Healthcare Writer Brian Eastwood

Digital Health

How Walmart F—– Around and Found Out

White flags are flying left and right, with Walmart announcing its retreat from care delivery less than a full week after Optum made a similar surrender.

Walmart’s five-year foray into primary care is ending with the closure of 51 health centers, the shuttering of its telehealth service, and the cancellation of any active ambitions in the space.

• The press release chalked up the “difficult decision” to a challenging reimbursement environment and high operating costs, which ultimately made the business unsustainable.

The abrupt finale arrives shortly after Walmart laid out plans to nearly double its footprint to 75+ health centers by the end of 2024, as well as several other marquee announcements.

• As recently as November, Walmart was inking health system partnerships with the likes of Orlando Health, and Bloomberg was even reporting on a potential acquisition of ChenMed that would have opened the doors to the Medicare Advantage market.

So what happened, and why couldn’t the nation’s largest retailer succeed in delivering care to the millions of underserved patients where it already has a presence? Mainly because retail clinics aren’t set up to succeed.

• Scaling brick-and-mortar clinics is simply a low margin endeavor. Reimbursement is low, provider costs are high, and the telehealth piece looks more commoditized every day.

• Even with Walmart’s economies of scale and armies of foot traffic, the system it was operating in doesn’t incentivize preventative care, but rather expensive procedures that it didn’t offer in-house.

The perfect storm of inflating costs and shiny technology that fails to actually reduce those costs is proving too much for retailers and telehealth companies alike. The only ones succeeding seem to have an edge that makes it possible:

• They have access to better rates (One Medical’s health system relationships)
• They have boosted margins from marking up generics (Hims & Hers)
• They control premium through value-based care arrangements
• They have some form of subscription revenue

The Takeaway

The moral of Walmart’s story is that even if you have all the best ingredients, the meal is still only going to be as good as the recipe. Having groceries and doctors under one roof doesn’t lead to more health visits if people don’t want to see a doctor where they get their groceries.

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The Wire

• Google Showcases Med-Gemini: Google took the lid off its next generation Med-Gemini AI, a medically-tuned multimodal model that’ll serve as the successor to Med PaLM 2 upon its upcoming launch. The paper examining Med-Gemini’s performance showed impressive results on the MedQA test, with its 91% accuracy outperforming Med PaLM 2 by 5% and GPT-4 by 1%. Although Med-Gemini also achieved “state-of-the-art” performance in areas like medical video understanding, actual care delivery doesn’t have multiple choice answers, and the paper reaches the familiar conclusion that “rigorous evaluation will be crucial before real-world deployment.”

• Teladoc’s Mixed Q1: Teladoc’s first investor call since the departure of long-time CEO Jason Gorevic was definitely a mixed bag, beating expectations with $646M of Q1 revenue while disappointing with a net loss of $82M. The net loss is up 18% from the first quarter of last year despite the ongoing “operational review” aimed at boosting its bottom line. The Chronic Care segment was a bright spot on the most recent call (9% enrollment growth), although it was overshadowed by BetterHelp’s 4% revenue shrinkage caused by an 11% decline in users.

• Doing More For Less: New research from the ACR’s Harvey L. Neiman Health Policy Institute confirms what many physicians already knew: they’re working harder for less compensation. Given the combination of RVU increases, conversion factor decreases, and inflation, reimbursement per beneficiary decreased 2.3% for physicians, while increasing an eye-popping 206.5% for non-physician practitioners. The authors say the declines are partially driven by Medicare’s budget neutrality rules, which stipulate that increases in one area (like primary care) have to be offset by declines elsewhere (like specialists).

• Turquoise Acquires Bramble: Turquoise Health is acquiring network management platform Bramble Health, which will be integrated into Turquoise’s solutions for employers. Although the press release leaves a bit to the imagination, Bramble’s leadership team is definitely coming along for the ride, and its core platform is a “transparent provider marketplace that enables customers to choose and contract with their preferred network partners based on validated cost and quality measures.”

• Female Physicians Outperform: Female physicians deliver better results, at least according to a large study of 800k Medicare patients recently published in Annals of Internal Medicine. Both female and male patients had a lower mortality when treated by female physicians (-0.16 percentage points compared to male physicians), however the benefit was even larger if the patient was also female (-0.24pp). The pattern was similar for readmissions, which the authors suggest might be attributed to less miscommunication, misunderstanding, and bias.

• Kaiser Adds Innovaccer: Kaiser Permanente is deploying Innovaccer’s AI platform and population health management solutions to over 650k members in Washington. Kaiser’s VP of AI said that their modus operandi on AI is to find areas where the tech can complement its physicians to boost quality of care, which is right in line with Innovaccer’s ability to provide an EHR- and payer-agnostic platform for advancing value-based care.

• Out-of-Network Mental Healthcare: A massive 284 page report from RTI International analyzed claims and enrollment data for 22M+ people between 2019 and 2021, finding that patients went out-of-network for behavioral health visits 3.5x more often than for medical or surgical visits. That multiple jumped to 8.9x for appointments with a psychiatrist, who had higher out-of-network use than 24 medical specialties evaluated. Despite landmark parity laws seeking to make mental health coverage equal to physical care, payors reimbursed medical and surgical care 22% higher than behavioral health visits.

• FDA to Oversee Lab Tests: The FDA finalized a new rule to treat laboratory-developed tests as medical devices, putting them in the crosshairs of federal oversight. Despite encompassing products like Theranos blood tests and misleading prenatal genetic tests, lab-developed tests have historically been considered low risk, but the new rules will phase in FDA oversight over the next four-years to ensure the results can be trusted. An estimated 12,000 labs will need to be submitted for evaluation, which has led to pushback from hospitals saying the high costs of regulation will only limit access for patients.

• Food-as-Medicine Results: Foodsmart published results from its three year partnership with Chorus Community Health Plans, an affiliate of Children’s Wisconsin. Over 11,000 members used Foodsmart to handle their food benefits management (SNAP benefits, personalized diets, nutrition plans for chronic conditions), which saved CCHP $2.6M in the first year, as well as an average of $33 per member per month. The greatest benefits were seen in members with chronic conditions, including diabetes ($107 PMPM), hypertension ($101 PMPM), and hyperlipidemia ($167 PMPM).

• AMA + eClinicalWorks: American Medical Administrators is partnering with eClinicalWorks to equip its providers with a new ambulatory cloud EHR and revenue cycle management solutions. AMA said the partnership stemmed from its mission to champion the autonomy of independent physicians, and it didn’t skip any of the bells and whistles. It’ll also be rolling out eClinicalWorks full suite of IT solutions, including Healow engagement, chronic care management, and remote patient monitoring.

• Do Lipid-Lowering EHR Alerts Work? The PROMPT-LIPID trial found that EHR alerts that encourage escalating lipid-lowering therapy (LLT) might not have a significant impact, unless clinicians stop dismissing them. Among 47 clinicians and 1,370 randomized patients, a similar share of the alerts group patients had their LLT increased as patients who didn’t have EHR alerts (14.1% vs. 10.4%). However, among patients whose doctors didn’t dismiss the alerts, LLT intensification more than doubled, underscoring the need to tackle clinician alert dismissals.

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