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This week, Walmart announced the closure of its Walmart Health business, resulting in the shuttering of 51 health centers across five states. This news is part of a larger reckoning within the health care sector that has implications for senior living communities.
Recent headlines such as the layoffs at UnitedHealth Group’s Optum arm, the closure of 160 VillageMD clinics by Walgreens, and the substantial losses incurred by hospitals in Washington are all indicative of the challenges facing health care organizations nationwide. These challenges include labor shortages, declining revenue, escalating operating expenses, and the impact of rising interest rates.
Anne Tumlinson, CEO of health care research and advisory services firm ATI Advisory, describes the current health care operating environment as the most challenging of her entire career.
In this members-only SHN+ Update, I analyze the upheaval in the health care sector and provide key insights for senior living communities, including:
- The shift from the “retail-ization” to the “consumerization” of health care
- The balance between scale and specialization in value-based care models
- The implications of current disruptions for the future of value-based care in senior living
The Future of Retail Health Care
The rise of “retail” health care has been a significant trend in recent years, with primary care clinics located within retail spaces making health care more accessible. However, recent closures and setbacks in this sector, such as the closure of Walmart Health and VillageMD clinics, highlight the challenges faced by these next-gen primary care businesses.
While some deals in the primary care space have faltered, there are successful organizations like Oak Street Health that remain resilient. Lessons from the shakeouts in primary care can inform senior living providers on the importance of consumer-oriented value-based care models.
Senior living executives have emphasized the need to listen to consumer preferences and adapt to meet their needs. This consumer-centric approach aligns with the future of value-based care.
A Long-Term Play
Amid current health care upheaval, the future of value-based care remains crucial. Organizations like Optum are adjusting their strategies in response to changes in Medicare Advantage payment rates and cost pressures.
Despite short-term financial pressures, the momentum towards value-based care models becoming dominant remains strong. Senior living providers should view engagement in value-based models as a long-term strategy in alignment with the broader direction of health care policy.
