In December 2017, CVS Health announced plans to purchase Aetna for $69 billion, followed by speculation that a Walmart-Humana deal would be next. Both mergers would create unprecedented opportunity for retail healthcare to gain favor with new consumers, especially among older individuals who largely make up the target audience of these mergers. These patients, who historically have been more cautious of retail care than younger generations, likely would be encouraged to use clinics or retail health services if the copay rates were low enough. The end goal, of course, would be to lower overall healthcare costs for the payer (and to increase drug sales) by identifying, treating, and managing chronic diseases early.

While CVS Health owns and operates the most retail clinics in the nation, Walmart only operates a handful of Care Clinics in three states—Texas, South Carolina, and Georgia. A merger that unites Aetna and CVS Health, therefore, could initially be a stronger competitor than Walmart-Humana for patient capture and retention, given CVS Health’s expansive footprint. CVS boasts more than 9,000 retail locations in the United States, Puerto Rico, and Brazil, compared to Walmart’s more than 5,000 locations in the United States.

Walmart’s few Care Clinics exist mainly in smaller markets (compared to CVS and Walgreens’ concentration of clinics in higher density areas), which suggests that the retail giant may be less concerned than CVS Health and Walgreens about using the walk-in clinic model to drive foot traffic to its stores—for now. Interest in new Care Clinics could rise as e-commerce giant Amazon paves inroads into new consumer markets and becomes a more significant competitor to Walmart’s in-store consumers.

In rural America (where Walmart has a strong presence), Care Clinics could grant Walmart direct access to some of the country’s poorest and sickest individuals—a high-cost target audience for prescription drug sales. Walmart has, thus far, ignored the opportunity to address rural healthcare needs but may be more open to doing so with Humana at its side, given Humana’s strong technology-centered platform that encourages virtual care. Indeed, a Walmart-Humana merger would be a formidable player against CVS-Aetna in the home-based healthcare category, especially if the Humana-Kindred Healthcare merger is successful.

In addition to tapping into the rural population, Walmart-Humana could achieve higher senior involvement than CVS-Aetna due to its abundant shelf real estate for medtech supplies. The large size of each Walmart store means the company has a greater capacity than CVS Health to stock new products. To that end, Walmart just released a new line of diabetes testing supplies, including a remote blood glucose monitoring system that shares data with a patient’s primary-care provider. Not all Walmart stores carry a full selection of medtech products, but Walmart is at least more likely than CVS Health to offer a wider selection in-store.

A larger store footprint also means Walmart could set up a small office in addition to, or instead of, a Care Clinic to attract senior shoppers to home healthcare and other Humana-sponsored health initiatives.

Perhaps the greatest value proposition of the speculated Walmart-Humana merger is the captive employee base of 1.5 million that could serve as the test population for cost reduction in drug and healthcare spending.

If Walmart can successfully drive down employee healthcare costs through on-site employee health clinics or remotely connected devices, the retail giant could be motivated to duplicate its health model for millions of consumers per year.

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