"Honey, go to store for some milk, eggs, and bread, and while you're there get your cough checked out." Retail healthcare? Really? Major players like Walgreens (who acquired Village MD) are losing billions (that's billions with a B) by betting that Americans will want a medical office visit to be like picking up a 6 pack of soda. As a physician, I find this so insulting and disgraceful that I can't even understand it. I have to trust that the American people are not so easily fooled by this corporate charlatanism. Good quality medical care starts with a doctor-patient relationship. Period. There is no such thing as retail healthcare; it's just another example of corporate greed. I hope their enterprises fail and if Senator Warren gets her way, maybe their CEOs will do some time at Club Fed.
David Krulee, M.D.’s Post
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“To put it bluntly, primary care is hard,” said Stephanie Davis, an analyst at Barclays. The problem for Walmart, said Craig Garthwaite, a strategy professor at Northwestern University, is that in medicine you can’t really build economies of scale by driving the costs of such things as purchasing and advertising down to charge lower prices and gain market share. In a doctor’s office, your big-ticket costs are the people: A family #physician might make something like $250,000, while a nurse practitioner is paid around $150,000. “None of that is scalable,” he said. “Each one of those doctors can only work eight to 10 hours a day. So you can’t run the business the same way.” "That doesn’t mean that there isn’t plenty of money to be made from the doctor’s office. But the value won’t come from charging a flat fee for, say, an annual checkup. Instead, for large companies, the doctor needs to be a conduit for capturing value elsewhere. Big hospital systems have been at this for a long time. They acquire or join with doctor groups to control patient traffic to higher-margin procedures. A primary-care doctor controlled by New Jersey-based Atlantic Health System, for instance, might refer a patient to a urologist within that same system. That approach really hasn’t helped patients. Instead, it has raised the cost of care, giving giant #hospitals billions of dollars in additional revenue. " This article also touches on Walgreens's desire to capture value based care with VillageMD, CVS Health' acquisition of Aetna, a CVS Health Company, and Amazon's attempt at subscription based #healthcare. https://lnkd.in/gTP3XbKp
Why the Walmart Model Doesn’t Work in Healthcare
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Health care disrupters like Walmart and Walgreens are altering their strategies or exiting the health care sector entirely. What does this mean? This is an insightful blog post that shares 3 lessons providers can learn from these pivots and exits.
Disrupter Downfall: Do Legacy Providers Prevail?
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Health care disrupters like Walmart and Walgreens are altering their strategies or exiting the health care sector entirely. What does this mean? This is an insightful blog post that shares 3 lessons providers can learn from these pivots and exits.
Disrupter Downfall: Do Legacy Providers Prevail?
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Senior Healthcare Program Manager | Agile Transformation Partner | Certified Artificial Intelligence (AI) Thought Contributor | Insightful Career Coach
In recent years, everyone from large retailers to private-equity firms to insurers have been jockeying to acquire doctor chains. The market top came sometime between mid-2022 and early 2023. Within a span of eight months, Amazon said it was spending $3.9 billion to buy the primary-care chain One Medical; a Walgreens unit struck a $9 billion deal to expand its medical practices; and CVS Health agreed to spend a whopping $10.6 billionon the primary-care chain Oak Street Health. At the time, it seemed inevitable that the doctor’s office was increasingly going to be a big-box service—something you do on your way to the snack aisle. It hasn’t worked out that way. “To put it bluntly, primary care is hard,” said Stephanie Davis, an analyst at Barclays. The problem for Walmart, said Craig Garthwaite, a strategy professor at Northwestern University, is that in medicine you can’t really build economies of scale by driving the costs of such things as purchasing and advertising down to charge lower prices and gain market share. In a doctor’s office, your big-ticket costs are the people: A family physician might make something like $250,000, while a nurse practitioner is paid around $150,000. “None of that is scalable,” he said. “Each one of those doctors can only work eight to 10 hours a day. So you can’t run the business the same way.” #healthcare
Why the Walmart Model Doesn’t Work in Healthcare
wsj.com
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Health care disrupters like Walmart and Walgreens are altering their strategies or exiting the health care sector entirely. What does this mean? This is an insightful blog post that shares 3 lessons providers can learn from these pivots and exits.
Disrupter Downfall: Do Legacy Providers Prevail?
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Upon reading the news of Costco's partnership with Sesame, the clamoring of healthcare thought leaders to comment was no surprise. And whether those comments were positive or panic-laden, they were suitably bland enough to be read during Zoom calls. No shock, no awe - no analysis aside from the significant value a Costco Gold Star membership can generate for a household, even if the membership rate were to be increased from the current $60/year. The walls of the once sacrosanct healthcare space have given over, large retailers are embedding healthcare services within their strategic plans. Is it because the current system is broken? Numerous experts will say that is the exact reason. But I wonder. Businesses, especially successful retailers, are successful because they are good at identifying opportunities, and not just when there's been a failure to deliver by market incumbents. But also, or maybe even more often, when there's just a lot of opportunity in a particular market space. Bust or Boom, the debate and the accompanying articles are there for the reading. But where is the third member of the healthcare triangle (patient, provider, payor) in all of this? I for one would like to hear from healthcare insurers. How will these pay to play services figure into your actuarial work? Will plan designs and costs change over time as consumers shift their points of access - if there are no claims generated by these services how does the traditional market respond? What about the pursuit of value-based care? In an age when traditional providers are told to dump endless data points into various repositories in the hopes that some sort of population health guidepost will emerge, the siphoning off (and silencing) of a subset of the population has to be accounted for somehow. Certainly articles to this end would be far too spicy for a multitask perusal. #costco, #healthcare, #managedcare, #valuebasedcare
Costco membership rate hikes 'a question of when, not if' amid healthcare bet
beckershospitalreview.com
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Walmart is not the first to try, nor the first to exit. But it does mark a significant, well-thought-out attempt, and failure, to penetrate and create a consumer version of healthcare. I think there are many reasons for this decision, but having been an incumbent of traditional healthcare my entire career we all know that clinic operations are not sufficiently profitable for industries accustomed to a margin worth supporting. Clinics serve financially as a "loss leader" for downstream services. Downstream services are not something easily provided in consumer-based care, which is the big trouble. Even as an traditional incumbent, I hope for meaningful healthcare disruption, but the complex and artificial limits of healthcare economics driven by policy and insurance, seem to promise it may never happen in the United States. Perhaps our greatest hope are systems large and integrated enough, driven by vision, will present something meaningfully different to US patients.
Walmart to shutter health centers, virtual care service in latest failed push into health care
cnbc.com
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Publisher of @NCThirdAge Twitter and Facebook for news for seniors in NC; lifelong learner; traveler;
(Gift article) Walgreens and Walmart are just two prominent examples of a retrenchment among big players in healthcare. "In recent years, everyone from large retailers to private-equity firms to insurers have been jockeying to acquire doctor chains. The market top came sometime between mid-2022 and early 2023. Within a span of eight months, Amazon.com said it was spending $3.9 billion to buy the primary-care chain One Medical; a Walgreens unit struck a $9 billion deal to expand its medical practices; and CVS Health agreed to spend a whopping $10.6 billion on the primary-care chain Oak Street Health. At the time, it seemed inevitable that the doctor’s office was increasingly going to be a big-box service—something you do on your way to the snack aisle. "It hasn’t worked out that way. “To put it bluntly, primary care is hard,” said Stephanie Davis, an analyst at Barclays. The problem for Walmart, said Craig Garthwaite, a strategy professor at Northwestern University, is that in medicine you can’t really build economies of scale by driving the costs of such things as purchasing and advertising down to charge lower prices and gain market share. In a doctor’s office, your big-ticket costs are the people: A family physician might make something like $250,000, while a nurse practitioner is paid around $150,000. “None of that is scalable,” he said. “Each one of those doctors can only work eight to 10 hours a day. So you can’t run the business the same way.” "These investments were always going to be difficult, but they also suffered from bad timing. In recent years, the cost of employing medical professionals—of whom there is a severe shortage in the U.S.—has soared in the wake of the pandemic, said Diya Iyer, a retail analyst at S&P Global Ratings. At the same time, the government has purposely dialed back on payments to Medicare, cutting into reimbursements. "
https://www.wsj.com/health/healthcare/why-the-walmart-model-doesnt-work-in-healthcare-c61a5cbc?st=jz06q7vv1de6ssb&reflink=desktopwebshare_permalink
wsj.com
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Walmart became the world’s largest company by revenue because it figured out how to use its size to offer consumers rock-bottom prices. Yet when the big-box retailer tried to apply that winning formula to healthcare, it failed miserably. In late April, the company said it would close its 51 health centers across five states and shut down its virtual-care offering. The company said that many patients loved the convenience of the clinics, but that it couldn’t find a sustainable business model. In other words, the clinics were bleeding money. Walmart isn’t alone in pulling away from the doctor’s office. Walgreens Boots Alliance Chief Executive Tim Wentworth recently told The WSJ that the company would reduce its stake in VillageMD, a primary-care provider, as part of a broader turnaround plan. That came after the pharmacy chain had already been closing clinics. In recent years, everyone from large retailers to private-equity firms to insurers have been jockeying to acquire doctor chains. The market top came sometime between mid-2022 and early 2023. Within a span of eight months, Amazon.com said it was spending $3.9 billion to buy the primary-care chain One Medical; a Walgreens unit struck a $9 billion deal to expand its medical practices; and CVS Health agreed to spend a whopping $10.6 billion on the primary-care chain Oak Street Health. At the time, it seemed inevitable that the doctor’s office was increasingly going to be a big-box service—something you do on your way to the snack aisle. It hasn’t worked out that way. “To put it bluntly, primary care is hard,” said Stephanie Davis, an analyst at Barclays. The problem for Walmart, said Craig Garthwaite, a strategy professor at Northwestern University, is that in medicine you can’t really build economies of scale by driving the costs of such things as purchasing and advertising down to charge lower prices and gain market share. In a doctor’s office, your big-ticket costs are the people: A family physician might make something like $250,000, while a nurse practitioner is paid around $150,000. “None of that is scalable,” he said. “Each one of those doctors can only work eight to 10 hours a day. So you can’t run the business the same way.” These investments were always going to be difficult, but they also suffered from bad timing. In recent years, the cost of employing medical professionals—of whom there is a severe shortage in the U.S.—has soared in the wake of the pandemic, said Diya Iyer, a retail analyst at S&P Global Ratings. At the same time, the government has purposely dialed back on payments to Medicare, cutting into reimbursements.
Why the Walmart Model Doesn’t Work in Healthcare
wsj.com
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The latest from AHA Market Scan: 4 Insights into Walgreens’ Health Strategy Review Walgreens recently has undergone significant leadership changes while facing financial challenges on several fronts. The pharmacy chain operator last month was replaced on the Dow Jones Industrial Average by Amazon and halved its dividend two months earlier to conserve cash as it tries to grow its business. In the roughly four months since new CEO Tim Wentworth took over, analysts have been trying to determine how the company will adjust its long-term vision — particularly since some of its huge investments to grow its health care business have yet to deliver the intended results. https://lnkd.in/e5S8HcJ9
4 Insights into Walgreens’ Health Strategy Review | AHA
aha.org
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