[{"innerBlocks":[],"name":"core\/freeform","postId":2302,"blockType":{"name":"core\/freeform","keywords":[],"attributes":{"content":{"type":"string","source":"raw"},"lock":{"type":"object"}},"providesContext":[],"usesContext":[],"selectors":[],"supports":{"className":false,"customClassName":false,"reusable":false},"styles":[],"variations":[],"apiVersion":3,"title":"Classic","description":"Use the classic WordPress editor.","category":"text"},"originalContent":"(Bloomberg)\u2014Experts contend that different threats from major shifts in two industries are pushing Walmart and health insurer Humana toward the same solution.

Amazon.com has taken direct aim at the giant retailer by siphoning customers out of its stores. Humana\u2019s rivals are striking deals to make them one-stop health superstores with insurance, drug coverage, pharmacies, clinics and doctors. A deal or joint venture between Humana and Walmart\u2014already longtime partners\u2014might help defend against those competitive threats.

The companies haven\u2019t publicly commented on reports Thursday that they were weighing a closer relationship or a merger, and it\u2019s not clear if they\u2019ll go forward with one, or what form it might take. A person familiar with the discussions told Bloomberg the companies are mainly considering a closer partnership to provide care to consumers at or near their homes, helping them manage or prevent illness.

Walmart would be able to steer Humana\u2019s millions of customers to the chain\u2019s stores, create new medical and wellness services in its millions of square feet of retail space, and take a bigger slice of the country\u2019s $3.5 trillion in health spending. Humana would get access to thousands of brick-and-mortar locations to provide low-cost health services, fitting into the insurer\u2019s strategy of providing more medical care directly to its members.

\u201cObviously a lot of things have to go right for this vision to come to fruition, but if they can pull it off, it will be an absolute game-changer in healthcare,\u2019\u2019 says Chas Roades, the co-founder of consulting firm Gist Healthcare.

Walmart runs 4,700 U.S. pharmacies and has been eyeing healthcare for years, although it hadn\u2019t publicly settled on a strategy. The company agreed to offer Medicare plans with Humana in 2010, and struck a deal to provide healthy-food discounts to some Humana customers in 2012. It has discussed building out physician clinics for years, but now has just 19 and recently said it wasn\u2019t planning to add more.

Humana has been opening medical clinics and operates nearly 200 locations with about 1,500 physicians. Its Humana at Home business cares for members where they live, avoiding costly hospital stays, and the company is bolstering that unit through a deal with private equity partners to buy part of Kindred Healthcare.

\u201cYou can see the strategy by which they could make investments that make people healthier for a patient that\u2019s both a Humana enrollee and a Walmart customer,\u2019\u2019 said Craig Garthwaite, a professor of strategy at Northwestern University\u2019s Kellogg School of Management. \u201cThese are the types of deals we should expect if you believe we\u2019re remaking the business model in healthcare.\u201d

Humana specializes in private Medicare plans for U.S. seniors, known as Medicare Advantage, although rivals like UnitedHealth Group and Aetna are threatening its position. The Medicare Advantage program offers insurers strong financial incentives to keep their customers healthier and manage costs by giving the plans a fixed sum of money to take care of each customer for a year, based in part on how sick the person is.

CVS Health already employs a similar strategy. It has more than 6 million people enrolled in Medicare drug plans, and it can steer those patients to its retail locations to pick up their pills\u2014a pending takeover of Aetna for about $68 billion will enhance that position. The companies also plan to create health hubs to care for individuals in CVS stores.

Other healthcare rivals are consolidating as well, using the combinations to simplify a complex web of intermediaries to take more control of patients\u2019 care.

UnitedHealth\u2019s Optum unit is spending billions to acquire physicians groups, most recently agreeing to pay $4.9 billion for DaVita Medical Group. In early March, insurer Cigna struck a $54 billion deal for pharmacy-benefits firm Express Scripts Holding.

Ana Gupte, an analyst at Leerink Partners, has been telling investors for months that Walmart was likely to make a play for Humana. She has pointed out that Walmart and Humana already have a co-branded Medicare prescription drug plan that brings customers into the stores, and that a tie-up offers strategic benefits for both sides. She estimates that Walmart would pay about $360 a share for Humana, 34 percent more than the insurer\u2019s closing price on March 29.

\u201cWe expect the stores would become a channel for Humana Medicare Advantage seniors to be steered toward chronic-care management and other services, in addition to retail pharmacy,\u201d Gupte said. For Walmart, she called it \u201can opportunity to cross-sell health and wellness and other merchandise.\u201d

It would also help the retailer find new uses for store space that\u2019s less needed as customers shift to shopping online, said Garthwaite, the Northwestern professor. Already, Walmart has taken steps to deal with excess real estate. The company in January said it would close 63 Sam\u2019s Club locations, converting some into warehouses dedicated to filling online orders instead.","saveContent":"(Bloomberg)\u2014Experts contend that different threats from major shifts in two industries are pushing Walmart and health insurer Humana toward the same solution.

Amazon.com has taken direct aim at the giant retailer by siphoning customers out of its stores. Humana\u2019s rivals are striking deals to make them one-stop health superstores with insurance, drug coverage, pharmacies, clinics and doctors. A deal or joint venture between Humana and Walmart\u2014already longtime partners\u2014might help defend against those competitive threats.

The companies haven\u2019t publicly commented on reports Thursday that they were weighing a closer relationship or a merger, and it\u2019s not clear if they\u2019ll go forward with one, or what form it might take. A person familiar with the discussions told Bloomberg the companies are mainly considering a closer partnership to provide care to consumers at or near their homes, helping them manage or prevent illness.

Walmart would be able to steer Humana\u2019s millions of customers to the chain\u2019s stores, create new medical and wellness services in its millions of square feet of retail space, and take a bigger slice of the country\u2019s $3.5 trillion in health spending. Humana would get access to thousands of brick-and-mortar locations to provide low-cost health services, fitting into the insurer\u2019s strategy of providing more medical care directly to its members.

\u201cObviously a lot of things have to go right for this vision to come to fruition, but if they can pull it off, it will be an absolute game-changer in healthcare,\u2019\u2019 says Chas Roades, the co-founder of consulting firm Gist Healthcare.

Walmart runs 4,700 U.S. pharmacies and has been eyeing healthcare for years, although it hadn\u2019t publicly settled on a strategy. The company agreed to offer Medicare plans with Humana in 2010, and struck a deal to provide healthy-food discounts to some Humana customers in 2012. It has discussed building out physician clinics for years, but now has just 19 and recently said it wasn\u2019t planning to add more.

Humana has been opening medical clinics and operates nearly 200 locations with about 1,500 physicians. Its Humana at Home business cares for members where they live, avoiding costly hospital stays, and the company is bolstering that unit through a deal with private equity partners to buy part of Kindred Healthcare.

\u201cYou can see the strategy by which they could make investments that make people healthier for a patient that\u2019s both a Humana enrollee and a Walmart customer,\u2019\u2019 said Craig Garthwaite, a professor of strategy at Northwestern University\u2019s Kellogg School of Management. \u201cThese are the types of deals we should expect if you believe we\u2019re remaking the business model in healthcare.\u201d

Humana specializes in private Medicare plans for U.S. seniors, known as Medicare Advantage, although rivals like UnitedHealth Group and Aetna are threatening its position. The Medicare Advantage program offers insurers strong financial incentives to keep their customers healthier and manage costs by giving the plans a fixed sum of money to take care of each customer for a year, based in part on how sick the person is.

CVS Health already employs a similar strategy. It has more than 6 million people enrolled in Medicare drug plans, and it can steer those patients to its retail locations to pick up their pills\u2014a pending takeover of Aetna for about $68 billion will enhance that position. The companies also plan to create health hubs to care for individuals in CVS stores.

Other healthcare rivals are consolidating as well, using the combinations to simplify a complex web of intermediaries to take more control of patients\u2019 care.

UnitedHealth\u2019s Optum unit is spending billions to acquire physicians groups, most recently agreeing to pay $4.9 billion for DaVita Medical Group. In early March, insurer Cigna struck a $54 billion deal for pharmacy-benefits firm Express Scripts Holding.

Ana Gupte, an analyst at Leerink Partners, has been telling investors for months that Walmart was likely to make a play for Humana. She has pointed out that Walmart and Humana already have a co-branded Medicare prescription drug plan that brings customers into the stores, and that a tie-up offers strategic benefits for both sides. She estimates that Walmart would pay about $360 a share for Humana, 34 percent more than the insurer\u2019s closing price on March 29.

\u201cWe expect the stores would become a channel for Humana Medicare Advantage seniors to be steered toward chronic-care management and other services, in addition to retail pharmacy,\u201d Gupte said. For Walmart, she called it \u201can opportunity to cross-sell health and wellness and other merchandise.\u201d

It would also help the retailer find new uses for store space that\u2019s less needed as customers shift to shopping online, said Garthwaite, the Northwestern professor. Already, Walmart has taken steps to deal with excess real estate. The company in January said it would close 63 Sam\u2019s Club locations, converting some into warehouses dedicated to filling online orders instead.","order":0,"get_parent":{},"attributes":[],"attributesType":{"content":{"type":"string","source":"raw"},"lock":{"type":"object"}},"dynamicContent":""}]

Walmart and Humana mull joint effort in light of market pressures

More for you