Meet ChenMed, the primary care company Walmart may purchase

ChenMed made headlines in recent days when it was reported that Walmart is interested in acquiring majority ownership of the primary care company, possibly for several billion dollars.

But what exactly is ChenMed, which has the chance to "supercharge" retail healthcare competition, according to one analyst?

In 2003, internist Jen-Ling James Chen, MD, was being treated for cancer when he was struck by the lack of coordination among specialists and the weeks it took to book appointments. So after his recovery, he turned his small Florida practice into the first ChenMed, offering concierge-style primary care for seniors on Medicare. The Chen "family purpose," according to the company's website, is to "glorify God by spreading more love and promoting better health to all who come in contact with ChenMed."

The company has grown to more than 125 practices in 15 states and has gotten the attention of retail healthcare disruptors, which are looking to treat Medicare patients and position themselves for the shift to value-based care. CVS Health, for instance, bought Oak Street Health, another primary care chain for seniors, in May for $10.6 billion. Amazon's One Medical has 46 clinics specifically for older adults.

Walmart is apparently aiming to enter that fray, as Bloomberg reported Sept. 8 the retail giant is in talks to buy a majority stake in the privately owned ChenMed. A deal could be weeks away, people familiar with the matter told the news outlet. Walmart declined to comment to Becker's.

Walmart has made its intentions to compete in retail healthcare clear with plans to have 75 clinics in its stores by the end of next year.

But a deal for ChenMed would be Walmart's biggest move in healthcare yet. It would also fit into the company's value-based care strategy. Walmart signed a 10-year deal with UnitedHealth Group in 2022 to treat its customers with Medicare Advantage, the value-based plan for seniors that ChenMed also focuses on.

"The potential for Walmart to acquire ChenMed would supercharge the already fierce competition among retailers and payviders to scale integrated value-based care delivery,"  Rebecca Springer, lead healthcare analyst at PitchBook, wrote. "While we view Walmart as the best fit buyer, ChenMed is a prize asset and other potential bidders could emerge, including Optum or a (private equity) consortium."

She noted that ChenMed is the "last scaled, multistate Medicare Advantage provider group that has not yet sold to a major retailer or payvider" other than Cano Health, which CVS showed interest in last year but has since fallen into financial straits. She said Humana already has a big Medicare Advantage presence with CenterWell while Walgreens and CVS made huge healthcare buys earlier this year.

Since 2009, ChenMed has been led by Dr. Chen's son, CEO Christopher Chen, MD. Day-to-day operations belong to Steve Nelson, the former CEO of UnitedHealthcare and multispecialty practice group Duly Health and Care, who was named president in July.

The company claims to have 33 percent fewer emergency room visits and hospitalizations and spend 10 times as long with patients as a typical primary care practice.

"When we began building out ChenMed, we were very much aware of what the delivery system felt like from the other side of the glass. That drives many of our decisions: If we were in the patient's shoes, what would we want?" Dr. Christopher Chen told University of Miami Medicine Magazine in 2020. "Our doctors don't get paid for just showing up and providing service. We only win when our patients win."

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