By Terry Bauer, Healthcare Management Consultant, CEO and Entrepreneur, Stroudwater. Terry will post once or twice a month on his LinkedIn page, www.linkedin.com/in/terrylbauer, and on Twitter @TerryLBauer.
MAY 20, 2015 – When Healthcare Finance reports that even Whole Foods is considering joining CVS, Walmart and Walgreens in the retail clinic boom, you know “the times they are a-changing.”
About 30% of the country’s 10,000-plus urgent care and walk-in clinics are now owned by corporations like CVS, United Healthcare (through Optum) or private equity investors, according to industry publications and another article in Healthcare Finance. That article also reports that CVS’ MinuteClinic visits have reached 25 million. CVS plans to open more than 100 new clinics this year, with more than 1,500 total locations expected by 2017.
A prime private equity target. The growth of retail clinics is just one signal of privatization in primary care today. Benesch Friedlander attorneys in Cleveland, Ohio, report in their 2015 private equity summary that private equity deal flow in healthcare hit a three-year high of $29.6 billion globally, including the increased targeting of primary care-focused physician groups “as a result of the shift to value-based care and population health management.” It’s all an attempt by the private sector to fix a problem that government has not been able to fix.
What’s more, the Accountable Care Organization (ACO) model—which only a few years ago promised a solution to the nation’s healthcare woes—is proving fairly ineffective as long as it continues to operate under the old volume-based, fee-for-service reimbursement system. “Relying on fee-for service payments continues to emphasize volume and threatens meaningful practice change,” said Lisa Letourneau, M.D., quoted in an interesting AISHealth article last week, Enhanced Primary Care, Not ACOs, Could Be Key to Cost Control.
Change is the only option. Couple the resistance to change in our reimbursement system with other healthcare realities today and it’s no wonder that the private sector looks at primary care and sees opportunity. When primary care physicians are still the lowest compensated among their colleagues, when insurance and government continue to place more demands on primary care in the form of technology and compliance requirements, when more young physicians are avoiding the hassles of setting up their own practices, then something truly has to give, especially when you consider that Baby Boomers aging by the millions are creating a greater demand for primary care than ever before.
It’s not as if the American public is mourning the demise of the traditional primary care practice. Sitting in a waiting room for 45 minutes to see a doctor for six minutes is hardly a model customer experience. But what will the new model look like? Membership medicine (concierge and direct primary care) offers promise, but with only about 5% of primary care doctors embracing it today, the model has a long way to go before it is in widespread use.
A measured solution. Maybe the message here is that no single solution will ever offer all the answers. It might just be that empowering primary care physicians with a combination of less drastic solutions would make a tremendous difference. Things like smarter and easier to use technology, complementary telemedicine, smaller patient panels, appropriate remuneration, and the proper financial incentives to manage all the care of their patients. These steps could work together to provide relief for primary care practices and improve outcomes for the patients and the payers.
Terry Bauer joined Stroudwater in 2014, where he leads the Strategy Practice Team at the firm. He also dedicates his time and focus to affiliations, accelerated operational improvement, physician/hospital alignment, and early stage healthcare technology and services. Terry has a passion for primary care and is convinced it is the key to achieving the Triple Aim. A big-picture leader with over three decades of experience introducing strategies to drive revenue and profit growth, Terry has successfully facilitated the completion and integration of more than two dozen acquisitions in the physician practice management and revenue cycle management industries. He has been actively involved in all facets of the healthcare industry with the exception of the pharma sector. Terry will post once or twice a month on his LinkedIn page, www.linkedin.com/in/terrylbauer, and on Twitter @TerryLBauer.