The retail fail

Not all consolidation attempts are successful, even when backed with plenty of money. Major retailers like Walmart, CVS, and Amazon made major news when they entered the health care business, buying up practices and urgent care centers, with a promise to fix health care and drive down costs. But most have already given up and exited the market.

“These nontraditional health care players have entered health care with the notion that if we bring business principles to medicine, which is poorly organized and inefficient, we can solve that,” says Joseph Betancourt, M.D., president, The Commonwealth Fund. “Our incredibly fragmented health care system and payer space has made them quickly realize it is not that easy. I think Walmart’s exit is a signal that it’s not as easy to make margin here, it’s not as easy to find those efficiencies, and it certainly may not be generating the revenue that they anticipated.”

One positive impact he says they have had on the industry is increasing focus on access and convenience. “There is no doubt the large brick-and-mortar systems looked at what Minute Clinic could do and how consumers flocked to that convenience and how many of them are now building their urgent care centers to meet that need of convenience,” says Bettancourt. “I think that shaped the industry to be more efficient, that in order to survive you have to be more convenient, but I think they haven’t been able to create the value the way they want to so far, but that story is still in play.”