Rumored Walmart-Humana Deal Is Latest Wave in Healthcare Shakeup

Rumored Walmart-Humana Deal Is Latest Wave in Healthcare Shakeup

Last Thursday, the Wall Street Journal reported that Walmart was in talks to acquire the health insurance company Humana, currently valued at around $37 billion, raising the prospect of another merger with transformative implications for the benefits industry. Both companies are keeping mum about the possible deal, though Bloomberg heard from a person familiar with the talks that the most likely outcome was a closer partnership between the retailer and the insurer, which already collaborate on providing prescription drugs for US senior citizens insured through Medicare (Humana is the second-largest provider of government-supported private Medicare Advantage plans in the US).

Either way, a closer partnership between these giants could have some major implications for the US health insurance market, especially in combination with the other changes that are going on. The pharmacy chain CVS announced in December that it had agreed to purchase the insurer Aetna for $69 billion as part of an effort to transform its 9,700 retail drug stores into “health care supermarkets” complete with wellness clinics for preventive care (That merger was approved by shareholders last month but has yet to pass muster with antitrust regulators in the Justice Department).

A similar move by Walmart would be groundbreaking, given the big-box retailer’s massive presence throughout the US. Even a deal to provide health care for Walmart’s 1.5 million US employees would be significant. Walmart becoming a health care provider would make a big difference, Tracy Watts, senior partner at Mercer, tells Employee Benefit News reporter Kathryn Mayer:

“I would think whatever happens with the deal, Walmart would leverage its relationship with Humana to provide primary care or extend convenience care to its employees in addition to the general public,” Watts says. She also predicts the retailer will leverage its onsite care locations to provide a convenient, cost-effective way for employees and others to receive basic treatments. “For employees to get healthcare from Walmart in those rural locations can be a really good thing,” she says.

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What Does Amazon’s Whole Foods Buy Mean for the Future of Grocery Shopping?

What Does Amazon’s Whole Foods Buy Mean for the Future of Grocery Shopping?

Amazon rocked the grocery world on Friday when the e-commerce giant announced that it had sealed a deal to acquire Whole Foods Market for $13.7 billion. The news sent the stocks of competitor grocery chains tumbling, indicating the degree to which investors expect this move to shake up the industry. However, the Washington Post’s Abha Bhattarai notes, “some analysts say Amazon is likely to face significant challenges as it expands into a notoriously difficult business with low profit margins”:

Amazon and Whole Foods are very different businesses: One is a technology company that wins over customers with sophisticated algorithms and low prices. The other, nicknamed “Whole Paycheck,” is known for the premiums it charges for specialty foods and its workplace culture that compensates cashiers and other staffers well. Both are led by hard-charging entrepreneurs who have spent decades turning their companies into iconic, multibillion-dollar businesses.

Similar questions were asked last year when Walmart acquired the e-tail startup Jet.com, as part of its own effort to compete with Amazon: How well will these two companies, with their very different cultures and business models, be able to integrate? But these differences between Amazon and Whole Foods may be part of what makes this acquisition such a game-changer, Slate’s Will Oremus figures:

Suddenly Amazon owns a nationwide network of already-popular grocery stores that have already solved the tricky logistical problems involved in sourcing and storing fresh food. What Amazon brings is the world’s largest online sales portal and its mastery of the home-delivery business. Scale, meet scale. Logistics, meet logistics. Loyal customer base, meet loyal customer base. If you’re in the grocery business and your name is not Amazon or Whole Foods, today is not a good day for you.

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