Bed Count: Can Walmart fill the gaps left by hospital closures?

Walmart is expanding into the primary care business. The proudly cheap company has become a profit giant by cutting costs and paying its staff as little as it can legally get away with. But do efficiency and low costs mean poor health care? And do non-traditional companies have a role to play in providing health services?

As some writers already have noted, Walmart’s move could bring health care back to rural areas and low-income areas that have lost hospitals in recent years. Rachel Abrams at the New York Times recently wrote:

With its vast rural footprint, Walmart is positioning its primary care clinics in areas where doctors are scarce, and where medical care, with or without insurance, can be prohibitively expensive. If they succeed, the company said, it is prepared to open even more.

There are at least three main reasons Walmart is poised to bring health care to communities that need it, beyond the fact that the company is one of the most successful business enterprises of all time.

1. Walmart has a low-income focus. Hospitals tend to leave areas where people don’t make a lot of money. And those are the people who typically shop at Walmart. About 18 percent of all federal food stamps are spent at Walmart, compared to about 8 percent of every dollar.

2. Walmart is expanding while hospitals are stagnating. Walmarts are nearly as prevalent as hospitals in the United States, and store numbers are rising more rapidly than hospitals. According to data from the Kaiser Family Foundation, between 2000 and 2011, community hospitals in the United States grew from 4,915 to 4,973, a growth rate of about 1 percent over an entire decade. Walmart Discount Stores, Supercenters, and Sam’s Clubs grew from 2,985 in 2000 to 4,413 in 2011. That’s a growth rate of 32 percent.

3. Walmart has a strong presence in rural areas. In many sparsely populated states and states with large rural areas, there already are more Walmarts than community hospitals. In Alabama, there are 116 Walmarts, compared to 102 community hospitals. In South Carolina, there are 87 Walmarts and 67 community hospitals. And in Texas, there are 477 Walmarts and 420 community hospitals. (Texas has more people than most states but a relatively low population density. It has about the same number of people per square mile as Alabama.) Look at where Walmart is opening these primary care clinics:

Sumter, South Carolina (population 40,836)

Florence, South Carolina (population 37,498)

Copperas Cove, Texas (population 33,374)

Benbrook, Texas (population 21,939)

Carrollton, Texas (population 125,409)

Palestine, Texas (population 18,516)

"I think this is good news and bad news," Sumter Mayor Joe McElveen told Lauren Sausser at The Post and Courier in Charleston. "The bad news is, I guess, the two are being opened in Florence and Sumter because we have lots of people who need service. The good news is that it is affordable."

J.K. Wall at the Indianapolis Business Journal wrote the most interesting piece to date on the Walmart move. The company is apparently considering Indiana for its next set of clinics. Wall understands the real driver of this trend, noting that hospitals have seen occupancy rates decline. He wrote about it in his column, The Dose:

That acceleration in the move away from inpatient care has sparked a few rural hospitals to look at getting out of the inpatient business altogether, and instead offer outpatient services, an ER and then transportation to larger hospitals for more complex care.

That’s what Walmart is betting on, too. So, as far as institutional health care goes, we may soon be seeing a future just like the one Wall evokes in his headline: Walmarts, walk-in clinics, and ambulances.

Photo by Mike Mozart via Flickr.