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Walmart in pursuit of disruptive innovation

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Walmart is in the early stages of a test involving its first company-owned in-store health clinics. If the project succeeds in its objectives and proves scalable, it could represent what Harvard Business School professor Clayton Christensen calls disruptive innovation, or if one prefers the earlier and more dramatic formulation of Austrian-born economist Joseph Schumpeter, creative ­destruction.

The retailer (which since 2005 has leased space to independent health clinic operators and now has such facilities in some 100 locations in this country) currently has Walmart Care Clinics in three Texas communities — Cooperas Cove, Benbrook and Carrollton. Staffed by nurse practitioners, the facilities are designed to provide high-quality primary care to Walmart employees and customers.

As one would expect from a company that has always been known for sharp pricing, the new clinic model places special emphasis on low costs. For most Walmart associates and family members who are covered by company health plans, a visit to a clinic costs just $4; for other consumers the price is $40. (Additional fees are charged for such services as diagnostic tests and ­immunizations.)

The $4 figure readily brings to mind the decisive role that Walmart played in the retail pharmacy market in 2006 when it began filling 30-day prescriptions for hundreds of commonly used generic medications at that price. Initially decried by many in the community pharmacy business, the policy soon became a catalyst that caused other companies to rethink their prescription drug pricing and pharmacy loyalty programs.

If Walmart manages to establish a new price structure for health care services delivered in a retail setting, that achievement will very likely have a ripple effect in the burgeoning in-store clinic sector, where CVS Caaremark Corp. and Walgreen Co. are currently the leaders.

The company is also working to extend the health care continuum and integrate its clinics into the broader community of physicians and other providers. In the process, the clinics should improve access for patients and help relieve the growing burden on primary care doctors, who are in increasingly short supply in many parts of the ­country.

Services offered by Walmart Care Clinics begin with basic acute care, including the diagnosis and treatment of such common illnesses as flu and strep throat, and extend to management of such chronic conditions as hypertension, diabetes and asthma. Wellness and preventive care services, including health screenings and vaccinations for influenza and other conditions, are also available.

For Walmart — which is working with QuadMed, an innovator in health care management solutions, to staff and manage its clinics — the foray into company-owned health clinics comes at a propitious moment. Implementation of the Affordable Care Act is bringing millions of people who previously lacked health insurance into the system and, equally important, accelerating the search for ways to make health care delivery more effective and cost efficient.

The Walmart Care Clinic is a sure sign that, under the direction of Labeed Diab, who became president of the retailer’s health and wellness business this spring, the company is serious about its commitment to providing associates and customers with affordable access to health care.

Other community pharmacy operators, especially those with in-store clinics, should keep a close eye on developments at Walmart. With its tremendous scale in health care (it is the third biggest dispenser of prescription medications in the U.S. and the top seller of over-the-counter products, and also has a large and growing vision care business) and commitment to innovation, the company, as it convincingly demonstrated with the $4 generics program, can raise the bar for the entire sector.


ECRM_06-01-22


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