It’s no surprise that the shortage of family doctors — who are vital to Americans’ health — is getting worse.
You practice in one of the lowest paid and least glamorous areas of medicine. Most are overworked and see up to 30 people a day; finding out if a sore throat is a streptococcal infection, or treating a patient’s chronic diabetes.
Why are billionaire companies, especially giant health insurers, gobbling up primary care practices? CVS Health, with its sprawling pharmacy business and ownership of major insurer Aetna, paid about $11 billion to purchase Oak Street Health, a fast-growing chain of primary care centers that employs physicians in 21 states. And Amazon’s bold purchase of One Medical, another major medical group, for nearly $4 billion is another such move.
The appeal is simple: despite their low status, primary care physicians serve large numbers of patients, bringing business and profits to a hospital system, health insurance company, or an expanding pharmacy.
And there’s an added attraction: The growing privatization of Medicare, the federal health insurance program for older Americans, means more than half of its 60 million beneficiaries have policies with private insurers under the Medicare Advantage program. The federal government is now paying these insurers $400 billion a year.
“That’s the big pot of money everyone’s aiming for,” said Erin C. Fuse Brown, director of the Center for Law, Health, and Society at Georgia State University and author of an article in the New England Journal of Medicine on business investing in primary care. “It’s a one-stop shop for all your healthcare expenses,” she said.
Many doctors say they become mere employees. “We’ve seen this loss of autonomy,” said Dr. Dan Moore, who recently decided to open his own practice in Henrico, Virginia to have more say in the care of his patients. “You don’t become a doctor to spend an average of seven minutes with a patient,” he said.
Physician practice takeovers are part of a vast, accelerating consolidation of medical care that leaves patients in the hands of a shrinking number of giant corporations or hospital groups. Many were already the patients’ insurers and controlled the distribution of drugs through ownership of drugstore chains or pharmacy benefit managers. But now, according to a recent analysis by the Physicians Advocacy Institute, nearly seven in 10 of all physicians are employed by either a hospital or a company.
The companies say these new arrangements will bring better and more coordinated care to patients, but some experts warn that the consolidation will lead to higher prices and systems driven by the quest for profits rather than the well-being of patients.
Insurers say their purchase of doctors’ offices is a step toward so-called value-based care, where the insurer and doctor pay a flat fee to care for an individual patient. The fixed payment serves as a financial incentive to keep patients healthy, provide better access to early care, and reduce hospitalizations and expensive specialist visits.
The companies say they prefer the fixed fees to 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 when doctors assume the financial risk of treating a patient, and earn more when they can save on treatment. Instead of being paid a few hundred dollars for a doctor’s visit, primary care physicians can be paid up to $14,000 a year to treat a single patient.
But experts warn that these big acquisitions threaten the personal nature of the doctor-patient relationship, especially when the parent company has the power to dictate benefit limitations from the first doctor visit to extended hospital stays. Once registered, these new customers can be directed to related business chains such as a CVS drugstore or Amazon’s online pharmacy.
UnitedHealth Group is a broad example of consolidated services. It owns the big insurer with nearly 50 million customers in the United States and oversees its ever-growing subsidiary Optum, which has been buying up networks of doctors and medical facilities. Optum can send patients from one of its approximately 70,000 physicians to one of its emergency care or surgical centers.
Senator Elizabeth Warren, a Massachusetts Democrat, is asking the Federal Trade Commission to take a closer look at some of these big deals that regulators have not yet blocked on antitrust grounds. “I am concerned that the takeover of thousands of independent providers by a few giant healthcare mega-conglomerates could reduce local or national competition, harm patients and increase healthcare costs,” she wrote to regulators in March.
This consolidation of medical care can also violate state laws that prohibit so-called occupational medicine. Such laws prevent a company that employs doctors from interfering in the care of patients.
And experts warn of the potential harm to patients as management seeks to control costs through byzantine systems that require prior authorization for treatment.
For example, Kaiser Permanente, the huge nonprofit health plan that also owns medical groups, filed a nearly $2.9 million malpractice case last year with the family of Ken Flach, a former tennis player who contracted pneumonia and after a Kaiser’s nurse and died of sepsis The doctor did not send him for a personal visit or to the emergency room, despite urgent pleas from his wife. Kaiser said medical decisions are made by his providers in consultation with their patients, and said his “deepest sympathies remain with the Flach family.”
Doctors also fret over an oversight that doesn’t benefit patients. “They try to run it like a business, but it’s not a business,” said Dr. Beth Kozak, a physician specializing in internal medicine in Grand Rapids, Michigan.
Her group of doctors has partnered 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 provide additional diagnostics for patients, which increases state reimbursements under the Medicare Advantage program. “It’s not because I take better care of patients,” she said. “It’s all to do with the billing.”
Corporate consumption of medical supplies continues to grow. Walgreens Boots Alliance, one of the largest US pharmacy operations, spent $5 billion for a majority stake in VillageMD, a primary care group, and partnered with Cigna to form another nearly $9 billion medical group to buy. And aside from an outright purchase, UnitedHealth is partnering with Walmart to offer care to older patients.
In promoting the benefits of buying Oak Street clinics to investors, Karen S. Lynch, chief executive officer of CVS Health, said primary care physicians reduce medical costs. “Primary care fosters patient engagement and positive clinical outcomes,” she said.
Many of these companies are building chains of clinics. During a recent tour of a clinic on Oak Street in Bushwick, one of 16 centers that have opened in New York City since October 2020, patients were typically seen from 8 a.m. to 5 p.m., with a nurse available after hours for questions about was available.
Ann Greiner, executive director of the Primary Care Collaborative, a nonprofit group, defended recent forays into this area of healthcare by private companies, saying they could provide practices with much-needed funds and improve access to care for people in underserved areas.
“People’s salaries in these arrangements are higher,” she said. “In many of these arrangements, they offer more comprehensive care. They offer more technology and more team-based care. These are all investments.”
But those deals also risk shifting the balance from quality treatment to profits, she said.
In recent years, some have invoked the laws banning occupational medicine to challenge these large-scale private surgeries. Envision Healthcare, a private equity-backed company that employs emergency room physicians, is being sued in California by a unit of the American Academy of Emergency Medicine, a professional group that supports independent practices, alleging violations of that state’s regulations have.
“Envision exercises pervasive and pervasive direct and indirect control and/or influence over the medical practice of physicians,” the lawsuit states. The lawsuit alleges that Envision controls physician billing and creates medical records.
While Envision declined to comment on the litigation, it said it “follows an operational structure that is common across the healthcare sector and is widely adopted by nonprofit, private and public groups, as well as hospitals and insurers.”
The large insurers find the doctors’ groups particularly attractive, although many report large losses. The acquisition of Oak Street, which has lost more than $1 billion over the past three years, could help CVS’ Medicare Advantage plans improve their quality, or “star” ratings, and increase payments on one of their plans increase.
Even a small number of patients can result in significant revenue. One Medical, the company owned by Amazon, is best known for its swanky clinics. The company acquired a practice specializing in Medicare Advantage. Only about 5 percent of One Medical’s 836,000 members are enrolled in this federal program, but according to the 2022 financial statements, about half of its revenue comes from this tiny fraction of patients.
Regulators are already pointing out questionable methods of some practices. In November 2021, Oak Street announced that the Justice Department was investigating sales ploys such as free rides to its clinics and paying insurance agents for referrals. A doctor at one center described recruiting patients with “gift cards, swag and goody bags,” according to a shareholder lawsuit against Oak Street.
The lawsuit worries doctors are inflating federal payments by overstating how ill their patients are.
Oak Street says he has not been charged with wrongdoing by the Justice Department and says the lawsuit is “baseless”.
These private Medicare Advantage plans have been heavily criticized for accumulating huge profits by inflating costs and exaggerating patient illnesses to burden 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 avenues of profit also explain why companies covet these deals. Unlike insurers’ money-making caps, which require a Medicare Advantage insurer to spend at least 85 cents out of every dollar on patient care, these doctor’s offices and pharmacy chains have no limit to their profits.
It may be too early to determine if consolidated care will improve patient health. “So far, if you look at the industry, the record of these acquisitions has been mixed,” said Dr. Sachin H. Jain, executive director of SCAN Group, a nonprofit organization based in Long Beach, California that offers Medicare Advantage plans.
And the investments can’t stop the rapid disappearance of the doctor so many people still seek for normal care, including a recent report showing fewer medical school graduates are entering the field.
“We’re dealing with an incredible level of burnout within the profession,” said Dr. Max Cohen, who practices near Portland, Ore. Since the pandemic, his low-income patients have gotten much sicker with the degree of illness, he said “through the roof.”