Walmart’s rumored purchase of Humana — which could allow the nation’s largest employer to control healthcare for its 1.5 million workers — is potentially the latest move in a benefits industry shakeup that finds employers leading the charge in lowering costs and improving care for their employees.

The Wall Street Journal reported late last week that the retailer was in preliminary talks to buy the Medicare insurance giant, though neither company have confirmed or denied reports.

“While we don’t know what the partnership or acquisition will look like, there are some possibilities, like care options, that would be financially advantageous for Walmart to do for their own employees,” says Tracy Watts, senior partner at consulting firm Mercer.

Bloomberg

Rising medical costs — health spending now eats up about 18% of the U.S. economy — recently have spurred other large employers to take healthcare into their own hands in a number of ways, by striking up alliances, forming their own companies and, as in the case of Apple’s latest announcement, embracing onsite health clinics for employees.

The possibility of a Walmart-Humana deal comes on the heels of a new partnership announced last month among Amazon, Berkshire Hathaway and JPMorgan Chase. The three said they are forming an independent healthcare company for their U.S. employees. Though vague on details, that alliance is poised to be a major disruptor in the benefits industry, experts predict, and one that Walmart may be competing with in its rumored venture.

See also: What’s behind Apple and Amazon’s healthcare moves?

“I would think whatever happens with the deal, Walmart would leverage its relationship with Humana to provide primary care or extend convenience care to its employees in addition to the general public,” Watts says. She also predicts the retailer will leverage its onsite care locations to provide a convenient, cost-effective way for employees and others to receive basic treatments.

“For employees to get healthcare from Walmart in those rural locations can be a really good thing,” she says.

Providing healthcare for its workers would not only help Walmart address rising healthcare costs, but also could help the retailer retain and recruit workers in a tightened labor market. Walmart has been an innovator when it comes to benefits, says Integrated Benefits Institute president Chris McSwain, noting the company’s comprehensive employee wellbeing program and its creation of Centers of Excellence, a network contracted through Geisinger and Mayo Clinic that aims to reduce the number of unnecessary spinal surgeries its employees undergo.

“Walmart has a unique set of assets that include brick and mortar [locations for such services as] pharmacy, vision, financial services, grocery and onsite clinics,” McSwain says. “When combined with an increasingly competitive and expanding set of offerings from e-commerce, this move has the potential to deliver their associates and customers greater value and lower costs.”

A Walmart-Humana partnership could also expand its reach to other employers, creating another major player in the healthcare market.

Poll Will the recent string of healthcare and pharma partnerships help bring down employer healthcare costs?

“Humana is a dominant player in the Medicare space, with some of the deepest health plan capabilities, but it has a less-established footprint with national employers,” says Mike Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions, an organization that advises around 12,000 employers that buy health plans for millions of employees. “Walmart brings a broad geographic reach and strong supply chain and retail orientation.”

Another possible effect of the merger: Putting the heat on other employers to drive down prescription costs or deliver onsite care. Walmart, the fourth-largest provider of prescription drugs, has made noise with its low-cost prescription drugs and its history of pressuring suppliers to lower wholesale prices. A combined Walmart-Humana effort could go even further, not only driving down drug prices for Walmart employees, but also convincing other employers to look for ways to save on their own pharmacy costs.

Similarly, a Humana deal could accelerate Walmart’s onsite care efforts — the retailer has a host of clinics now — in a move, Watts says, that “other employers would pay attention to.” Mercer research finds that employer offerings of worksite or near-site clinics for primary care services is on an upward trend, jumping 7% since 2013 to 33% in 2017 among employers with 5,000 or more employees.

Even if a deal isn’t reached between Walmart and Humana, the news still sends a strong message that the healthcare market is ripe for disruption — and employers are leading the charge.

“We’re seeing disruption, we are seeing new things, but this is only the beginning,” Watts says. “And I think with every new deal that happens, it helps fuel our thoughts about what can happen next.”

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