Walmart to close all US health clinics, citing lack of profitability

Retail giant Walmart announced on Tuesday its decision to shut all 51 of its health centres across the United States, along with discontinuing its virtual healthcare operations. The move comes as the company determined the healthcare business model was unsustainable due to rising operational costs and reimbursement challenges.

Marilee McInnis, a spokeswoman for Walmart, explained to Reuters, "Healthcare is expensive to run. We were finding that the increased labour and operating costs environment, like with reimbursement, both public and private, made it difficult (to run the business) and obvious we had to close."

Walmart stressed that the closure was prompted by a "lack of profitability" within the care business, rendering it unsustainable at the present time. The health centres, typically located adjacent to Walmart Supercentres and offering services such as primary care, dental care, behavioural health, labs, and telehealth, are expected to cease operations within the next 30 to 90 days.

Despite not disclosing specific financial details, Walmart expressed its intention to shift focus to its extensive network of pharmacies and Vision Centres within its stores, which provide services similar to those offered by the now-closing health centres. Analysts believe that while the decision is disappointing, it is not expected to significantly impact Walmart's financial outlook.

This decision marks a notable reversal of Walmart's previous plans to expand its health centre locations in the US, reflecting the challenges faced by retailers venturing into healthcare services. Similarly, other companies such as Walgreens, Amazon, and CVS have encountered difficulties in this sector, with some experiencing slower-than-expected growth and significant financial setbacks.

The struggles faced by Walmart and other retailers underscore the complexities of the US healthcare system, characterised by a mix of employer-funded care, private health insurance, and government programs. These challenges come amid broader issues in the healthcare sector, including physician shortages and escalating drug costs.

In response to the news, Walmart shares dipped by 1 per cent in morning trading on Tuesday, reflecting investor reaction to the closure announcement.

(With Reuters inputs)