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Our Take: Walmart to acquire on-demand telehealth provider MeMD

May 10, 2021

Walmart announced Thursday that it has entered into an agreement for Walmart Health to acquire MeMD, a Scottsdale, Ariz.-based multi-specialty telehealth provider.

The retail goliath said the MeMD acquisition would allow Walmart Health to provide access to virtual care across the nation, complementing the company’s in-person Walmart Health centers.

The first Walmart Health center opened in Georgia in September 2019, offering primary and urgent care, lab testing, X-ray and diagnostic services, counseling, and dental, optical and hearing services. By last September, there were six centers, five in Georgia and one in Arkansas, and Walmart said it intended to open seven more in Georgia and two in Chicago by the end of its fiscal year. This year, Walmart Health is expanding its brick-and-mortar centers into several cities in Florida.

According to MeMD’s website, the business delivers virtual medical and mental health visits to 5 million members nationwide. Services include urgent care, men’s and women’s health, talk therapy, teen therapy, and psychiatry.

MeMD was founded in 2010 by Dr. John Shufeldt, an emergency medicine physician who founded the NextCare chain of urgent care clinics in 1993 and served as CEO until 2010. He also briefly served as CEO of Doctors Express, a chain of urgent care centers that was sold to American Family Care in 2013.

Financial terms of the agreement were not disclosed. The transaction is subject to regulatory approval and Walmart expects it to close “in the coming months.”

Our Take: Health care delivery continues to morph, with the distinction between provider, payer, employer, and retailer seeming to blur more each year and with every significant M&A announcement.

Walmart, the largest private employer in the U.S. and the largest retailer in the world, began establishing direct-contracting relationships with hospitals and health systems in 2016, launching insurance products connected to value-based contracts with providers that deliver care to Walmart’s employees. Then, last October, Walmart launched Walmart Insurance Services, providing consumers a choice of Medicare plans offered by Humana, UnitedHealthcare, Anthem, and a number of other insurers.

Walmart’s purchase of a telehealth provider was inevitable, in light of the increased demand for virtual care in the past year and the expectations that telehealth will remain a popular option beyond the pandemic.

Meanwhile, Amazon branched out into virtual care a little over a year and a half ago, with Amazon Care. It started by offering medical care via chat and video conferencing, along with in-person visits when warranted, to employees enrolled in the company’s health insurance plan who lived in the Seattle area. In March, Amazon announced it was making Amazon Care available to other employers in Washington state and would be expanding the virtual care services to other companies and Amazon employees in all 50 states this summer.

And there’s Apple, who launched its own primary care group called AC Wellness in 2018, along with a network of on-premise health clinics for employees in and around Santa Clara County, California. Plus, there’s all of the technology Apple has built into its iPhones and the Apple Watch to help consumers monitor and improve their health.

CVS has seriously smudged those lines of distinction, starting in 2005 when it partnered with MinuteClinic to open in-store clinics to treat minor injuries and illnesses. The drug chain acquired MinuteClinic a year later, and the number of clinics continued to grow. By mid-2019, when CVS Health announced plans to open 1,500 HealthHUBs, which would offer more comprehensive medical services such as chronic disease management, the company was operating approximately 1,100 MinuteClinics.

And of course there’s CVS Health’s acquisition of Aetna in 2018. And its partnership with Teladoc, initiated in 2015 and expanded in 2018 to offer MinuteClinic video visits via the CVS Pharmacy app.

Not to be left out, Walgreens announced a partnership with Humana in 2018 to open senior care clinics inside two Walgreens stores in Kansas City, Mo., that would be operated by Humana subsidiary Partners in Primary Care. Walgreens and Humana expanded their collaboration a year later to include two more clinics in the Kansas City area and one in Anderson, S.C.

In April 2019, Walgreens announced a collaboration with Village MD through which Village MD would operate full-service primary care clinics next to a handful of Walgreens stores in Houston. In October of the same year, Walgreens said it would be closing 150 of the in-store clinics that it operated on its own — but more than 200 clinics that the company was operating in partnership with health care providers would remain open. Last December, Walgreens and Village MD said they would open 40 more co-branded primary care clinics by mid-2021 and a total of 500 to 700 in the next five years.

More recently, Cigna subsidiary Evernorth revealed in February that it plans to acquire telehealth provider MDLive, and insurance technology startup Bright Health just announced last month that it will buy Zipnosis, a company that offers a telemedicine platform used by dozens of health care systems nationwide.

We could go on, but you get the idea. In the race to gain or maintain a respectable share of the lucrative health care market, insurers and retailers (and hybrids) have shown that they are willing — and even eager — to collaborate with and acquire providers to expand their services. We’d like to think that employers are getting into the game with the goal of reducing the costs of and improving access to health care services for their employees, but it’s pretty obvious that they also believe there’s a handsome profit to be made.

If health care consumers (which at some point includes all of us) benefit through better access and (maybe) lower costs, does it matter what the underlying motive is? Perhaps not. But it does make us wonder how much of this activity we’d have seen if health care in this country weren’t so profitable.

We also wonder what else Walmart has planned.

What else you need to know 
Nashville, Tenn.-based HCA Healthcare signed a definitive agreement to sell four of its hospitals in Georgia to Atlanta-based Piedmont Healthcare for approximately $950 million. The agreement covers the sale of Eastside Medical Center in Snellville, Cartersville Medical Center in Cartersville, and Coliseum Health System, which includes two acute care hospitals, an inpatient behavioral health facility, and an ambulatory surgery center in Macon. The transaction, which is subject to regulatory approval, is expected to close in the third quarter. In the news release announcing the agreement, HCA also stated that it completed the acquisition of Meadows Regional Hospital in Vidalia, Ga., from Meadows Health Alliance. HCA reportedly paid $73 million for the hospital, which will be renamed Memorial Health Meadows Hospital.

CVS is offering mental health counseling services as part of a pilot program the company launched in January, NPR recently reported. Currently, the services are available in a dozen retail stores with HealthHUBs in or near Houston, Philadelphia, and Tampa, Fla., and CVS plans to expand them to 34 stores by the end of the year. CVS said its goal is to improve access to mental health care. NPR noted that CVS is covering the cost of the visits for people with Aetna health coverage and has negotiated with other insurance companies to reduce patients’ out-of-pocket costs.

The Delaware Supreme Court rejected Cigna’s appeal to gain a $1.85 billion breakup fee in connection with the insurer’s failed attempt to merge with Anthem. The ruling upheld a lower court’s decision from last August, in which Vice Chancellor J. Travis Laster said neither insurer would receive fees or damages stemming from the uncompleted $54 billion transaction. A federal court blocked the proposed merger in 2017 after the Department of Justice argued that the deal would diminish competition.

Eight bills addressing drug prices, all with bipartisan support, have been introduced in the House and Senate, Reuters reported Tuesday, attributing the information to statements lawmakers made during a recent hearing of the House Judiciary Committee’s antitrust panel. The bills, each with a sponsor from both sides of the aisle, aim to make it easier for biosimilars to be approved or to curb practices that brand-name drug manufacturers engage in to prevent or postpone competition by generic competitors, such as pay-for-delay patent settlements.

CMS extended the Comprehensive Care for Joint Replacement bundled payment model for three more performance years. The agency issued a final rule extending the model through December 2024, with some revisions. Of note, coverage will be expanded to include both in-patient and outpatient surgeries. However, rural and low-volume hospitals will be excluded when the extension period begins on Oct. 1, 2021, and so will hospitals that participated voluntarily starting in 2018. Several changes were made to the model’s payment methodology as well, including its target price calculation. CMS said the additional three years would permit testing of these and other modifications.

Do Health Apps Really Make Us Healthier? Harvard Business Review, 4.7.21

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