How Walmart Could Fix the US Health Care System
Health Care

How Walmart Could Fix the US Health Care System

Ricardo Moraes

Walmart, the nation's biggest employer, is trying to redesign how U.S. health care works. It's one of the few companies that has the power to succeed.

The retailer has been having early-stage talks with Humana about strengthening their partnership, which could also entail an acquisition of the insurer, sources familiar with the situation told CNBC. It also approached online pharmacy start-up PillPack to scoop it up for under $1 billion.

These discussions are still early, but point to an ambitious vision in health care to offer services and potentially even take on risk for a large patient population, including lower-income Americans and seniors.

Walmart's moves come just weeks after three megacompanies — Amazon, Berkshire Hathaway and J.P. Morgan — announced joint plans to improve the health care experience for their 1.3 million employees.

Walmart employs 2.3 million people. And it touches millions of Americans through its online marketplace and retail stores, where it sells everything from food to prescription medicines.

"Everyone in the country is talking about Amazon and its partners changing the landscape of self-insured, large employers," said Trevor Price, CEO of the health services firm Oxeon Partners, who closely follows Walmart.

"But the company that has the biggest opportunity to change landscape of health care, given all the Americans that walk through the door every week, is Walmart."

Walmart employees and customers come from all demographic groups, including the lower-income population that accounts for the vast majority of the nation's health costs.

This gives Walmart the potential to make a real difference.

"Walmart has access to the food consumption, medical data and shopping cart of Americans from all social classes, and not just the 1 percent," said Julie Papanek, a health-focused investor at Canaan Partners.

To cater to these groups, Walmart has been ramping up its health offerings, from pharmacy to care delivery, all with a focus on affordability.

The company offers a list of prescription drugs that it sells for $4, no insurance required. That service alone, the company claims, has saved its customers more than $3 billion since it was launched more than a decade ago.

It has attempted to build on that over the years by offering access to medical care — with mixed success. Last summer, it started offering lab testing services in some Florida and Texas locations. And it rolled out primary-care clinics that operate inside Walmart stores.

For its employees with complex needs like high-risk surgeries, the company has been adding facilities like Mayo Clinic to its network in a "Centers of Excellence" program.

One discrepancy, as Oxeon's Price points out, is that Walmart's business relies on selling everything consumers want — including unhealthy items like processed food and cigarettes. That could clash with a bigger move into health services. In contrast, CVS Health stopped selling cigarettes as part of its own transformation into health-care-centered company. Last year, CVS announced plans to acquire Aetna for $69 billion.

Still, as Walmart further invests in its grocery business, there is opportunity to tie in its increasing focus on both industries.

Health experts agree that Walmart is the one to watch.

"Outside of specialty drugs, Walmart is quietly the most affordable pharmacy in the country," said Thomas Cassels, a health researcher and consultant.

"And by contracting directly with providers across the country they are closing in on offering the most affordable medical services and episodes as well."

Your move, Amazon.

This article originally appeared at Read more from CNBC:

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