Maybe Walmart should open a hospital instead

Kaiser Health News and NPR found a request for information letter from Walmart to prospective partners saying the retailer was seeking help to “dramatically … lower the cost of healthcare … by becoming the largest provider of primary healthcare services in the nation.” When asked, Walmart denied that it had such an objective.

Walmart is probably planning to build a network of in-store clinics that are a lot like MinuteClinics. Walmart’s already had a couple false starts in this arena and there’s no great reason to be confident that it will be successful this time around. Most people seem to think Walmart mainly wants to boost retail traffic.

As the article points out, primary care is not where the costs are. Rather, the big money is in specialty physicians and hospitals. I’d like to see Walmart de-emphasize its me-too store clinic strategy and do something bold and potentially impactful.

Open a hospital for instance. Maybe partner with Toyota or Apple to do so.

Ok, I know it’s a completely impractical suggestion, but I would really like to see someone apply Walmart’s supply chain and retail expertise, Toyota’s process engineering and Apple’s design philosophy toward health care. Rather than start with the presumption that everything is going to be expensive, complex and opaque, go for a lean, mean, yet elegant structure.

It’s probably impossible to build such a facility in the US. But maybe the first one can be set up just across the border in Mexico, drawing traffic from north and south of the border –probably self-pay and high deductible patients to start. Staffing will clearly be a challenge, but with the right setup it could become an attractive place to work.

The Walmart $4 generic issue was a bold move. Copying MinuteClinics is not. Why not go for something more worthwhile?

November 9, 2011

8 thoughts on “Maybe Walmart should open a hospital instead”

  1. Now, that’s thinking big! I love it. Why not learn from the experts, especially since health care is beginning to address problems that other industries have already addressed well?

  2. “Walmart is probably planning to build a network of in-store clinics that are a lot like MinuteClinics.”

    Well, Dave, they already have ~140 of them, & are by most reckoning currently the 3rd largest retail clinics operator, so… 😉

    As is your habit, you’ve posed a bold question regarding Walmart’s approach to digging themselves a health care business toehold; a bolder question than many who tried summming up Walmart’s health initiative “news” earlier in the day. But WMT taking on a hospital-level complexity of care would be as if Sony had tried to build living-room stereo “furniture” in the 50s to compete with Motorola & RCA (pp 184-6 of The Innovators’ Prescription…). It – disruptive innovation – just doesn’t happen that way.

  3. Thanks, Greg. Certainly there are some clinics in Walmarts now but (at least according to the article) they are run by independent vendors and have fallen far short of the 400 clinics Walmart promise in 2007.

    As for disruptive innovation, I see your point. However not all innovation is disruptive in the way Christensen describes it (cheaper, lower quality alternatives that initially appeal to undemanding segments.)

    To name a few bold innovations from the partners I’ve suggested:

    Walmart: Every day low pricing, $4 generic drug program

    Toyota: Toyota Production System, Prius

    Apple: Macintosh, iPad

  4. “However not all innovation is disruptive in the way Christensen describes it (cheaper, lower quality alternatives that initially appeal to undemanding segments.)

    To name a few bold innovations from the partners I’ve suggested:

    Walmart: Every day low pricing, $4 generic drug program…”

    Dave, I may be missing something: how is WMT’s $4 generics initiative not fairly typical of the kinds of innovation that fit the Christensen model?

    and WMT’s modus operandi is contracting vendors for goods & services sold under its banner. They don’t make generics meds, or bait coolers, either.

  5. Dave, we agree re: generics, but some DO find them ‘inferior’ with respect to dosage, color, shape, size, ‘status’, maker credibility, and a variety of other things that influence a person to buy/not buy, or take/not take.

    It’s WMT’s approach to the ROLE of generics in their product mix – its purpose with respect to their shoppers – that may be considered innovative.

    Innovative is “new” much less often than is usually appreciated. More often it’s just “different with purpose”, if you see where I’m going; a different way of seeing, and supplying tools to accomplish, a “job to be done” to borrow from Christensen again.

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