Last week, WMT acquired MeMD, a virtual provider in Arizona. Per the press release, MeMD will “allow Walmart Health to provide access to virtual care across the nation including urgent, behavioral and primary care, complementing our in-person Walmart Health centers.” Can MeMD rescue Walmart’s struggling clinic strategy? I am skeptical.
Virtual is a great complement to the clinics
Adding virtual to the clinics could be a very good idea: Walmart’s clinics had the extraordinarily bad luck of rolling out during a pandemic. More importantly, they are weighed down with unresolved strategy contradictions (convenient transactional care vs. relationship-based primary care, high disposable income locations vs. care deserts) and an ill-designed business model (everyday low prices coupled with a heavy on-the-ground service infrastructure). See our assessment here. The leadership team behind the clinic strategy has largely departed.
How could virtual and the clinics complement each other? Stand-alone virtual care lacks a “last mile” solution – easy access to ancillaries which are unavoidably in-person (e.g., diagnostics such as x-rays, labs, blood draws, or nursing education on how to use devices). Walmart Clinics – with the right distribution across its store fleet – could provide that solution. Meaningfully more traffic to the stores will keep the retail-focused enterprise supported and engaged.
But competing with your referral sources is not
The challenge will be scaling: a Walmart Clinic serves people in the surrounding zip codes while any one virtual provider – even the emerging leaders – will have at best a handful of patients in such a geography. Yet MeMD is no leader: the company claims 5 million members in the press releases, but its market presence is otherwise well camouflaged. Most clients appear to be via smaller scale channel partners (e.g., UBA, HealthJoy, Health Advocate, Aflac). Even Walmart does not appear to be a customer.
That makes the acquisition of MeMD as a complement to the clinics puzzling.
The best way virtual can add store traffic would be if the clinics were a neutral utility collaborating with any virtual care provider. Acquisition of MeMD is consistent with WMT’s “own or procure” philosophy which works in retail, but in healthcare services – where so many hands touch each patient – partnering is critical. By owning MeMD, WMT will now compete with TDOC and Doctors-on-Demand, nudging them elsewhere for their last mile.
Boxed into a smaller opportunity
If MeMD can’t help the clinics, then why make the acquisition? It could be that WMT is just insourcing virtual care for its employees: WMT’s current vendor, Doctors-on-Demand, may be expensive. WMT may also be planning some big virtual care innovations which will be easier to drive if WMT owns the asset. The company is very proactive in managing employee health: it has engineered some remarkable capabilities in managing its employee health (e.g., its specialty care via national centers of excellence) developed through sustained innovation.
WMT may be more ambitious than that. Certainly, the healthcare press is using the MeMD acquisition to stoke the image of an AMZN vs. WMT “big retail disruptive entry into healthcare” rivalry. And WMT could help MeMD build the capabilities to be a contender (for example: help MeMD learn how to work with a Fortune 1 company, add 1.5M potential WMT employees as patients to its operating scale, package up its specialty referral capabilities to create credible alternative to the Doctors-on-Demand / Grand Rounds combination). But that will take time and a lot of work.
Even assuming success, WMT still lacks the channel to sell those services to other employers. And while virtual care has grown enormously during Covid, it has also gotten a lot more competitive given clear stand-alone leaders and traditional providers offering hybrid models. The days of riding market growth in virtual care are over. Given all that, it is hard to see MeMD enabling WMT to carve out a big piece of healthcare delivery (unless there are a lot more acquisitions in the pipeline) and it is easy to imagine the retail leaders within WMT losing patience with the complexity of such a strategy.
Either way, Walmart Clinics are likely to continue to languish.
 MeMD also has a handful of employer clients (Carvana, Decker Logistics) and some very targeted arrangements with health plans (e.g., BlueKC has arranged for MeMD to be temporarily available outside of its members during the public health emergency while using AmWell for its membership).
 Only a few years ago (2019), Walmart launched an exclusive relationship with Doctors on Demand for its associates (still applicable in 2021 per Associate’s benefits handbook).