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Over the past several years, major retailers—including Walmart and Walgreens—attempted to transform healthcare delivery by opening clinics, acquiring provider networks, and offering direct care services. Their ambition was clear: use massive consumer reach and physical footprint to disrupt traditional healthcare.
But by 2024–2025, both companies dramatically scaled back those plans. Clinics closed. Acquisitions were unwound. Strategies were rewritten.
This retreat isn’t a sign that healthcare is impossible to innovate—but rather a reminder of how complex and unforgiving the healthcare ecosystem truly is. Their experience offers critical lessons for digital health companies navigating a market where distribution, reimbursement, operations, and regulation intersect in challenging ways.
Retailers are experts in logistics, not longitudinal care. Running clinics means:
The promise of synergy between retail traffic and primary care utilization simply didn’t materialize at a sustainable scale.
Retail clinics struggled with:
Disjointed workflows made it difficult to deliver high-quality clinical care efficiently.
As retail competition intensified and margins tightened, healthcare became an expensive distraction.
Walmart shuttered all 51 of its standalone health centers.
Walgreens closed nearly half its VillageMD clinics.
Leadership in both companies cited the same issue: the economics didn’t work.
Retailers learned that running healthcare services is fundamentally different from selling products. Ownership created complexity, liability, and financial exposure they weren't structured to absorb.
Instead, they’re now shifting to partnership-driven models that leverage their strengths—reach, trust, and convenience—without requiring them to operate entire provider networks.
This retreat is rich with important lessons:
Digital health companies often dream of being “full-stack.” But Walmart and Walgreens proved that owning every component of care is costly and risky.
Better strategy:
The future belongs to collaboration, not domination.
Retailers excel at scale, logistics, and consumer engagement—not direct clinical operations.
Similarly, digital health startups should ask:
Often, the answer points toward enablement, not ownership.
Reimbursement in primary care is notoriously low. Running clinics is expensive. Regulatory and operational overhead crush inexperienced entrants.
Digital health companies must design models that:
Purely patient-paid models rarely scale sustainably.
Walmart and Walgreens underestimated one of healthcare’s biggest hurdles: systems integration. Innovation fails if it cannot coexist with:
Digital health products must integrate seamlessly to thrive.
Retail clinics struggled to build continuity—critical for chronic care, risk adjustment, and population health.
Digital health companies must prioritize:
Short-term, transactional models tend to collapse.
Instead of owning clinics, retailers are focusing on:
Retail will still play a role, but not as the primary care operator many once predicted.
Digital platforms will fill gaps left by retail retreats by enabling:
Retail provides access.
Providers deliver care.
Digital health connects the ecosystem.
The next wave of success belongs to companies that:
Disruption for its own sake is out.
Collaboration and enablement are in.
Because Walmart and Walgreens operated with:
If they struggled with direct healthcare delivery, startups must learn the lessons early:
Digital health succeeds when it helps healthcare work better, not when it tries to build a parallel version of it.
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