The “Walmart-ization” of Primary Care

By: Nichole Geary

Retail medical clinics are not new.  By now, everyone is familiar with CVS’s Minute Clinic and Walgreen’s Healthcare Clinic.  These types of clinics provide vaccination and general disease monitoring services.  However, as both companies have been very careful to differentiate its clinics from primary care providers, the overall impact on healthcare has been small, and for primary care providers, non-existent.   More recently, the entrance of Walmart has changed the landscape dramatically.

Walmart has been quietly increasing its retail medicine footprint, opening primary care clinics in rural health areas of South Carolina and Texas.  These clinics are designed to be customer-centric, advertising walk-in checkups for $40 and seven-day-a-week accessibility.  Currently, Walmart does not accept private insurance at its clinic locations; however it is enrolling clinics in state Medicaid programs.  The retail giant is working with QuadMed to staff the primary care clinics with nurse practitioners.  The retailer anticipates rolling out three more locations within the next year, targeting states that have not expanded Medicaid.

Consumer-directed medicine and chronic disease management is a large market, representing hundreds of billions of dollars spent annually.  Walmart has the marketing reach and store foot traffic to emerge as a strong player.  Combine Walmart’s marketing reach and the influx of new healthcare exchange enrollees with high deductible plans, and these new clinics could potentially change the way primary care services are provided on a national level.

While Walmart’s ultimate success as a primary care retailer and the effects of its $40 checkup on the national cost of healthcare remain to be seen, companies and individuals looking to follow Walmart’s example should take note—Walmart’s entry into the medical world raises several complicated legal hurdles.  For example, many states such as South Carolina and Texas have laws which ban the corporate practice of medicine.  These laws prohibit non-physician owned companies such as Walmart, to own or exert control over medical facilities or employ medical professionals.  In these states, all medical facility policies, even those affecting only clinic hours or payment rates must be made by a physician.

Moreover, several states have fee splitting laws that may limit Walmart’s ability to retain a percentage of clinic revenue.  In addition, many states laws prohibit payment for patient referral and control or limit the marketing of medical services.  In these states, marketing contracts that are based upon a per-lead fee may be prohibited.  Penalties for violation of these anti-referral laws range from civil fines to criminal prosecution.  Finally, scope of service issues may arise based upon the provision of primary care by nurse practitioners and the level of physician supervision required in each state.  Walmart’s ability to successfully navigate these legal issues will certainly play a part in its ultimate success as it attempts to “rollback” the prices of primary care.

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