“Walmart Inc. is eliminating some jobs inside its U.S. pharmacy business as the world’s largest retailer seeks to reduce costs and plot a new course in an evolving health-care landscape.”
“Some jobs” equals, if message board freakouts are to be believed, about 40% of senior pharmacist positions at the planet’s largest retailer. The company maintains, more vaguely, that the reductions amount to “less than “3% of all health and wellness staffers”.
Whatever the diminished share of Walmart’s health workforce — and make no mistake, Walmart shedding 40% of its senior pharmacists creates a big wave in the labor pool for that profession — this news is the opening page of the latest in an ongoing series of “who knew health care could be so hard?” chapters in the story of the retailer’s zigzagging health strategy. Up close, Walmart’s inability to grow health care beyond more than around 1/10th of its annual revenues probably seems like a staggering failure. Stuff labeled health care accounts for around 18% of US GDP — so why has health care’s share of Walmart’s take been stuck at only 3/5ths of that for several years?
Stepping back, the answer becomes clearer: far from a disappointment, Walmart’s 11% of revenue share from health care is an overwhelming success.
And we know that thanks to the truths implicit in The Most Important Chart In All of US Health Care.
The Chart tells us that, for most people, most days, health treatment is a relatively small share of consumption — much less than 11% of their available income.
And for the small share of people for whom health treatment is a very big, positively overwhelming budget item? Walmart is not their shopping destination — and probably never will be.
More, as famed physicist PW Anderson told us, is different.
Big consumers of health care are not simply buying warehouses full of bandages, or headache remedies — they’re not doing that at all. They’re consuming the labor time of teams of pricey, highly trained clinical specialists, scarce space in prestigious hospitals, examinations facilitated by equipment bearing 8-figure price tags — all stuff that’s never going to be on special at the nearest Walmart store.
And once you have acquired every bit of the more humdrum slice of health care spending that makes sense for your enterprise, the next thing to do is to trim the spending you incur to retain it.
And that’s what Walmart’s staffing reductions represent. Pharmacists cost upwards of $50/hour, more if benefits are included; pharmacy technicians, a fraction of that. Walmart became Walmart by obsessing about the relationship between input costs and profits from income. It’s not complicated, and it’s not pretty for some staff nor for some Walmart customers, who may — or may not — miss the professional counsel they once took for granted from those apparently-soon-departed pharmacists.
A lot of what people think of as health care is not the stuff that costs all of us, collectively, a lot of money. Materially reshaping forms of that type of care — expanding teleclinician visit services, enabling clinicians other than doctors to write prescriptions & diagnose conditions, putting pressure on prices of widely-consumed medicines — will change what health care is for many, but will not substantially impact what health care costs us.
This reality will continue to be overlooked, by the general public as well as by people making decisions about health policy. And that is not a healthy prescription for any of us.
Walmart Trims Pharmacy Jobs as Company Mulls Health Strategy (6/26/19 Bloomberg News)