Large corporations are buying primary care physicians’ practices in droves. CVS bought Oak Street, while Amazon bought One Medical. Primary care is rather mundane as physicians’ practices go. So why are hospitals, insurers and pharmacy chains scooping up primary care practices?
The appeal is simple: Despite their lowly status, primary care doctors oversee vast numbers of patients, who bring business and profits to a hospital system, a health insurer or a pharmacy outfit eyeing expansion.
And there’s an added lure: The growing privatization of Medicare, the federal health insurance program for older Americans, means that more than half its 60 million beneficiaries have signed up for policies with private insurers under the Medicare Advantage program. The federal government is now paying those insurers $400 billion a year.
Medicare Advantage plans are private Medicare plans run by insurance companies. An insurer that offers Medicare Advantage plans can work with physicians to better manage patient care and keep seniors out of the hospital. Hospitals are where most health care dollars are spent. Providing a high level of coordinated primary care can: 1. Identify more health conditions, which boosts risk subsidy payments from Medicare. 2. It can also identify and control conditions before they require hospitalization.
Under Medicare Advantage, doctors often share profits with insurers if the doctors take on the financial risk of a patient’s care, earning more if they can save on treatment. Instead of receiving a few hundred dollars for an office visit, primary care doctors can be paid as much as $14,000 a year to manage a single patient.
The companies say these new arrangements will bring better, more coordinated care for patients, but some experts warn the consolidation will lead to higher prices and systems driven by the quest for profits, not patients’ welfare.
If Medicare Advantage keeps seniors out of the hospital it will be good for seniors and health plans alike. If the goal is to merely inflate how sick a senior appears on paper it could be bad for taxpayers. In addition, it may not benefit patients when their personal physician is more stressed about meeting a quota than providing the most appropriate care for their patients.
The absorption of doctor practices is part of a vast, accelerating consolidation of medical care, leaving patients in the hands of a shrinking number of giant companies or hospital groups. Many already were the patients’ insurers and controlled the distribution of medicines through ownership of drugstore chains or pharmacy benefit managers. But now, nearly seven in 10 of all doctors are either employed by a hospital or a corporation, according to a recent analysis from the Physicians Advocacy Institute.
Over the years I have often heard complaints about poor health plan network adequacy and that too many health plan don’t have enough physicians in their networks to care for plan members. The theory is that too many physicians could lead to overconsumption of unnecessary care. The current trend of health plans buying primary care practices ensures there are in-network physicians to care for patients. Such an arrangement could steer patients to doctors whose job it is to care for plan members. Or buying primary care practices could merely be a way to enhance the revenue earned from plan members. In other words, your health plan employing primary care physicians could be good, bad or indifferent.
About 20 years ago CVS acquired MinuteClinic and placed the small clinics inside selected stores. It was mostly a way to get patients into drugstores. It made more sense for a drugstore chain like CVS to buy MinuteClinic than maintaining the retail clinics as standalone clinics. Let’s hope the latest foray into retail primary care is a strategy as simple as boosting walk-on customer traffic. Amazon is also the owner of a large primary care chain, One Medical. If Amazon can do for primary care what it’s done for retail shopping, I’m all for it.