A look at the physician office market.
July 2022 – The Journal of Healthcare Contracting
Not long ago, big health systems appeared to be the biggest challenge for independent physician practices. And truth be told, they probably still are. A December 2021 study published in Health Affairs showed that from 2014 to 2018, hospital and health system ownership of physician practices increased by 89%, from 24% to 46%. But increasingly, health systems are competing for the physician market with health insurers, drugstore chains and other retailers.
They’re not new to the game. They’ve tried many approaches before. But they’re persistent. Here’s a rundown on what’s happening among some of the big retail players.
- Amazon Care: Works with Care Medical, an independent practice based in Seattle, to deliver healthcare to Amazon Care members, and plans to expand the program across the United States. The company provides telehealth as well as “mobile care RNs” (the latter in a handful of locations).
- Best Buy: Acquired Current Health for $400 million in November 2021. According to Best Buy, Current Health “integrates patient-reported data with data from biosensors – including their own continuous monitoring wearable device – to provide healthcare organizations with actionable, real-time insights into the patient’s condition.” Meanwhile, Best Buy’s Geek Squad installs personal emergency response systems, medication management devices, remote patient monitoring, and “Senior Living Safety Systems” in the home.
- CVS: MinuteClinic® clinics are in 1,100 CVS Pharmacy and Target stores. In 2021 CVS announced it would convert as many as one thousand existing stores into HealthHUBs, offering treatment for common illnesses, chronic care management, telehealth, pharmaceutical consultation and medical products.
- Dollar General: Established a partnership in 2020 with London-based Babylon, a telehealth provider which, in March 2021 acquired Fresno, California-based FirstChoice Medical Group, with 180 primary care and 1,000 specialty providers. In July 2021 Dollar General hired its first chief medical officer, Albert Wu, M.D.
- Walgreens: In October 2021 agreed to invest $5.3 billion in VillageMD to accelerate the opening of at least 600 Village Medical primary care locations – staffed by primary care physicians and pharmacists – in more than 30 U.S. markets by 2025. (VillageMD remains independent, but Walgreens has a 63% ownership stake.)
- Walmart: As of September 2021, provides healthcare services (including primary care, x-rays, labs, wellness classes) in 20 health centers, called Walmart Care Clinics, in Arkansas, Georgia and Illinois. Walmart Health is building seven primary care clinics in Northeast Florida.
Along with these retailers add UnitedHealth’s Optum unit, which Bloomberg says has more than 60,000 employed or “aligned” physicians, about half in primary care; and Humana, which is reported to be bringing its primary-care footprint to about 250 locations in 2022.
Austin Regional Clinic
All that said, independent practices, such as Austin Regional Clinic, based in Austin, Texas, remain strong. “Our advantage is being local,” says CEO Anas Daghestani, M.D. “Healthcare is still local, and there are pieces you can solve by providing a digital experience or applying [artificial intelligence]. But at the end of the day, patients seek the relationship, local access and market knowledge.”
Austin Regional Clinic is a 42-year-old multispecialty group with 380 physicians, nurse practitioners and physician assistants. The Clinic cares for 580,000 patients in 33 locations in the Austin and Central Texas area. It represents 19 specialties, but 65% of its physicians and advanced practice providers focus on primary care.
It’s true that independent practices lack the scale and access to the infrastructure or financial solutions that national companies enjoy, says Dr. Daghestani. “But we respond by investing in the future and looking for strategic partnerships, whether with large organizations or with local and regional ones.”
Another advantage that independent practices have over many retailer-based clinics is their ability and desire to solve for total care, not pieces of it, he says. “People need a quarterback to guide their care, and we can be that quarterback.”
Chief Medical Officer Manish Naik, M.D., says, “One of the biggest challenges companies such as Amazon, Walmart and the others face is that they’re addressing one piece of the puzzle, such as an urgent care issue or something from a menu of common minor ambulatory conditions.” That approach exacerbates the fragmentation of healthcare, he says. “You may address the sore throat, but you haven’t addressed things like blood pressure or blood sugar. You’re not caring for the whole patient. An organization like Austin Regional Clinic supports patients in managing all aspects of care, and if we do a good job of that, the total cost of care is less.”
Conventional wisdom has it that young people prefer the perceived simplicity and speed of dealing with a retail clinic rather than a family physician or practice. “It may be harder to attract [young people], but it’s doable,” says Dr. Naik. “You have to provide a digital front door, whether it’s a patient portal, telemedicine or digital access, like online scheduling and text reminders, and we’ve had success doing that.
“Still, there’s a limit to what you can accomplish digitally. AI or a patient portal are tools like any other tools. But how do you connect that digital care with in-person care?” After all, AI is only as good as the input fed into it, and that should be based on feedback from clinicians taking care of patients in their offices, he says.
Young doctors coming into practice today were brought up in the digital world and find it easy to adjust to electronic medical records and patient portals, says Dr. Naik. But young doctors aren’t the only ones who are mastering these skills at Austin Regional Clinic. “Some of our most senior doctors have contributed significantly to the progress we’ve made with cutting-edge digital solutions.”
‘Unfair advantages’
Retailers and insurers are trying to solve for the same issues that all physician practices are, including access, patient satisfaction, and recruitment and retention of patients, says Dr. Daghestani. And they have significant and impressive tools to address those issues. But the challenge they face is that they are fragmented from the larger healthcare ecosystem. If retailers are to maintain a presence in the healthcare market, they would be well-advised to partner with local practices, such as Austin Regional Clinic, he says.
Insofar as competition from bigger players goes, Dr. Daghestani sees “unfair advantages” every which way. “Yes, national companies have access to capital and technology, and they have a new way of looking at things, because healthcare is new to them. But our unfair advantage at Austin Regional Clinic is this: We think of ourselves as organized medicine. We are local, we have relationships with patients and employers, and for us, healthcare is a career, not a project.
“If we can figure out how to channel our respective ‘unfair advantages’ so that independent practices and national companies can both be successful, that’s where the magic can happen. And if we can’t figure that out, we risk further fragmentation.”