The failure of Walmart Health
The failure of Walmart Health
It's not that it failed, it's that it failed doing something so boring
Last week, Business Insider reported that Walmart’s health venture is struggling. Despite its beginnings as a cash-pay provider intended to make healthcare simpler, Walmart is floundering with some pretty basic aspects of patient visits: Implementing their EMR, verifying their patients’ insurance coverage, and billing correctly.
I read the Business Insider piece with schadenfreude (sorry).
But after the schadenfreude came sadness. Walmart actually had an excellent opportunity to step back from offering healthcare directly and instead try something innovative and specific to the Walmart business. In my mind, the obvious option would have been integrating food pharmacy “prescriptions” into their user experience. So why did they take the least interesting path?
What could a food pharmacy accomplish?
A significant number of Americans suffer from poor nutrition, lack of access to food— especially to high quality food—and from conditions related to this food insecurity. Approximately 1 in 10 American households were food insecure at some point in 2020, according to the USDA. Rates of food insecurity are higher in households with children and households headed by a single parent, and food insecurity disproportionately affects Black and Hispanic households. Meanwhile, nearly half of all adults in the U.S. have hypertension, and only in a quarter of those adults is their hypertension considered to be controlled. Type II diabetes is increasingly occurring in younger populations.
In limited pilots, food pharmacies have shown a dramatic ability to alleviate some of this burden of disease. In one pilot, Geisinger Health, an innovative health system in central Pennsylvania, offered the food, menus, and recipes to patients with poorly controlled diabetes who also reported food insecurity, as well as their families. When paired with coaching, the pilot saw an average drop in HbA1c levels, a widely used marker of how controlled diabetes is, of 2 points over a year. This was a big improvement compared to the average drop of 0.5 and 1.2 points Geisinger reported seeing when adding a second or third medication to diabetic patients’ regimens.
Another study, published in Health Affairs, offered general healthy meals to one group, and medically tailored meals to another. Compared to the control population, both groups that received meals saw a reduction in emergency room visits and fewer expensive healthcare interventions. Those that received medically tailored meals also had fewer inpatient admissions.
In these limited pilots, food pharmacies have also had an impact on cost. The Geisinger pilot achieved an average two-thirds drop in insurer costs per person. While the second pilot mentioned above did not have cost as one of their primary outcomes, the authors found that the medically tailored meal group achieved lower medical spending.
Despite this evidence, as Nikhil Krishnan pointed out in his comprehensive piece on food as medicine, there are three major barriers to implementing food pharmacies across the U.S.:
The inability of doctors to write food “prescriptions”
The time, space, and skill challenges of preparing fresh food
The lack of integration between insurers and food retailers that would allow patients to fill food prescriptions and get some or all of the cost covered by insurance
Where Walmart could have made a difference
Walmart has tried innovative ideas before. Several years ago, the corporation caused a big splash by announcing a partnership with a short list of hospitals, including the Mayo Clinic and Geisinger Health. Under the partnership, now known as Walmart’s Centers of Excellence program, the corporation flies employees needing specific, common surgeries to those hospitals. There, Walmart employees receive the surgery, as well as food and lodging, for free. The partnership is worthwhile to Walmart because the costs of having the surgeries performed at high volume, high quality facilities outweigh the costs patients incur through the traditional process.
Walmart could attempt this pilot because it’s not only the largest employer in the U.S., it’s also self-insured. This means that Walmart itself takes the financial risk of insuring its patients (most likely with one of the major insurers handling the administrative portion of the insurance). It also means that Walmart can run pilots with its insurance program—any cost savings or losses are on the corporation.
Which is why it seems so obvious that Walmart could try a food pharmacy pilot, taking a stab at the third of the three barriers listed above—uniquely, it’s both the insurer for its employees as well as an enormous food retailer.
According to Walmart, 90% of Americans live within 10 miles of a Walmart location. The corporation is in the business of transporting, pricing, and selling food. And (not to elide Walmart’s worker issues, which are real) they genuinely have low prices. Further, if Walmart wanted to expand into new areas of healthcare, the corporation could have piloted the program with its own insurance, and then used the learnings and outcomes data to pitch insurers and providers.
Making it even simpler, running a food pharmacy appears to be fairly cheap. From the Harvard Business Review article covering the Geisinger pilot:
Employee expenses form the bulk of the costs; food accounts for only a small portion of the total. Program costs (before clinical and behavioral gains) initially amounted to $3,000 to $5,000 per year per patient across the initiative, with that cost decreasing to about $2,200 as we have progressed and learned.
And I don’t think Geisinger was able to buy its food at Walmart wholesale prices, either.
Granted, I’m generally skeptical of studies that show dramatic cost savings with one simple patient intervention, primarily because I think it’s often too simple and removed from other aspects of patients’ lives. As the disappointing results of the Camden Coalition’s randomized, controlled trial showed, sometimes things aren’t as simple as providing intensive, high quality care.
That said, there’s no doubt that access to healthy food—especially for patients with conditions that are directly tied to diet, like hypertension, diabetes, or gout—could impact patients’ quality of life as well as, potentially, the total cost of lifetime care. (It’s also noteworthy that the patients in the Camden Coalition study were at the extreme margins and that the study was short; structural changes take time.)
In short, while a food pharmacy might not solve all of the conditions related to the Standard American Diet, it at least has all the makings of an interesting pilot, especially for the largest food retailer in the U.S., which also happens to be interested in healthcare.
What happened?
I suspect I’m not the very first person to suggest Walmart try to incubate some kind of food pharmacy program, which is why I’m so surprised there’s been limited talk of it. Am I missing something major? (Seriously, if I am, let me know.)
With some heavy googling, I was able to find a recent report (report is paywalled, summary article is not), funded by a grant by Walmart, that suggests food retailers implement one of five different food-as-medicine programs, including medically tailored nutrition and food prescription programs. But that’s it.
In lieu of further evidence, I think there are a few potential reasons as to why Walmart chose providing direct healthcare services over implementing a food pharmacy test program:
There’s an existing road map for a cash pay system, there isn’t for a food pharmacy at scale
Walmart employees, while underpaid, are generally healthy and food secure enough not to need a food pharmacy program, so there’s no point in piloting one
Walmart fell prey to the “businessman politician” phenomenon, where they thought they could run healthcare like a business and do it more efficiently. However, they forgot to account for all of the stakeholders, each with decades of reasoning behind why they do what they do—and that Gordian knot can’t be cut with marketing or money.
I haven't been able to find definitive answers, but I can say that I reviewed interviews given by top Walmart healthcare executives going back several years and didn’t hear anyone say anything interesting or new. Based on this (admittedly limited!) data point, my guess is that Walmart fell for #3: They thought they could do it better, but they failed to calculate how complicated healthcare is.
Conclusion
A few years ago, I totally believed big tech and retail companies could take over healthcare. Now I more or less expect them to underwhelm. I wish one of them would try something new. And for Walmart, the “something new” seems obvious.
This information shouldn’t be taken as investment advice (obviously), and the opinions expressed are entirely my own, not representative of my employer or anyone else.