Hospitals will be keeping a close eye on the potential merger between Walmart and Humana, as the deal could significantly hurt their bottom lines.
Sources told The Wall Street Journal last week that Walmart, the nation's largest employer and retail giant, was in talks to purchase Humana. Walmart has dipped its toes into healthcare in the past, opening a series of primary care clinics in its stores.
A merger with Humana would accelerate the corporation's entry into the healthcare space, a prospect that's worrying to providers, according to an article from the WSJ. The deal "should be a concern to everybody in healthcare," Randy Oostra, CEO of Ohio-based health system ProMedica, told the publication.
Oostra said Walmart would likely join the retail healthcare options that are pulling patients away from outpatient care provided by traditional hospitals—which often helps cover the cost of more expensive inpatient services.
"What worries us is death by a thousand cuts," Oostra said. "Another deal and another deal."
The mega-merger between CVS and Aetna rang similar alarm bells for providers. If the deal goes through, CVS intends to expand its MinuteClinics to become a one-stop shop for patient needs including primary care, pharmacy services and vision care.
Hospitals haven't lowered costs enough to meet the prices offered by these retail clinics, which can make them a less attractive option for patients.
Retail healthcare is also a major threat to primary care providers, leading some PCPs to open their own walk-in clinics to stay competitive.
Another wrinkle in the potential Walmart-Humana deal that could worry providers is how Walmart currently operates its employee benefits, according to the WSJ. It has increasingly formed direct contacts with specific hospitals.
This practice, combined with Humana's infrastructure, could lead the combined entity to build employer health plans with narrow networks that leave many hospitals out in the cold. Geisinger Health System, for example, currently contracts with Walmart and is paid notably lower rates—but it attracts potential patients it might not otherwise, according to the article.
The CVS-Aetna merger and a similar deal planned between Cigna and Express Scripts have faced criticism that they would be anticompetitive, and both are under scrutiny from lawmakers and the Department of Justice.