Recent closures affecting retail-based healthcare companies could leave lessons behind for DSOs looking to expand their services.
Barry Lyon, DDS, a chief dental officer for the division of orthodontics and pediatric dentistry for Dental Care Alliance, recently spoke with Becker's about the challenges facing retailers in the healthcare space.
Editor's note: This Q&A is part of a weekly series featuring Dr. Lyon focused on topics in the dental industry and DSO field. This response was lightly edited for clarity and length.
Dr. Barry Lyon: With the recent news that Walmart is closing 51 health centers in 5 states and Walgreens is closing 160 of its VillageMD primary care clinics, the future of retail based healthcare is in question. According to Walmart, "the challenging reimbursement environment and escalating operating costs created a lack of profitability" that made its Walmart Health business unsustainable.
Walgreens spent more than $5 billion to acquire a majority stake in VillageMD, but announced the closings after they recorded a $5.8 billion, after-tax impairment charge after it adjusted the asset’s value.
Even though there is a shortage of primary care doctors, building a network of primary care clinics is challenging. Some patients are reluctant to leave their current provider and may feel a retail setting does not match up well with medical care. Further, the start-up costs faced by retailers failed to consider the influx of patients who haven’t recently sought healthcare but arrived with medical issues that needed addressing.
Can dentistry successfully integrate healthcare with dental services? Currently, Hero Practice Services and Pacific Dental Services provide healthcare in addition to dentistry. Hero has optometry services in their offices, while Pacific Dental has created PDS Health. Lessons learned from Walmart’s and Walgreens’ ventures into healthcare will benefit DSOs who plan to go that route.