Dive Brief:

• Walmart plans to close all 51 of its health centers across five states. The retailer said Tuesday it also will end its virtual healthcare offering. Walmart said it did not have specific closing dates for each center but would share that information once decisions are made.
• The healthcare industry’s “challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time,” the company said.
• Walmart’s nearly 4,600 pharmacies and more than 3,000 vision centers will stay open. The pharmacies will continue to offer health screenings and testing.

Dive Insight:

Walmart’s decision is a major reversal of previously announced plans to expand its health center footprint. It originally planned to operate 75 locations this year, but later pushed that goal back to 2025. As recently as this month, the company planned to open 22 health centers in 2024, sister publication Healthcare Dive reported.

The centers stopped accepting new patients on Tuesday. Walmart said it will now focus on continuity of care for existing patients and helping its health center associates and healthcare providers transition to other roles as it winds down the business. The health centers are located in Arkansas, Florida, Georgia, Illinois, Missouri and Texas.

First launched in 2019, Walmart’s health centers offered medical, dental and behavioral healthcare services like annual checkups, sports physicals, X-rays, chronic condition management, and treatment for minor illnesses or injuries.  

The company said all health center associates may transfer to any other Walmart or Sam’s Club. They’ll be paid for 90 days unless they transfer or leave the company. Eligible employees who do not transfer or leave will receive severance. Walmart’s health center provider partners will be paid for 90 days through their employers. After that, they’ll receive transition payments.

Several retailers have moved further into the healthcare sector in recent year. Dollar General last year introduced a pilot program that brings mobile health clinics to three stores in Tennessee. The clinics offer basic healthcare services to walk-in customers and by appointment. Amazon also recently expanded its telehealth services nationwide. The e-commerce giant also acquired primary care provider One Medical last year for $3.9 billion, which gives Amazon a physical footprint for delivering healthcare. Best Buy in November entered its third home healthcare product development deal with a regional health system.

“Walmart isn’t the first, and it won’t be the last, retailer to stumble in the healthcare market,” Neil Saunders, managing director of GlobalData, told Retail Dive in an email. The main reason is because of how the U.S. healthcare system operates. 

“Walmart is used to serving consumers directly and having them pay for products and services. Healthcare isn’t like that,” Saunders said. “It’s a complex web of interested parties and Walmart having to deal with insurers for reimbursements has been problematic.” Saunders said Walmart is performing well overall but will likely face more top line pressure. As a result, he said the retailer will need to double down on efficiency to deliver on the bottom line.

“The scrapping of this healthcare initiative is part of Walmart becoming more focused on things that make it money rather than spreading itself too thinly into many different areas. In some ways, there are shades of Amazon about this: experimenting and testing things and withdrawing quickly from initiatives that don’t work,” Saunders said.

Walmart announced and made some other major changes recently. They include closing Store No. 8, its tech and business innovation unit, removing self-checkout from some locations and adding buy now, pay later through fintech partner One. The retailer also said it plans to remodel 650 stores this year and build or renovate 150 locations by 2029.