WalMart Diversifies Into Medi-Care

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reports.droy
Sep 17, 2014
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The retail giant, Wal-Mart (

WMT, Financial), is pursuing other lines of business to grow its revenue and plans to open a dozen primary care clinics within a small number of retail stores by the end of 2014.

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The retail giant has made immense foray in opening half a dozen primary care clinics in rural markets in Texas and South Carolina where need for healthcare clinics is eminent. With plans to open six more clinics before January next year, and to staff them with nurse practitioners in a partnership with QuadMed, Wal-Mart is all set to create a major difference in the healthcare domain. Let’s check out what difference the retailer wants to add to the healthcare industry and why it’s fussing around over a handful of clinics. Here’s the answer.

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The difference is relevant

The concept of retail clinics has been propounded in the past by Wal-Mart which already has over 100 retail clinics across its stores in the U.S. However, the company has strategized to open company branded one-stop solutions for primary health-care, just recently. The clinics would be open for longer hours than of immediate competitors – 12 hours per day during the week and 8 plus hours during the weekends. And considering the company’s size and scale, Wal-Mart does have the potential to break new grounds in the healthcare space.

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The company’s move means a lot to millions of Americans getting insurance coverage through Obamacare, and seeking new and convenient sources of health care. The discount giant is about to offer more comprehensive services such as chronic disease management at a lower cost.

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Wal-Mart is explicitly marketing the clinics as “primary care” service locations, writing on its website that its “expanded scope of coverage enables us to be your primary medical provider.”

Also the new clinics would charge just $40 per visit – the same amount paid by several insured U.S. citizens as co-pay. It also accepts Medicare and plans to accept Medicaid at specific locations. But its offering a kicker to the workers at Wal-Mart- the roughly 1 million employee count can receive the services from such clinics for just $4 per visit.

Hence, Wal-Mart is out to set a new retail price trend in the health care industry, while it proceeds cautiously keeping with its tradition of offering heavy discounts.

Wal-Mart moving the markets

Wal-Mart’s push into the primary care clinics isn’t a shock; the company has spent several years dropping hints that it would make a play for the care delivery market. “Wal-Mart’s corporate strategy has never been about the first-mover advantage, it was more about distribution efficiency and cost management.

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As Wal-Mart enters the market a bit later than expected, it has aided the company to capitalize on markets that were created by its competitors, and also to learn from their mistakes.

The difference created by Wal-Mart is already a concern for CVS Health Corp. (

CVS, Financial) and Walgreens (WAG, Financial) which provide a limited number of retail-based urgent care services. And Wal-Mart’s picking up the right markets to create the niche.

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Both Texas and South Carolina have primary care access problems and most of it is related to the cost of healthcare. As neither state has expanded Medicaid, both have a group of uninsured who will prioritize cost when seeking care. And Wal-Mart’s first cost effective new clinics in these states will serve such groups and aid in creating an edge over the rivals which already have a stable hold on the healthcare sector.

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Indeed, this move of the retailer keeps pace with the broader trend of retailers, big-box stores and other non-traditional competitors who are charging into health care delivery. And its entry might push the standards up in hospitals- if a Wal-Mart clinic is open 15 hours a day, that’s a new standard health systems and physician groups might have to meet as well in the U.S.

Hospitals are at risk of losing volumes of business, if they are not able to meet the growth pace of Wal-Mart clinics, as the retailer is about to bring in a huge transformation in the industry structure.

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Final take

Wal-Mart is adding an ace up its sleeve as it ventures into a new business domain, and the management has taken a planned move which has been well-accepted in the healthcare industry. There is more to explore as far as the future of the “new clinics” are concerned and the next quarter results will reflect the revenue which Wal-Mart is generating from this recent diversification. So, let’s wait and watch.

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