Retail healthcare in the U.S. is rapidly gaining popularity, making headlines as major companies such as Walmart, Walgreens, CVS, and Amazon enter the medical scene with promises to transform primary care delivery. However, recent trends indicate that this model is struggling to establish itself sustainably. While these leading companies initially captured consumer and industry interest, navigating the complex healthcare environment has presented unforeseen challenges. There is now growing evidence that hospital-related facilities and health system settings will shape the future of healthcare, making it easier to provide quality, continuity, and trust in patient care.
Retail failure in healthcare – what went wrong?
Retail clinics appeared well-positioned to provide accessible and affordable primary care. But over the past year, its viability has been called into question. For example, Walmart recently closed all 51 of its health centers, taking a major step back from healthcare. Facing poor business performance, Walgreens announced plans to close 1,200 stores by 2027. CVS also adjusted its primary care expansion plans and scaled back its original goals.
The retail clinic model has struggled for several reasons. One fundamental flaw is that primary care has never been a core business for these retailers. For Walmart and Kroger, healthcare has always been a side project, a loss leader meant to support other parts of the business rather than a fully integrated component. This marginal position has limited investment in innovation and clinical capabilities, making it difficult to compete with traditional healthcare providers.
Additionally, retail clinics were primarily located in urban centers, which limited their scope of practice, exacerbating access problems for patients in rural and suburban areas where primary care shortages were most acute. Limited geographic coverage and lack of virtual care integration created barriers for patients seeking convenience. Without a more diversified strategy, such as expanding into rural markets or partnering with existing health networks, retail clinics will remain isolated and have less impact.
Amazon's approach: different strategy, similar challenges
Amazon, another major player in the retail healthcare space, has taken a different route by focusing on primary care, chronic disease management, prescription fulfillment, and virtual care delivery. This approach seemed promising, leveraging Amazon's technology capabilities and logistics reach. Amazon saw virtual care as a way to provide more scalable services and began working specifically to target chronic conditions.
But despite the strategic differences, Amazon's healthcare ambitions face similar challenges to brick-and-mortar retailers. The company's efforts in chronic care have been praised for their potential, but the company has struggled to build deep and lasting relationships with patients. This is something health systems excel at, with established infrastructure and comprehensive care models. By focusing on episodic and transactional care rather than managing a patient's entire ongoing needs, Amazon's potential to meaningfully impact healthcare outcomes is limited.
Why care that collaborates with hospitals and healthcare systems stands out
Hospitals and health systems offer unique benefits that are hard to come by in retail clinics, such as continuity of care, strong patient-provider relationships, and a comprehensive approach to health management. Traditional health care systems foster long-term relationships between patients and their health care providers, integrate various specialties, and maintain a deep understanding of an individual's health history. This is a key element essential to providing both primary and complex care.
Health systems also excel at providing coordinated care. Unlike a fragmented retail approach, hospital-affiliated care ensures patients have access to the right specialist at the right time with a unified plan that addresses their entire health needs. These capabilities highlight the challenges retailers face in meeting patient expectations as demand for integrated, comprehensive care increases.
The failure of Walmart, Walgreens, and other companies to fully enter the primary care space highlights why health systems remain central to the future of care delivery. While retail clinics have sought to cater to convenience, health systems offer the richness and continuity of service that patients really need.
Lessons for the future of medicine
Entering retail health care is not without its benefits. It provided lessons on the importance of convenience, consumer-centric experiences, and digital innovation. These are all things that health systems can and should continue to adopt. But failed retail healthcare endeavors also provide insight into what can go wrong. In other words, healthcare needs to be more than just a transactional experience. The focus should be on relationships, continuity, and coordination.
To succeed, retailers must make healthcare a core part of their business, expanding geographically into underserved areas and partnering with existing providers to strengthen their capabilities. Without such changes, the scope of retail healthcare will likely remain limited and will not be able to create the meaningful, systemic change that health systems can provide.
Crucial to the future of health care in the United States is that health systems, not retail giants, are in a position to provide the depth of care, relationship building, and long-term health outcomes patients deserve. Retail has brought innovation and attention to healthcare delivery, but the future lies with companies that treat healthcare as a core mission-driven initiative.
Photo: Michail_Petrov-96, Getty Images
Ryan Bengtson is an accomplished healthcare administrator with over 25 years of consulting, strategy, and business development experience. Prior to joining Panda Health, Ryan was the founder and president of Luminis, a digital health advisory firm. He previously served as Senior Vice President of Corporate Alliances at Waystar and Managing Director at Huron Consulting Group before beginning his career at Accenture.
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