Walmart to shutter health care centers, cites lack of profitability

In a move that caught the industry by surprise, Walmart is reversing course on providing primary care services. 

In the latest setback to retail health care, the retail giant said it has made the “difficult decision” to close its 51 Walmart Health clinics and also shut down its virtual care service. The news came one month after Walmart said it planned to open 22 new Walmart Health locations this year. It also comes as Walgreens has pulled back on its plan to expand its VillageMD primary care clinics, with plans to close about 160 locations.  

“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,” the retailer said. “This is a difficult decision, and like others, the challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time.”

The retailer said it will continue to provide health and wellness services across the country through its nearly 4,600 pharmacies and more than 3,000 Vision Centers. 

Walmart launched Walmart Health in 2019. The centers are designed to allow patients to manage their health care in one location, with services that include dental, primary care, behavioral health, x-ray, labs and more. The clinics are located across five states:  Arkansas, Florida, Georgia, Illinois and Texas.

"The attempts to enter these spaces and some of the failures of doing so really underscore the challenges and complexities of operating in the U.S. health care space," David Silverman, a retail analyst at Fitch Ratings, told The New York Times. He noted the layers of government and insurance providers that are involved in health care.

Walmart Health associates are eligible to transfer to any other Walmart or Sam’s Club location, the company said. They will be paid for 90 days, unless they transfer to another location during that time or leave the company. After 90 days, if they do not transfer or leave, eligible associates will receive severance benefits.

The clinic’s provider partners will continue to serve existing patients while clinics are open. Through their respective employers, these providers will be paid for 90 days, after which eligible providers will receive transition payments.