Walmart Health Closes Health Centers, Telehealth Service

Walmart’s exit from brick and mortar and virtual health is the latest indicator that some retailers are still floundering to develop a sustainable, affordable healthcare delivery model.

On April 30th, Walmart announced the shuttering of their telehealth services and in-person health centers. "The challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time,” said the retailer in a statement.

This lament is all too common for retailers with aspirations of entering the healthcare space. Over the past several years, Amazon, Walgreens, CVS and others have made large-scale investments in building and buying health care delivery organizations – only to scale down or return to their core competencies after encountering the same obstacles as Walmart. In February, Amazon announced hundreds of job cuts across its primary care and pharmacy businesses, and Walgreens has closed more than 140 VillageMD primary care locations in recent months over profitability concerns.

Why is it so challenging to establish a sustainable and cost-effective healthcare system?

The majority of these retailers are succumbing to the traditional healthcare system’s complex model of third-party payors. They have been focusing on reimbursement through negotiated agreements with health insurers, including commercial insurance and Medicare Advantage plans for seniors. It’s a complicated and convoluted process filled with audits, claims and obscure fees. And as negotiations get more competitive in these spaces and third party reimbursement stays flat or declines, more retailers are leaving the space, citing lack of profitability, administrative burdens and more.

The Sesame solution

For Sesame, these grievances aren’t surprising. In fact, they’re the reason we built Sesame in the first place. By creating a platform for direct connection between providers and patients, we’ve eliminated the hassle of claim submissions, denial appeals and administrative inconveniences. The “escalating operating costs” and “challenging reimbursement environment,” cited by WalMart are simply not a part of our marketplace.

The radical simplicity of this model is appreciated by Sesame partners, patients and providers alike. We’ve seen continued interest in telehealth in the direct pay segment of the economy, and prices on the Sesame marketplace have stayed affordable as clinicians avoid the expense and administrative challenges associated with insurance claims submission and reimbursement.

Clinicians on the Sesame platform continue to offer a range of in-person and video-based services, including clinical visits, labs and imaging, and affordable prices across all 50 states. In contrast to findings from insurance data (where telehealth visits are reimbursed at lower rates than in person-visits, and thus clinicians have an incentive to minimize telehealth and return to in-person care), direct pay care continues to see robust demand for video visits to avoid the wasted time, expense and exposure of brick and mortar care delivery.

What does this mean for the retail health space?

Retailers will continue to experiment in the health care delivery space - Amazon, for one, has several active experiments across insurance-based and direct pay care options supported by their investment in pharmacy.

Sesame has also seen the benefits of a large-scale retail partnership through our ongoing relationship with Costco Wholesale, and welcomes others looking to avoid the costs of building their own platform while still offering affordable solutions to their customers and members.

We will also continue to build as a direct-pay-first platform, supporting thousands of clinicians building their own private-pay practices on our infrastructure and serving hundreds of thousands of Americans seeking affordable, accessible care options nationwide.