Major retailers like Best Buy, Walmart, and Amazon are ramping up healthcare delivery investments. Best Buy is partnering with Atrium Health to offer in-home hospital care to patients. Walmart, which launched its own health centers in 2019, announced earlier this year that it would double the number of Walmart Health centers and expand into two new states. This follows Amazon’s multibillion-dollar acquisition of healthcare provider One Medical, which broadened the company’s reach in the highly competitive Medicare Advantage market.
These companies are well-positioned to transform healthcare for millions of Americans, many of whom are existing customers. But to achieve sustainable growth, they must thoughtfully manage long-standing challenges faced by traditional providers – on top of scrutiny from consumers and regulators.
More than half of Americans are dissatisfied with the healthcare system, according to a recent Gallup poll. Costliness and convenience (or lack thereof) are large factors, while provider shortages and the complexity of managing patient data are other common issues that legacy institutions struggle to manage. The striking disparities in healthcare outcomes for certain groups are another obstacle. Black women are three times as likely to die during childbirth as white women, our growing mental health crisis, and the lack of access to healthcare providers for millions of rural Americans. Nearly two-thirds of rural communities live in primary care health professional shortage areas (HPSAs).
Large retailers have the infrastructure to advance more affordable, efficient, and holistic healthcare solutions for consumers today. Experts predict that these companies are more likely to offer an enhanced patient experience, in large part because of the access and convenience they provide, particularly to patients living in HPSAs. A recent study found that 69 percent of Americans would consider switching to another provider that offers more appealing services, such as convenient locations they already visit and availability of same-day appointments.
The challenge for these companies will be establishing credibility in the highly regulated industry.
Senator Elizabeth Warren raised concerns that M&A in healthcare could lead to higher patient costs, diminished quality of care, and less competition. The senator pushed for the Federal Trade Commission to “carefully scrutinize” CVS Health’s acquisition of the primary care network Oak Street Health. The deal ultimately closed without regulatory intervention, but Senator Warren is not alone in these reservations. The FTC declined to contest Amazon’s acquisition of One Medical, but made it clear that it would “continue to look at possible harms to competition created by this merger as well as possible harms to consumers that may result from Amazon’s control and use of sensitive consumer health information held by One Medical.”
Major retailers, skilled at selling usefulness and ease, must prove that they are committed to the holistic well-being of consumers. Strategic M&A and partnerships with credible healthcare institutions are essential to this work. Engaging communities directly to understand challenges and co-develop solutions that better meet their needs is crucial. This is particularly critical for building trust with communities that may view large retailers in a less-than-favorable light.
Companies like Dollar General, for example, have been criticized for pricing out locally owned grocers in small towns and replacing healthy food options with heavily processed alternatives. CVS had a data privacy concern in 2021 when one billion search records were posted online in a data breach. Public mistrust is detrimental for organizations managing sensitive patient data – doing everything possible to regain it is imperative as they look to expand.
Walmart is headed in the right direction. Its strategic partnership with CareSource relies on evidence-based solutions “to improve health outcomes in under-resourced and underserved communities where racial health inequities are widespread.” The work will begin in Ohio, where CareSource is headquartered and focuses on cardiometabolic disease prevention (Heart disease is the leading cause of death in Ohio, according to the CDC). The partnership will also concentrate on improving maternal and child health outcomes in Georgia, which has the second-highest maternal mortality rate in the U.S.
Tailoring healthcare offerings to the specific needs of communities, at the hyperlocal level, will go a long way in building trust, mitigating government scrutiny, and managing costly reputational issues. There is no silver bullet for reforming the healthcare industry, but retailers that demonstrate a commitment to driving meaningful outcomes for patients stand to make a big splash in the industry.
Learn more about how Ichor advises clients in the healthcare industry to meet the evolving needs of patients, payers, providers, consumers, and the communities around them.
A former U.S. Senate health policy advisor and policy director for the Democratic Senatorial Campaign Committee, Ben Nathanson is leader of the Healthcare Practice at Ichor Strategies. He is based in the New York City office.
Connie Chang is a member of Ichor Strategies’ Community Team and a public health advocate with experience in community engagement and policy analysis. She is based in the New York City office.
