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Retail healthcare 2.0: A 'new retail price'

Walmart is taking another, bigger step into American healthcare with new primary care services. Is a health plan next?

After years of selling prescription drugs, co-branding a Medicare drug plan and partnering with local hospitals and providers for some 100 walk-in clinics, Walmart is now going to be a quasi-provider itself -- offering access to a nurse practitioner for $40 ($4 for its insured employees) and dozens of low-cost lab tests. The company has opened six Walmart Care Clinics in Texas and South Carolina, and has plans for at least several more this year.

The prices, particularly the $4 per visit cost for some 1.1 million workers and dependents covered by the company health plan, are aimed at "setting a new retail price in the healthcare industry," as Jennifer LaPerre, Walmart's senior director for health and wellness put it.

The first clinics are opening in generally middle and lower income communities, where individuals and families are likely to be price sensitive.

The South Carolina stores, in Sumter and Florence, are located in areas with an uninsured rate of about 17 percent and median household incomes of about $41,000, while the Texas stores -- in Carrollton, Benbrook, Cooperas Cove and Palestine -- are located in more middle class regions, in greater Dallas, Fort Worth, adjacent to the Fort Hood Army base and in, the case of Palestine, a small east Texas town.

The clinics, staffed and run with the company QuadMed, are offering appointments and taking walk-ins,  open 8 to 5 Monday through Friday, 8 to 5 Saturdays and 10 to 6 Sundays. A visit with an NP is $40 for uninsured and privately insured patients, and the company says it also accepts Medicaid and fee-for-service Medicare (though it is not clear what those beneficiaries would be charged). Customers "will have plenty of time to ask questions or share your concerns" the company says.

They'll also have access to a wide range of basic diagnostic tests. Point of care lab tests, with the results delivered the same day, include bladder infection, cholesterol, and mono tests for $8, and hemoglobin blood sugar, urine protein and HIV tests for $15. Among tests requiring off-site analysis, the clinics will sell hemoglobin blood sugar and thyroid tests for $8, strep throat tests for $15, pap smear tests for $36, and sexually-transmitted infection tests for $33.

Walmart's move, along with clinics at CVS, Walgreens and Target, is "part of a whole larger trend where pretty much any retailer, big box, grocer and pharmacy is coming to stake a claim in consumer-driven healthcare," said Lisa Bielamowicz, MD, the chief medical officer at the Advisory Board Company.

Walmart has been through an evolution in healthcare and this latest move -- the company running its own clinics, rather than partnerships with a Baptist Health System, St. Mary's or Mayo Clinic -- is a fairly significant iteration, setting the stage for future dives into the healthcare economy.

The large opportunity Walmart is going after are the price-sensitive lower-income and uninsured populations, but the clinics may also gain traction among middle-income consumers with high-deductible plans and even the well-off, Bielamowicz said.

"No doubt that consumers of any income level want convenience and availability for basic care, and these factors can trump doctor-patient relationships, especially for younger patients," she said.

Considering that primary care visits on average cost about triple what Walmart is charging, Bielamowicz thinks the clinic's presence could set new standards for convenience and prices in certain regions, creating an impetus for health systems and medical practices to stay open later and lower at least some consumer out-of-pocket prices.

"The game and competitive factors by which you win primary care business are starting to change," Bielamowicz argued. "Health systems and physician groups have to understand that. If there's a Walmart clinic open 15 hours a day, that's the standard you may have to meet."

There is a window of opportunity right now, though, for savvy health organizations, Bielamowicz said. "You can charge more for these services" -- same day appointments, walk-in on-site lab tests -- and some consumers "are willing to pay more."

But these are differentiators for now, she said. "They are eventually going to rise to be the standard," and retailers like Walmart are poised to capture more business if established health organizations don't change.

Indeed, more than just primary care could be captured by retailers. And Walmart, facing pressure from Amazon as a low-cost everything store, is looking for growth markets.

Depending on how many clinics Walmart opens up and how many patients come to them, the company could help shape low-cost regional networks with its influence of referrals, and even launch a health plan, Bielamowicz argues.

"You could see how they could evolve this strategy," Bielamowicz said.

Last year, amid speculation of Walmart's healthcare strategy, Bielamowicz offered one scenario that could be disruptive for insurers and providers alike -- but potentially attractive to vast swaths of healthcare consumers.

"What if Walmart expands enough in primary care that it disrupts local, established patient-physician relationships and referral chains, combines clinical, pharmacy and consumer data to create comprehensive patient profiles and then uses that to create a membership model that can drive patient decisions, and then on top of everything, they're able to launch or partner with a nationwide affordable health plan and require aggressive price concessions to participate in their networks?"

Whether or not Walmart or its retail brethren takes all or part of that route, if health organizations don't start offering their customers -- patients, members and employers -- more tangible value, "somebody else will," Bielamowicz said.

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