2022 forecast: Competition in retail healthcare will heat up. Here's what to expect from Amazon, CVS and Walgreens

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“We’re going to see some fierce competition, and if these companies aren’t creating differentiators, they’re going to fail,” said Natalie Schibell, senior analyst at Forrester. (Walmart)

The biggest U.S. retailers are placing huge bets on healthcare. As patients increasingly demand lower costs and convenient care delivery, retailers like Walmart, Amazon, CVS and Walgreens have stepped in to meet their needs where traditional providers lack the resources to do the same.

All four companies have accelerated their investments in healthcare this year, stepping into new areas from primary care to telehealth.

And the retail healthcare boom isn’t expected to slow down anytime soon. Next year, industry experts anticipate that retailers will ramp up their investments in key technologies and tackle issues like social determinants of health and data sharing to provide personalized healthcare experiences to their customers.

Here are five expert predictions for how the retail healthcare market will shake out in 2022.

1. Retailers will embrace omnichannel strategies while leveraging their strengths.

All four of the top retail healthcare players have taken on omnichannel strategies to some degree. The challenge for each company will be capitalizing on their strengths to capture their target share of the market, said Natalie Schibell, a senior analyst at Forrester.

“We’re going to see some fierce competition, and if these companies aren’t creating differentiators, they’re going to fail,” she said.

CVS has gone all-in on omnichannel care delivery this year, with offerings from prescription delivery to primary care. The company announced in November its plans to close 900 physical locations over the next three years and create three types of stores: one for primary care, one for its HealthHUB sites and one for its traditional retail model.

“When they’re done, I would expect it looks like a for-profit version of Kaiser Permanente,” said Todd Huseby, lead partner in consulting firm Kearney’s retail healthcare practice.

RELATED: CVS Health plans 900 store closures, lowers guidance as retail strategy shifts digital

Amazon has taken a similar approach, expanding its virtual care services and home-based care services in 2021. But Schibell said its biggest advantage lies in its massive consumer base and extensive supply chain, which it can leverage for prescription delivery following the 2020 rollout of Amazon Pharmacy.

“They have a substantial customer base, and ultimately, that’s going to lead to lower drug prices for Amazon customers, which is a huge competitive advantage,” she said.

2. Patients will get a more personalized healthcare experience from retailers.

Using new technologies and strategies tailored to each population, retailers will focus on customizing the consumer experience in healthcare to boost access and build patient trust, said George Van Antwerp, managing director at Deloitte.

“It’s about understanding the consumer and being able to create a personalized set of experiences for them that blends that omnichannel strategy,” he said. “Based on where I am and my disease and my benefit coverage and my existing dynamics, what’s the best path for me to choose and the best way for me to be supported?”

Van Antwerp said retailers will also need to consider the demographics of each location—taking into account social determinants of health—when determining which services to offer and which types of clinicians to hire.

“The footprint for some retail healthcare services in a college town may look very different than one that might be in a senior community,” he said.

With over 5,000 locations nationwide, Walmart will excel in rural areas where access to care is limited, Schibell said.

RELATED: HLTH21: Where Walmart is focusing its health efforts in the next 5 to 10 years

And, as CVS opens new clinics, it’ll have to be strategic about where it puts them.

“The reality of it is that the company will generate more revenue in more affluent communities. I don’t know what their strategy will be, but historically, that’s what we’ve seen,” said Schibell.

3. More money will go toward primary care, at the expense of traditional clinics.

Retail primary care clinics are popping up all across the country as companies double down on their investments.

Walgreens increased its stake in primary care company VillageMD in October to become the majority owner with a $5.2 billion investment, with the goal of opening hundreds of clinics through the partnership over the next four years.

Those investments are likely to only increase next year as retailers look to replace traditional providers, at least for certain kinds of care. Traditional providers will have to adapt if they want to survive, digitizing their services where possible and making it easier for patients to get appointments, Schibell said.

RELATED: Consumers are embracing pharmacy expansion into primary care, says J.D. Power

“Primary care physicians all around the country: Look out. You’re going to have to make sure you’re offering those digital services and that level of convenience,” she said.

4. Retailers will confront the interoperability problem.

If retailers want to be a consumer’s sole source for primary care, they must create solutions for data sharing.

Relying on retail clinics for a portion of a patient’s care could help drive down overall costs, Schibell said. But though some retailers have made efforts to link patient records, like Walmart in its September partnership with Epic’s electronic health record, she said the current solutions don’t fully allow for the new care model these companies propose.

“It’s a more fluid approach, but I’m also a little bit concerned. When you have all these different options available, you’ll have patients who might go to their primary care physician, and then they might go to a physician at CVS or Walmart, and you have to make sure the EHR reflects all that information that’s needed on that patient,” she said.

Huseby said companies may target interoperability solutions for M&A in the new year.

“I think you would expect to see significant electronic health record interoperability investments,” he said. “What’s unclear to me is how all that data from different EHRs and from various providers are going to get into a CVS or Walgreens or Walmart EHR that they’re presenting as the dashboard to the consumer.”

RELATED: Amazon rolls out AWS for Health cloud services for healthcare, genomics and biopharma

5. Expect more investments in cloud solutions.

Seeing potentially millions of patients also requires robust systems for data collection and analytics, and experts expect retailers to pour more money into cloud-based technologies for their range of needs.

CVS’s partnership with Microsoft, announced at the beginning of December, aims to personalize customer care by leveraging the tech giant’s tools—especially cloud computing. As part of the collaboration, the pharmacy behemoth plans to migrate 1,500 new and existing business applications onto Azure.

In July, Amazon rolled out Amazon Web Services for Health, with cloud-based solutions for healthcare, genomics and biopharma. The company recently announced that biotech giant Gilead Sciences will be using its cloud services.

Those investments will help retailers personalize the consumer experience, too, Huseby said.

“They’re going to invest in technology for sure, it’s going to be cloud-based because that’ll help them automate and innovate faster, and it’ll drive a lot more self-service for consumers on mobile devices,” he said.