In addition to the resource below, please review Researchers: For-Profits Have Destabilized the Primary Care Market from Healthcare Innovation.
Sept. 9, 2024:
Writing in Health Affairs, three researchers assert the failure of corporations to enhance primary care
Today, I review, link to, and excerpt from The New York Times‘ article, “Corporate Giants Buy Up Primary Care Practices at Rapid Pace”, Published May 8, 2023
Updated May 12, 2023.
All that follows is from the above resource.
Corporate Giants Buy Up Primary Care Practices at Rapid Pace
Large health insurers and other companies are especially keen on doctors’ groups that care for patients in private Medicare plans.
It’s no surprise that the shortage of primary care doctors — who are critically important to the health of Americans — is getting worse.
They practice in one of medicine’s lowest paid, least glamorous fields. Most are overworked, seeing as many as 30 people a day; figuring out when a sore throat is a strep infection, or managing a patient’s chronic diabetes.
So why are multibillion-dollar corporations, particularly giant health insurers, gobbling up primary care practices? CVS Health, with its sprawling pharmacy business and ownership of the major insurer Aetna, paid roughly $11 billion to buy Oak Street Health, a fast-growing chain of primary care centers that employs doctors in 21 states. And Amazon’s bold purchase of One Medical, another large doctors’ group, for nearly $4 billion, is another such move.
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.
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.
Insurers say their purchase of medical practices is a step toward what is called value-based care, with the insurer and doctor paid a flat fee to care for an individual patient. The fixed payment acts as a financial incentive to keep patients healthy, provide more access to early care and reduce hospital admissions and expensive visits to specialists.
The companies say they favor the fixed fees over the existing system that pays doctors and hospitals for every test and treatment, encouraging doctors to order too many procedures.
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.
But experts warn these major acquisitions threaten the personal nature of the doctor-patient relationship, especially if the parent company has the authority to dictate limits on services from the first office visit to extended hospital stays. Once enrolled, these new customers can be steered toward chains of related businesses, like a CVS drugstore or Amazon’s online pharmacy.
UnitedHealth Group is a sprawling example of consolidated services. It owns the major insurer that has nearly 50 million customers in the United States and oversees its ever-expanding subsidiary, Optum, which has bought up networks of doctors and medical sites. Optum can send patients from one of its roughly 70,000 doctors to one of its urgent care or surgery centers.
Senator Elizabeth Warren, Democrat of Massachusetts, is urging the Federal Trade Commission to take a closer look at some of these large deals, which regulators have so far not blocked on antitrust grounds. “I fear that the acquisition of thousands of independent providers by a few massive health care mega-conglomerates could reduce competition on a local or national basis, hurting patients and increasing health care costs,” she wrote to regulators in March.
This consolidation of medical care may also run afoul of state laws that prohibit what is called corporate medicine. Such statutes prevent a company that employs doctors from interfering with patient treatment.
And experts warn of the potential harm to patients, when corporate management seeks to control costs through byzantine systems requiring prior authorization to receive care.
For example, Kaiser Permanente, the giant nonprofit health plan that has exclusive contracts with physician groups, settled a malpractice case for nearly $2.9 million last year with the family of Ken Flach, a former tennis player who contracted pneumonia and died from sepsis after a Kaiser nurse and doctor would not send him for an in-person visit or to the emergency room, despite the urgent pleading of his wife. Kaiser said medical decisions are made by its providers in consultation with their patients and said its “deepest sympathy remains with the Flach family.”
Doctors also chafe at oversight that does not benefit patients. “They are trying to run it like a business, but it’s not a business,” said Dr. Beth Kozak, an internal medicine doctor in Grand Rapids, Mich.
Her doctors’ group has teamed up with Agilon Health, an investor-owned company, to work with Medicare Advantage plans. Dr. Kozak said she has to work longer hours, not to provide better care, but to supply additional diagnoses for patients, which increases federal reimbursements under the Medicare Advantage program. “It’s not because I’m giving better patient care,” she said. “It’s all tied to the billing.”
Regulators are already flagging questionable methods employed by some practices. In November 2021, Oak Street disclosed that the Justice Department was investigating sales ploys like free trips to its clinics and payment of insurance agents for referrals. One doctor at a center described recruiting patients with “gift cards, swag and goody bags,” according to a shareholder lawsuit against Oak Street.
The lawsuit detailed concerns that doctors were inflating the payments from the federal government by overstating how sick their patients were.
Oak Street says it has not been accused of any wrongdoing by the Justice Department and says the lawsuit is “without merit.”
These private Medicare Advantage plans have been heavily criticized for racking up enormous profits by inflating costs and exaggerating patients’ illnesses to charge the government more than they should.
Under new rules, the Biden administration would eliminate some of the most problematic, overused diagnoses, and doctors and insurers could earn less.
But other pathways to profit also explain why corporations covet these deals. Unlike the caps on insurers’ moneymaking, where a Medicare Advantage insurer has to spend at least 85 cents of every dollar on patient care, there are no limits to how much profit these doctor practices and pharmacy chains can make.
And the investments may not halt the rapid disappearance of the doctor still sought by so many people for ordinary care, including a recent report showing fewer medical school graduates going into the field.
“We’re dealing with incredible levels of burnout within the profession,” said Dr. Max Cohen, who practices near Portland, Ore. Since the pandemic, his low-income patients have become much sicker, he said, with the level of illness “through the roof.”
A correction was made on
May 12, 2023:
An earlier version of this article misstated the relationship between Kaiser Permanente, the health plan consortium, and physician groups. Kaiser Permanente said it had exclusive contracts with doctors’ groups, but did not own them.
