By Andria Cheng Retail reporter
OCTOBER 24, 2014 – NEW YORK (MarketWatch) — Wal-Mart Stores Inc. pushed down prices for some generic prescription drugs to just $4 eight years ago, setting a new industry standard. Now it is trying to do the same for seeing a doctor.
On Friday, a Walmart Care Clinic opened in Dalton, Ga., six months after Walmart U.S., the retailer’s WMT, -0.02% biggest unit, entered the business of providing primary health care. It now operates a dozen clinics in rural Texas, South Carolina and Georgia and has increased its target for openings this year to 17.
An office visit costs $40, which Walmart U.S. says is about half the industry standard, and just $4 for Walmart U.S. employees and family members with the company’s insurance. A pregnancy test costs just $3, and a cholesterol test $8. A typical retail clinic offers acute care only. But a Walmart Care Clinic also treats chronic conditions such as diabetes. (Walmart U.S. also leases space in its stores to 94 clinics owned by others that set their own pricing.)
“It was very important to us that we establish a retail price in the health-care industry because price leadership matters to us,” said Jennifer LaPerre, a Walmart U.S. senior director responsible for health and wellness, in an interview.
“The cost of health care is opaque. This is very transparent.”
Walmart U.S. hasn’t yet decided whether to roll out the clinics nationally. It so far has limited itself to markets where people are uninsured or underinsured, have a high rate of chronic diseases or struggle to get access to medical care, as well as places where it has a large number of employees. About 40% of the patients seen at the clinics so far don’t have a primary-care provider, LaPerre said.
But should it expand the concept, it could end up in competition with Target Corp. TGT, -1.08% , Walgreen Co. WAG, +0.63% and CVS Health Corp. CVS, +0.44% and potentially start a price war over health care.
Clinics are a growing part of retailers’ focus. CVS, for example, charges $22 for a pregnancy test at its clinic and up to $69 for a cholesterol test, according to its price lists. Walgreen this year added some chronic-care services to its lineup.
“The cost of health care is opaque,” said Robin Sherk, an analyst at research consultancy Kantar Retail. “This is very transparent and a very compelling proposition. It can be very disruptive to the marketplace.”
A Walmart Care Clinic may not appeal to everyone. The only insurance programs it accepts (beyond the one for Walmart employees) are Medicare for the elderly and, in South Carolina and Georgia, Medicaid for the poor. The co-pay at a clinic that accepts private insurance typically is between nothing and $25, said Thomas Charland, chief executive of Merchant Medicine, a consultancy targeting the walk-in medicine industry.
For Wal-Mart, the clinics could help lower its own health-care bill. The company cut its outlook this year after projecting an additional $500 million increase in health-care costs, which CEO Doug McMillon on Wednesday described as “a real issue.”
It also helps address another problem: sluggish traffic at its supercenters. The clinics are located inside the stores, sometimes by the pharmacy department, and patients could be tempted to buy other items on their way out.