The news that Walmart is shutting down its healthcare clinic business is shocking on many levels but also goes to demonstrate the power of strategic discipline from a business acumen perspective.
Just a few months ago, Walmart was talking about expanding and growing to meet the emerging needs of patients and vertically integrating services into products through its network of pharmacies and stores that sell over-the-counter products.
So, what changed, and what business acumen lessons can be learned?
The Press Release
Walmart’s press release contained some interesting insights:
“BENTONVILLE, Ark., April 30, 2024 — Back in 2019, we launched Walmart Health Centers. During our five-year journey, we made meaningful impacts with patients while continuing to learn, pivot, and evolve. While our mission to help people save money and live better remains, today we are sharing the difficult decision to close Walmart Health and Walmart Health Virtual Care. Through our experience managing Walmart Health Centers and Walmart Health Virtual Care, we determined there is not a sustainable business model for us to continue.”
Think about it for a moment; “we determined there is not a sustainable business model.” For decades, Walmart embodied the value proposition of low price driven by world-class operational excellence, yet that strategy couldn’t be executed in the healthcare space. The press release further added:
“This is a difficult decision, and like others, the challenging reimbursement environment and escalating operating costs create a lack of profitability that makes the healthcare business unsustainable for us at this time.”
From a purely business acumen perspective, this means that one of the top operationally effective organizations on the planet could not survive in an ecosystem where the revenue coming from payers like insurance companies and government agencies will never be greater than the operating expenses to run the business.
The Path Forward in Healthcare Services
While it is very concerning to digest that Walmart failed here, that can’t be the end of trying to bring reasonable quality care to a larger more scalable population. For all the great things Walmart is about, they, like most companies, have tremendous competitive advantage but are not excellent at everything.
Specifically, surviving in the healthcare services business involves navigating a complex landscape of regulations, technological advancements, patient needs, and financial constraints. In thinking through this interesting situation and using it as a case study for working on business acumen, I share these five key strategic tactics for organizations to thrive in the ecosystem. To survive and thrive organizations must:
- Demonstrate Adaptability and Innovation: Healthcare is constantly evolving, with new treatments, technologies, and regulations emerging regularly. Organizations that can adapt to these changes and innovate to meet evolving patient needs will be better positioned for long-term success.
- Invest in Technologies that Lower Costs and Scale Revenues: Embracing technology can improve patient care, enhance operational efficiency, facilitate data-driven decision-making, and ultimately reduce costs while driving more net revenues. This includes electronic health records (EHRs), telemedicine, data analytics, and other digital tools.
- Drive Efficient Operations: Streamlining processes and operations can help reduce costs and improve the overall efficiency of the organization. This includes optimizing workflows, reducing wait times, and minimizing administrative burdens.
- Provide Reasonable and Efficient Quality Patient Care: Providing reasonable and scalable quality patient care should always be a key focus, but it is not the top priority. Reasonable quality of care includes ensuring patients receive accurate diagnoses, effective treatments, and compassionate support throughout their healthcare journey.
- Collaborate and Form Partnerships: Collaboration with other healthcare providers, community organizations, and stakeholders can reduce costs, increase revenues, enhance care coordination, expand services, and improve patient outcomes.
In summary, the impact of Walmart’s decision will be felt for years to come as other similar organizations exit the space or worse yet never enter it for fear of financial failure. But, for all these challenges, there are also many opportunities. It takes good leadership, great strategies, and a focus on execution to take advantage of them. When someone does, they will have years of success.
