Wal-Mart Aims to Conquer Medical Services

Wal-Mart (NYSE:WMT) plans to offer medical services ranging from the management of diabetes to the treatment of HIV infections.

Hot Feature: Will Cisco Continue to Outperform After Earnings?

In the same week in late October that Wal-Mart announced it would stop offering health insurance benefits to new part-time employees, it sent out a request for partners to help it “lower the cost of healthcare” by becoming “the largest provider of primary healthcare services in the nation.” Wal-Mart spokeswoman Tara Raddohl confirmed the proposal on Tuesday.

The 14-page request asks firms to lend their expertise in a wide variety of areas, including managing and monitoring patients with chronic, costly health conditions. Partners in the venture will be selected in January.

By expanding the number of its in-store medical clinics, Wal-Mart could be hoping to boost store traffic, but the move would also help the corporation capitalize on growing demand for primary care in 2014, when the federal health law full kicks in and millions more Americans are expected to have health insurance.

While many retail clinics offer basic services such as tests and vaccinations, Wal-Mart hopes to offer a service that will oversee patients with complicated chronic conditions, including asthma, HIV, arthritis, depression, and sleep apnea.

Wal-Mart’s massive purchasing power could help lower healthcare costs for some patients, while its partnerships would increase patients’ access to primary care services.

However, family physicians are objecting to the Wal-Mart approach, arguing that patients need a regular source of care from someone who knows their medical history. Glen Stream, president of the American Academy of Family Physicians, says Wal-Mart’s plans would only further fragment care. Others aren’t convinced Wal-Mart’s plan would significantly cut healthcare costs

Still, the move could help boost sales by increasing foot traffic in Wal-Mart stores. “Their traffic has been declining for over two years and they’ve been losing market share,” said Colin McGranahan, a retail analyst for Sanford C. Bernstein & Co. “If you get someone in the door, you can also sell them milk and a shotgun.”

Wal-Mart is by no means the first retailer to ramp up its medical offerings — CVS Caremark (NYSE:CVS), Walgreens (NYSE:WAG), Kroger (NYSE:KR) and Target (NYSE:TGT) have all recently reinvigorated efforts to open in-store medical clinics. Until recently, Wal-Mart was the nation’s leader in opening such clinics, but now finds itself in third place with about 140 of them, while CVS Caremark has nearly 550 “Minute Clinics” and Walgreens has 355 “Take Care” clinics.

Wal-Mart tried to regain its position by switching up strategies. Before, the company leased store space to independent clinic vendors, but early efforts, backed by venture capital money, faltered and the firm failed to open the 400 clinics it had intended by 2010. More recently, Wal-Mart switched strategies and began leasing space to hospital systems, and the clinics began to grow again. However, last month, the company opened three in-store clinics while closing ten.

Don’t Miss: Will This New Ad Trifecta Challenge Google?

“This is an industry where people haven’t figured out how to make money,” said Tom Charland, CEO of Merchant Medicine, a Minnesota-based research and consulting firm. “My guess is the whole purpose of [Wal-Mart’s] request for information is to find someone to help them because they’ve not been able to pull it off.”