What does retailer Walmart Inc., which has built a reputation for ruthless cost-cutting and obsessive customer analytics, want with health insurer Humana Inc.? The two are in early acquisition talks, The Wall Street Journal reported late Thursday.
Like other recent health care pairings, the deal — should it go through — marks a pursuit of big data across industries.
Customer data, a longtime preoccupation of retailers, is increasingly seen by health care executives as central to containing rising health care costs.
Combined, this type of big data could be used to better sell Walmart’s
retail products and services and manage the financial risks of Humana’s
Having both retail and health businesses under one umbrella could also help push wellness initiatives for customers and health plan members, such as incentivizing healthier food choices, something Humana and Walmart have already worked together on.
“As the country’s largest retailer and the biggest seller of food, Walmart is in a unique position to help consumers lead healthier lives and make informed decisions about things like diet,” said Neil Saunders, managing director of GlobalData Retail. As the potential owner of a health insurance firm, it would also be in a position to reward customers for making healthy choices.”
One hint that this is what Walmart is interested in comes from Walmart and Humana themselves.
Walmart has worked with Humana’s wellness rewards program since 2012 to bring discounts on healthier foods to customers who complete an online health assessment.
Walmart has described it as a “first-of-its-kind effort… the first national program where a major retailer and health care company came together to offer incentives for people to make more nutritious food choices.”
Eligible foods, sold under Walmart’s “Great for You” label, have to meet certain nutritional requirements and include fruits and vegetables, whole grain products, low-fat or non-fat dairy products and lean poultry and meat products.
“The resulting model is a win-win-win: Walmart increases sales of Great For You products; Go360 promotes healthier lifestyles, lowering health care costs; and customers save money on healthier food options and, over time, may see improvements in health indicators such as high blood pressure and obesity,” Walmart said.
(Technically, the program’s “discounts” is, in practice, Walmart credit that can be applied to other purchases. That credit can be spent on non-food products or even — gasp! — unhealthy foods, notes one fact sheet.)
A tie-up between the two companies could have similar goals, but at a broader scope and scale.
“You can use data to predict what the life expectancy might be of your consumers, change the way you think about risk for them, think about how much they might cost when you insure them, and you can hopefully drive wellness with them; what kinds of choices could I help them make to improve long-term health,” said Gurpreet Singh, health services sector leader for PwC.
Such a move would bring privacy questions with it, including concerns about penalties for those who aren’t judged as making so-called healthy choices, Singh noted. But programs to improve healthy living would “hopefully be more of an opt-in scenario, reducing some of the downsides” for consumers, he said.
Walmart’s geographic reach, which is especially concentrated in rural and suburban communities, would also be an advantage when it comes to health and wellness, Singh said.
Diabetes is extremely common in rural areas — the Centers for Disease Control and Prevention has called a stretch of the southeastern U.S. the “diabetes belt” — due to limited access to health care, health education and healthy food, poverty and other factors.
Limited access to healthy foods is also connected to other major U.S. public health issues, including obesity, cancer, heart disease and stroke, notes the CDC.
But the jury’s still out on how much individuals will change their daily decisions in response to corporate prodding.
In health research, wellness programs, especially those run by employers, haven’t come out looking particularly well.
Walmart shares have plummeted 9.9% over the last three months through Thursday and Humana shares have surged 8.4%, compared with a 2.5% drop in the Dow Jones Industrial Average
and a 1.2% decline in the S&P 500