Healthcare mergers pose challenges for primary care

May 30, 2018

Massive deals, such as CVS’s pending purchase of Aetna, could exert increased pressure on small practices.

Physicians have no say in the mergers and consolidations shaping the future of primary care. But plenty is at stake for healthcare clinicians.

The giant players in healthcare-insurers, providers, pharmacies, and pharmacy benefit managers (PBMs)-are scrambling to get bigger and add capabilities in order to compete with each other and with new entrants in the industry, including Amazon and retailers like Walmart.

Some of the mergers could create a new model of primary care, one in which much of the care now provided by physicians in their offices could be done by mid-level providers working in retail settings. 

“It’s the wild, wild West. Obviously, it’s going to be very disruptive to the primary care environment,” says Theresa Hush, CEO of Roji Health Intelligence, a Chicago-based consulting firm.

Mergers and acquisitions in healthcare are not new, of course. Recent decades have seen independent practices absorbed by multi-group practices which, in turn, join hospital-based healthcare systems, which have merged with other large systems. Those so-called horizontal deals join firms in the same market sector.

Some of the latest mergers are different, however, because they often involve not just healthcare providers, but insurers, retailers and PBMs, which are third-party administrators of prescription drug programs for commercial health insurers. These new transactions are vertical integrations, which blur the traditional lines that once delineated roles and responsibilities in the healthcare sector.

While the companies involved say the mergers will lead to greater efficiencies, lower costs, and better healthcare, the decisions are being made largely by profit-oriented CEOs, not those on the front line of daily patient care. Not surprisingly, many doctors are skeptical of the motives and outcomes.

“I fear that any merger in healthcare is going to be harmful for patients and doctors,” says Marni Jameson Carey, executive director of the Association of Independent Doctors (AID).
 

Vertical integration

The deal drawing the most attention is CVS Health’s purchase of Aetna. The $69-billion deal, which has been accepted by shareholders of both companies and is awaiting approval from the Department of Justice, creates a company that is combines a pharmacy, insurer, PBM, and retail health clinic operator.

CVS, which has 1,100 convenient care clinics at its stores, intends to add more and expand their services with the goal of becoming a “community-based health hub” that can improve patients’ health and answer their questions about their health conditions, as well as prescription drugs and health coverage, according to the company.

All of the above sounds like the role of primary care physicians, says Carey. “I think this is a step for insurance companies to get into the business of providing healthcare, which is a business I don’t think they should be in,” she says, adding that insurers are more likely to be concerned with their bottom line than with patients’ health.

Since that deal was announced last December, it’s been reported that Walmart is in talks to buy Humana, a transaction which would create a similar hybrid of retailer/pharmacist and insurer.

Concerns over care

Convenient care clinics at CVS and elsewhere have been in existence at least since 2000. Many patients prefer them because of their longer hours, greater accessibility, faster service, and often, lower costs. But the services they offer have been limited because care is usually provided by nurses, nurse practitioners, and physician’s assistants, not doctors.

But the combined company will now have a financial incentive and the means to steer Aetna’s 22 million customers to CVS clinics, not only for prescriptions and vaccinations, but for expanded primary care services, such as management of chronic conditions and home monitoring.

That worries Donald Collins, MD, an internist and solo practitioner in Orlando, Fla. He has watched more of his patients go to retail clinics for routine care, such as flu shots and colds. He’s worried that a CVS-Aetna (or Walmart-Humana) merger will result in patients going to clinics for more serious care, to their detriment and his own.   

“My impression is that this is not going to be good for me and my patients. [Retail clinics] are steadily chipping away at the physician-patient relationship,” Collins says. “I worry I will lose control of my patients.” He says most patients don’t know that clinics are staffed by mid-level providers and not physicians. “I worry that patients aren’t going to have the same level of care,” he says.

One of the most important services he offers is guiding patients through the healthcare maze with advice and referrals to specialists he knows are good, Collins says, whereas a mid-level in a retail clinic might not be able to do that. He says losing patients to retail clinics also will hurt practice revenue, adding, “There may come a point where I can’t continue to do this.”

Primary care practices are losing patients to the estimated 12,000 retail clinics and urgent care centers. Office visits to primary care doctors declined 18 percent from 2012 to 2016, even as visits to specialists increased, according to the Health Care Cost Institute. According to industry group Convenient Care Association, there are more than 2,400 convenient care (aka retail) clinics in 44 states and Washington D.C., and the number is growing. The clinics have accounted for more than 35 million patient visits.

And a vertically integrated company would have more leverage over primary care physicians even if it doesn’t deliver the care itself, says Chris Kane, MBA, a principal at Progressive Healthcare, a consulting firm in Tennessee. For example, a hybrid insurer/PBM/pharmacist like CVS-Aetna could use its data-mining capabilities to become even more controlling in the drugs and treatments for which it will reimburse providers.

“I think that could be very disheartening to primary care physicians,” Kane says, adding that he expects the new companies to lobby lawmakers to allow mid-level providers to deliver more types of care, which would further cut into primary care practices. And, Kane says, 0because of their size and integration, the new firms will have even more leverage in negotiating reimbursements with doctors.


Partnering up

All the mergers make it harder for primary care doctors to remain independent, says Hush, of Roji Health Intelligence.

A former vice president of UnitedHealthcare and director of the Illinois Medicaid program, Hush says physicians are going to have to change their business models to survive. However, she adds, that doesn’t mean independent practitioners necessarily have to sell their practices or go to work for someone else.

One option is to join an accountable care organization (ACO), but Hush says that doctors should only join one that gives them a voice in management and operations so they can retain control of their practice. Other choices that offer some organizational and financial stability might be a capitated care model and risk-sharing contracts, she says.

Kane, of Progressive Healthcare, says independent primary practitioners also could join multi-specialty practices to retain quasi-independence.

Orlando physician Collins says he is considering joining an ACO because of its additional resources and efficiencies, but would rather remain fully independent: “I’m solo by choice. There are a lot of things I complain about but, at the end of the day, I do this because I want to,” he says.    

Possible benefits

Not everyone thinks the mergers will be bad for physicians. A combined CVS-Aetna could be beneficial for patients and physicians alike, says David Blumenthal, MD, president of The Commonwealth Fund, a foundation that works to improve and expand the healthcare system.
“They will not be trying to compete with primary care physicians,” Blumenthal says, adding that a vertically integrated healthcare giant has the potential to work with doctors to make them more efficient.

“I think they can make allies of physicians by offering them services that will help them to manage their caseload,” he says, citing compliance assurance, community management, medication tracking, home care services, and appointment scheduling as tasks that a primary care practice might outsource to such a company.

Progressive Healthcare’s Kane says the new firms might hire more physicians to work in expanded retail clinics to provide primary care, which would offer another career path for doctors.

Payal Bhandari, MD, a primary care doctor in San Francisco, says the primary care model has done a poor job of meeting the needs and preferences of patients and the mergers could fill a gap in care without replacing primary care physicians.

“I think it’s a good thing (for patients),” she says. “Physicians will be OK if they still do their jobs.”

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