Walmart Shutters 51 Health Clinics and Telehealth Business Amid Profitability Struggles

Walmart announced on Friday that it is shutting down all 51 of its health clinics across five states and closing its telehealth business, MeMD, due to high operating costs and a challenging reimbursement environment. The retail giant cited a shortage of profitability as the primary reason for the decision.

The affected clinics are located in Arkansas, Florida, Georgia, Illinois, and Texas. Walmart launched the health clinic initiative in 2019 with ambitious plans to open more than 75 centers across the U.S. by 2024. However, the company has now determined that the operating costs and reimbursement challenges have made the business model unsustainable.

"The challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time," Walmart said in a statement. The retailer will continue to operate its pharmacies and vision centers, but did not disclose the financial details or the number of jobs that will be affected by the shutdowns.

Why this matters: Walmart's move highlights the struggles that major retailers face in gaining a foothold in the booming healthcare industry. Rising insurance premiums and operating costs have made it difficult for companies like Walmart, CVS, and Walgreens to profitably expand their healthcare offerings, despite the potential to disrupt the traditional healthcare market and improve access for consumers.

The decision to close the clinics represents a dramatic turnaround from Walmart's previously announced plans to expand its health clinic footprint. Walmart executives acknowledged that the move was not easy, but necessary given the financial realities. "We determined there is not a sustainable business model for us to continue," said a Walmart spokesperson.

Despite the closures, Walmart stated that it will continue to provide health and wellness services through its pharmacies and vision centers, and plans to expand its Walmart Healthcare Research Institute and other health programs. Employees affected by the closures will be eligible to transfer to other Walmart or Sam's Club locations.

The closure of Walmart's health clinics and telehealth business underscores the financial challenges that primary care providers face in the current healthcare landscape. Walmart's experience mirrors that of other retailers who have struggled to make their primary care ventures profitable. As the company shifts its focus back to its core pharmacy and vision services, the gap in accessible and affordable healthcare options for many communities may widen.

Key Takeaways

• Walmart is shutting down all 51 of its health clinics across 5 states due to lack of profitability.
• Walmart cited high operating costs and challenging reimbursement environment as the primary reasons for the decision.
• The closures represent a dramatic turnaround from Walmart's previously announced plans to expand its health clinic footprint.
• Walmart will continue to provide health and wellness services through its pharmacies and vision centers.
• The closure of Walmart's health clinics underscores the financial challenges that primary care providers face in the current healthcare landscape.