Amazon versus Walmart in Healthcare Wars

Walmart vs. Amazon – Healthcare Wars – What You Should Know

A War is Coming!

A few weeks ago, I posted a blog about Amazon, Berkshire and JP Morgan announcing their new venture into the health insurance space.  My first question in the blog was, “Has major healthcare disruption just been launched?”  Based on the news yesterday that Walmart is in talks to buy Humana, the answer is a resounding “Hello Sam Walton’s red truck, Yes!”

See earlier Amazon Blog Here:  https://www.benefitcompany.com/amazon-healthcare-not-operate-within-18-americas-gdp/


Why Now? 

Fear is a great motivator, and Amazon’s announcement to enter the healthcare space surely prompted Walmart, their biggest competitor, to action sooner rather than later.

Also, remember that healthcare represents 18% of our nation’s GDP, and prescription drugs (through retail pharmacies and inpatient facility settings) is expected to approach 50% of healthcare spending within the next decade.

Humana owns Humana Pharmacy Solutions, which processes more than 240 million prescriptions per year. Walmart had to strike fast because of an ever-dwindling number of prospective partners in the Pharmacy Benefit Management (PBM) space. You see, CVS/Caremark is buying Aetna and has already announced a strategic alliance with BlueCross/Anthem; Cigna just bought Express Scripts Inc.; and Optum is already owned by UHC. In short, the BUCAs already have a date to the margin dance.

Walmart’s mission is: “We save people money so they can live better.”  In that context, any of us who understand how the fox guards the henhouse in the world of PBM’s will know Walmart would not want to be on the outside looking in relative to that profit-robust industry.

Turn now to the front-line of retail distribution, and it is interesting to recall how the acquisition of Whole Foods by Amazon relates to the Amazon vs. Walmart Healthcare War:

  • PBM is to Distribution,
  • as Amazon is to Whole Foods,
  • as Humana Health Plan Pharmacy is to Walmart.

One may look at this analogy and wonder how Amazon, Humana, and “PBM” are an accurate comparative. Amazon hired Mark Lyons from a Blue Cross operation recently, and his task is to build an internal Pharmacy Benefit Manager for its own employees (and presumably those of JP Morgan and Berkshire). In any event, I believe Amazon will buy a top-10 PBM over the coming two years to ensure adequate purchasing power.


Why does Humana make sense for Walmart? 

In addition to Humana already owning an internal pharmacy, Walmart/Humana will appear to have the upper hand over Amazon/Whole Foods purely from a speed-to-market standpoint.  Humana is a going concern, and their existing infrastructure is a positive differentiator in the comparison.

Further, Humana is the significant player in the Medicare market.  The baby-boomers, with their growing population (“pig through the population python”), is a segment Walmart will nurture in the Medicare supplemental insurance space.

Why does this matter?  At the face of it, Walmart’s target market leans toward the Senior market (e.g., Medicare market), while Amazon’s image leans toward the GenY/Millennial market. Knowing drug spend is highest amongst seniors, I give the edge for the next decade or so to Walmart/Humana.  However, Amazon may be able to play the game cheaper, and price may win. (That would be a novel concept in healthcare, but that’s a subject for another blog).


Who will win?

Who knows?  Each competitor is walking confidently in the direction of their competitor. “Welcome to Walmart” shoppers are seeing a new focus on e-commerce out of Arkansas, while the “e-Prime Amazon Clickers” are seeing brick and mortar strategies through Amazon’s partnership with JP Morgan and Whole Foods.

Enjoy watching these emerging Healthcare Wars.  It will be intriguing to watch who wins the various battles. At this stage, there is no prediction we can make on who will win the war. Hopefully, it’s employers, families, retirees and taxpayers!


P.S. Click <here> to send me money for my prescription drugs.

John A. Hearn

John A. Hearn – Principal

Next Post Previous Post

Your email address will not be published.

The Benefit Company
Based on 13 reviews
powered by Google
Michael Taylor
Michael Taylor
15:28 07 Feb 20
I have been working with The Benefits Company for more than 3 years and our organization has been a client for many... more. Every member of the team is very responsive and professional. The often present to our C-Suite and the C-Suite values the partnership.TBC goes above and beyond with any request that we have as it pertains to our benefits or HR programs. Every year they present us with various considerations to consider for the next year. John Hearn is has great knowledge industry. Our account manager, Stacy Cook, is very responsive and is an extension of my team.read more
19:21 05 Feb 20
I can't say enough good things about my experience. During my cancer diagnosis, the last thing you want to worry about... is how your Insurance Company is going to actually work for you. I of course, had many questions, which were always answered in "full detail". Amy Towe, our Insurance representative could not have been more helpful. She would check on things for me and always got me an answer promptly. Amy was always available when ever I had a question. She defiantly made the entire process easier. I truly can say enough about her. Her caring was so appreciated throughout my entire journey.Angela Adamsread more
Anne Lalinde
Anne Lalinde
19:09 05 Feb 20
Have worked with The Benefit Company for years through different companies. I appreciate the boutique level services... provided. The Benefit Company is a class act.read more
Marilyn Wiederhold
Marilyn Wiederhold
17:36 05 Feb 20
I have worked with The Benefit Company for over 8 years. They are the best!! Amy Towe and Christine Muro are so... helpful. they make my life so much easier!!read more
Andrea Glass
Andrea Glass
17:30 05 Feb 20
My experience working with the benefit company has been SENSATIONAL! They are truly customer driven, and go above and... beyond to deliver amazing customer service!read more
See All Reviews