What Health Systems Can Learn from Retail Health Care Failures
Providing medical care proves to be more challenging than companies expected.
// By Brian Griffin //
As major retailers struggle to deliver primary care services, some health care strategy experts say the situation provides health systems with an important learning opportunity.
Earlier this year, Walmart closed all 51 of the company’s health centers and sold off its virtual care business, while Walgreens shuttered 160 of the chain’s VillageMD clinics. In addition, Amazon laid off hundreds of workers in its One Medical practice and pharmacy division.
James Gardner, health care expert
“What these retailers discovered is that it’s extremely difficult to profitably deliver quality health care,” says James Gardner, a leading health care expert who specializes in disruptive innovation. Gardner attributes their difficulties to several factors, including:
- Tight primary care profit margins
- Major workforce shortages (e.g., doctors, nurses)
- Rising health care labor costs
- Administrative burdens
“Clearly, retailers failed to realize how complex the medical field is and how different it is [from] their operating models,” observes Gardner.
Disruption Efforts Continue
Despite recent setbacks, Gardner believes major retailers, along with technology giants and start-up ventures, will continue to pursue health care strategies: “We’re talking about a nearly $5 trillion industry that’s broken and in desperate need of transformation. That makes it vulnerable to ongoing disruption by outsiders with new ideas.”
Evidence of dysfunction can be found in a 2023 Gallup poll results, which showed that 54 percent of Americans rate health care in the United States as fair or poor, and only 46 percent rate it as good or excellent. Similar dissatisfaction was expressed in a 2023 Harris poll that found 60 percent of consumers graded the nation’s medical system as a “C” or lower, and 70 percent indicated it failed to meet their needs.
Read on for more insights from industry thought leaders Matt Gove and Dan Miers on what this means for health systems, and a case study of a successful retail model adopted by Baptist Health in Kentucky.