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 They are also aimed at boosting Walmart's slowing growth in
brick-and-mortar store sales as it faces increasing pressure online
from Amazon.com Inc. Deepening its existing partnership with Humana,
or even acquiring the company outright, could be a step toward
turning its 4,700 or so U.S. stores into healthcare centers that aim
to attract more shoppers over 65.
"The end goal here is to get more people in their stores, get them
to buy drugs and make an additional purchase while they are in the
store,” said Charles Sizemore, founder of Sizemore Capital
Management LLC, who owns shares of Walmart.
If Walmart can offer “competitive rates” on primary care and other
health services, he said, it “can grow traffic and push store
visits.”
Walmart approached Humana this month, and the companies began to
discuss closer ties focused on new partnerships, two people familiar
with the matter told Reuters on Thursday. An acquisition of Humana
by Walmart is also being discussed, the sources said.
Walmart declined comment Friday. Humana could not immediately be
reached for comment.
Closer ties between the two could enable the retailer to tap into
Humana’s patient roster and possibly put some of its physician
clinics in stores to offer medical care to customers.
Walmart is the largest retailer to hit upon the combination of
retail and health insurance, but it is not the first.
CVS Health Corp <CVS.N> has struck a $69 billion deal to acquire
Aetna Inc <AET.N>. Separately, insurer Cigna Corp <CI.N> has a $54
billion deal to buy pharmacy benefits company Express Scripts
Holding Co <ESRX.O>. The two deals, if approved, will put pressure
on the entire health care supply chain.
AMAZON CHECKMATE?
Humana could provide Walmart with “one more way to checkmate Amazon
and equal and eclipse the CVS/Target partnership and equal and
eclipse the CVS/Aetna partnership,” said Burt Flickinger at
marketing consulting firm Strategic Resource Group.
“It allows them to get ahead of everybody from warehouse club
operators like Costco, Target and other retailers who run chain
drugstores as well as food and drug combo operators like Kroger and
Wegmans.”
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Bentonville, Arkansas-based Walmart already has pharmacies at many
store locations and has a co-branded drug plan with Humana that
caters to patients using Medicare, the federal health insurance
program for people over 65. That plan steers patients to Walmart
stores for their pharmacy needs, offering customers an opportunity
to save up to 20 percent on drug costs, analysts said.
one of the country’s largest providers of Medicare Advantage plans -
a type of coverage offered by a private company that contracts with
Medicare.
Humana has 5.1 million seniors on prescription drug benefits and
another 3.5 million on full medical benefits, according to Ana Gupte,
senior health care analyst with Leerink Partners in New York.
Walmart superstores “could be a one-stop shop for seniors,” said
Gupte, adding that Humana already has about 50 pharmacies sharing
locations with doctors’ clinics, and could expand that model using
Walmart’s real estate and pharmacies.
DATA ANALYSIS
There is also a potential for Walmart and Humana to benefit from
their mass of customer data, said Neil Saunders, managing director
of GlobalData Retail.
“One thing retailers have is a very good understanding of customers.
They know their eating habits and other consumption patterns and
that is quite useful in forming insurance decisions," he said. "That
is certainly something that Walmart would be able to leverage.”
Humana patients are most likely already heavy shoppers at Walmart,
according to David Friend at the BDO Center for Healthcare
Excellence and Innovation.
"If you know that somebody is on a certain medicine you can sell
them other products and services and that will help keep customer
loyalty," he said.
(Reporting by Nandita Bose and Chris Prentice; Additional reporting
by Carl O'Donnell and Emma Thomasson; Writing by Vanessa O'Connell;
Editing by Susan Thomas and Bill Rigby)
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