In early July, rumors arose about Humana possibly buying Walmart’s shuttered clinics. The Louisville, Kentucky-based insurer is now announcing its intention to lease clinical space at 23 Walmart Supercenter retail stores. Where the Bentonville, Arkansas-based retailer is stepping back from its ambitions in primary care, Humana sees the opportunity to expand its primary care business for seniors in vital markets.
“Humana’s business model is focused on Medicare Advantage, and Medicare Advantage enrollment is growing rapidly in rural areas where Walmart has a significant retail footprint,” said Hal Andrews, president and CEO of Brentwood, Tennessee-based Trilliant Health, a healthcare analytics company. “With Humana’s focus on developing value-based primary care for seniors, the Walmart locations are a logical fit for Humana.”
In 23 of Walmart’s 51 shuttered health centers, Humana is opening CenterWell Senior Primary Care and Conviva Care Centers, which provide senior care and include access to physicians, nurse practitioners, medical assistants, care coaches, social workers, behavioral health specialists and clinical pharmacists. The locations are in Florida, Georgia, Missouri and Texas and will be open “no later” than the first half of 2025, according to the announcement.
“Humana decided to lease these locations because they represent a unique opportunity to lease space from a world-class community partner such as Walmart and offer seniors in these four states greater access to our integrated approach to care,” said Mark Taylor, director of corporate communications for Humana, in an email.
Leasing these centers is a “relatively inexpensive” way to “fill in gaps in their coverage,” said Michael Greeley, cofounder and general partner of Flare Capital Partners, in an interview.
He added that Humana will likely be more successful with these centers than Walmart. Many retailers are struggling in healthcare because they don’t understand what it takes to manage healthcare assets from an operational and labor perspective. Dollar General also recently ended its healthcare pilot with DocGo, while Walgreens-backed VillageMD has been closing a series of clinics.
“It’s very expensive labor, and [these centers] can lose a lot of money if they’re not fully utilized,” Greeley said. “And so Humana — because of the insurer relationship — can activate, engage, incentivize insured lives to use these facilities. They have the infrastructure to manage these people. … A retailer like Walmart doesn’t come with all of that infrastructure and had to build it out. I think the thesis Walmart had was intellectually compelling: ‘We have all this foot traffic in the store, and so while people are there, they’ll just go next door into our clinics.’ And I think it was much more of an operational challenge than they expected.”
Another healthcare expert — Seth Joseph, founder and managing partner of Boston-based consulting firm Summit Health Advisors — noted that Walmart was in talks to acquire Humana in 2018, meaning the two companies are fairly familiar with each other.
“This is a deal that makes sense between two organizations that know each other,” he said. “Humana gets access to pre-build clinical space in attractive locations, and Walmart gets a modest revenue stream while dramatically reducing costs associated with the clinics themselves.”
Joseph noted that Humana likely chose to lease the centers from Walmart instead of buying them because it’s an easier transaction with lower risk. Andrews added that there would be some logistical challenges to buying since the clinics are located in or adjacent to the Walmart store. The legal costs to subdivide a Walmart store for someone to buy the clinic space would probably exceed the purchase price.
What will happen with the remaining 28 shuttered Walmart clinics? Health system Mercy announced last week that it is leasing three of them in Arkansas. Joseph said it’s a possibility for Humana to lease additional locations in the future depending on the success of the first 23, though some markets will make more sense than others, so “Walmart will retain the right to look for other options.” However, Joseph doesn’t foresee another insurer taking over the clinics.
When asked if Humana will pursue additional locations, Taylor, the Humana spokesperson, said he won’t speculate on Humana’s future business plans.
Greeley stated it’s likely some of the centers will have to close completely, but hopes to see other hospital systems like Mercy pick up the remaining locations.
“I think it will be interesting how [aggressively] the hospital systems get into this market, versus the insurers,” he said. “I was pleased to see Mercy. Maybe you’ll see in some of these other markets where there are stranded facilities [that] the local hospital systems will be more creative. … I worry, but I don’t know this to be true, that some of these will be in unattractive markets, or markets with financially weak healthcare systems, and so maybe there are some that get shut down ultimately.”
Photo: Dina Mariani, Getty Images
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