The need is to bring forward a way to improve access to those basic things.” 

Other big retailers also see opportunity if they can tear down healthcare’s barriers of cost, access and complexity. Amazon spent nearly $1 billion to buy only pharmacy PillPack and has launched a healthcare joint venture with JPMorgan Chase and Berkshire Hathaway. CVS completed a $70 billion merger with health insurer Aetna.  

Osborne says retailers haven’t yet persuaded consumers to regard them as healthcare providers themselves, though CVS has made the greatest branding strides among the big players. But he says Walmart’s customers do see retailers as someone who can figure healthcare out for them.  

“What they trust us to do is to say, ‘You may not be the expert, you may not be the medical expert. But I trust you to go and engage with the players and partners in the system and you’re going to vet it and you’re only going to bring forward solutions that you yourself trust,’” he says. “They trust us to go out and act on their behalf.