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Large health insurers and other companies areespecially keen on doctors’ groups that care for patients in private Medicare plans.
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By Reed Abelson
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.
And there’s an added lure: The growing privatization of Medicare, the federal health insurance program for older Americans, means that more than half its 60 million beneficiaries have signed up for policies with private insurers under the Medicare Advantage program. The federal government is now paying those insurers $400 billion a year.
“That’s the big pot of money everyone is aiming at,” said Erin C. Fuse Brown, director of the Center for Law, Health & Society at Georgia State University, and an author of a New England Journal of Medicine article about corporate investment in primary care. “It’s a one-stop shop for all your health care dollars,” she said.
Many doctors say they are becoming mere employees. “We’ve seen this loss of autonomy,” said Dr. Dan Moore, who recently decided to start his own practice in Henrico, Va., to have more say in caring for his patients. “You don’t become a physician to spend an average of seven minutes with a patient,” he said.
The absorption of doctor practices is part of a vast, accelerating consolidation of medical care, leaving patients in the hands of a shrinking number of giant companies or hospital groups. Many already were the patients’ insurers and controlled the distribution of medicines through ownership of drugstore chains or pharmacy benefit managers. But now, nearly seven in 10 of all doctors are either employed by a hospital or a corporation, according to a recent analysis from the Physicians Advocacy Institute.
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.”
The corporate consumption of medical care keeps growing. Walgreens Boots Alliance, one of the largest U.S. pharmacy operations, spent $5 billion for a majority stake in VillageMD, a primary care group, and teamed with Cigna to buy another medical group for nearly $9 billion. And short of 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, the chief executive of CVS Health, said primary care doctors lower medical costs. “Primary care drives patient engagement and positive clinical outcomes,” she said.
Many of these companies are building chains of clinics. On a recent tour of an Oak Street clinic in Bushwick, one of 16 centers opened since October 2020 in New York City, patients were typically seen from 8 a.m. to 5 p.m., with a nurse available after hours to field questions.
Ann Greiner, the chief executive of the Primary Care Collaborative, a nonprofit group, defended the recent forays by private companies into this field of health care, saying they are infusing practices with sorely needed funds and may improve access to care for people in underserved areas.
“The salaries of the folks in those arrangements are higher,” she said. “They are providing more comprehensive care in many of those arrangements. They are providing more tech and more team-based care. That’s all investment.”
But these deals also risk shifting the balance from quality treatment to profits, she said.
In recent years, some have invoked the laws banning corporate medicine to challenge these large-scale private operations. Envision Healthcare, a private equity-backed company that employs emergency room doctors, is being sued in California by a unit of the American Academy of Emergency Medicine, a professional group that supports independent practices, accusing it of violating that state’s provisions.
“Envision exercises profound and pervasive direct and indirect control and/or influence over physicians practice of medicine,” according to the lawsuit. The suit maintains that Envision controls the doctors’ billing and establishes medical protocols.
While Envision would not comment on the litigation, it said it “follows an operating structure that is common across the health care sector and widely used by nonprofit, privately held and public groups as well as hospitals and insurers.”
The big insurers find doctors’ groups particularly attractive, although many have reported sizable losses. The acquisition of Oak Street, which has lost more than $1 billion over the last three years, could help CVS’s Medicare Advantage plans improve their quality or “star” ratings and increase payments for one of its plans.
Even small numbers of patients can translate into significant revenue. One Medical, the company Amazon owns, is best known for sleek clinics. The company scooped up a practice specializing in Medicare Advantage. Only about 5 percent of One Medical’s 836,000 members are enrolled in that federal program, but roughly half of its revenue comes from that tiny slice of patients, according to its 2022 financial statements.
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.
It may be too soon to determine whether consolidated care will improve patients’ health. “So far, when you look across the industry, the record of these acquisitions has been mixed,” said Dr. Sachin H. Jain, the chief executive of SCAN Group, a nonprofit based in Long Beach, Calif., that offers Medicare Advantage plans.
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.
How we handle corrections
Reed Abelson covers the business of health care, focusing on health insurance and how financial incentives affect the delivery of medical care. She has been a reporter for The Times since 1995. @ReedAbelson
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How do you succeed in primary care? ›
- Be Strategic But Nimble. ...
- Tighten Operations and Workflows. ...
- Understand Financial Data. ...
- Align Your Compensation Models. ...
- Review Quality and Patient Satisfaction Ratings. ...
- Connect Clinical Variation and Evidence-Based Care. ...
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Primary care doctors spend more than 50% of workday on EHR tasks, American Medical Association study finds. Primary care doctors spend more than half their workday on EHR tasks, according to a new study.What solutions do you feel should be explored to combat physician and staffing shortages? ›
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We enhanced the “4 Cs” Primary Care Model (first contact; comprehensive care; continuous care; coordinated care) with the addition of 5 more Cs: physician credibility, collaborative learning, cost-effectiveness, capacity expansion, and career satisfaction.What are the 4 C's of primary care? ›
The four primary care (PC) core functions (the '4Cs', ie, first contact, comprehensiveness, coordination and continuity) are essential for good quality primary healthcare and their achievement leads to lower costs, less inequality and better population health.Are primary care physicians overworked? ›
A new study published in The Journal of General Internal Medicine shows how overworked primary care physicians are: if they followed all guidelines on the recommendations concerning preventive care, chronic diseases, treatment, and taking care of an average number of patients, their workday would last more than 24 ...What is the average time a doctor spends with a patient? ›
A review of 2018 data suggests that most U.S. physicians spend between 13 and 24 minutes with patients. About 1 in 4 spend less than 12 minutes, and roughly 1 in 10 spend more than 25 minutes. All in all, it seems like doctor-patient time isn't changing substantially.How much time do doctors actually spend with patients? ›
Average length of visits was 17.4 minutes. The median length of visits was 15.7 minutes. The median talk time by patient was 5.3 minutes, and physician, 5.2 minutes. The median time during which neither part spoke was 55 seconds.What is a reason for the shortage of primary care physicians? ›
The US is expected to face a shortage of primary care physicians ranging from 21,000 to 55,000 by the year 2033. Both patients and doctors are getting older. As patients age, they tend to need more care from their PCPs to address the proliferation of medical problems and medications that inevitably comes with aging.What is one potential solution to the primary care physician shortage in this country? ›
Primary care physician shortages could be eliminated through use of teams, nonphysicians, and electronic communication. To compound matters further, primary care physicians now work part-time more frequently and are retiring at an earlier point in their careers than in the past.
How do you solve inadequate staffing? ›
- Act on Employee Feedback. ...
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processes and design, five principles emerged: shared goals, clear roles, mutual trust, effective communication, and measurable processes and outcomes.What are the 7 C's in healthcare? ›
The 6Cs of nursing are a mix of qualities that all nurses live by when working with service users – Care, Compassion, Competence, Communication, Courage, and Commitment.What are the 6 C's of primary care? ›
The six Cs of healthcare (connection, communication, creativity, cooperation, cost-consciousness and computerization) contain the seeds to both understand what constitutes true health from an empirically-verifiable standpoint and casts a vision for uniting policymakers with patients and clinicians to tackle one of the ...What are the 4 P's of patient care? ›
The four Ps (predictive, preventive, personalized, participative)  (Box 21.1) represent the cornerstones of a model of clinical medicine, which offers concrete opportunities to modify the healthcare paradigm .What are the 4 levels of care in the healthcare system explain? ›
Primary care is the main doctor that treats your health, usually a general practitioner or internist. Secondary care refers to specialists. Tertiary care refers to highly specialized equipment and care. Quaternary care is an even more specialized extension of tertiary care.What is the House of Care Framework? ›
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Key Results. After excluding personal time, physicians spent 66.5% of their time on direct patient care (23.6% multitasking with use of the EHR and 42.9% without the EHR), 20.7% on EHR input alone, 7.7% on administrative activities, and 5.0% on other activities (0.6% using the EHR).What do doctors spend most of their time doing? ›
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Nurses Spend More Time with Patients.What is the largest physician shortage? ›
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- South Korea. South Korea tops the list of best healthcare systems in the world. ...
- Taiwan. Taiwan is second in the best healthcare systems in the world. ...
- Denmark. ...
- Austria. ...
- Japan. ...
- Australia. ...
- France. ...
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Job burnout continues to be one of the biggest challenges facing doctors today.
The relative shortage of physicians in rural areas of the United States is 1 of the few constants in any description of the US medical care system. About 20% of the US population—more than 50 million people—live in rural areas, but only 9% of the nation's physicians practice in rural communities.What to do if your company is understaffed? ›
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- Ensure that you have a full understanding of the staffing levels and mix of skills required to operate safely, and use this when agreeing reduction plans.
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- Communication and interpersonal skills. ...
- Professionalism and humanism. ...
- Diagnostic acumen. ...
- Skillful negotiation of the healthcare system. ...
- Knowledge. ...
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You'll have the opportunity to form long-term relationships with patients. Primary care physicians are different from specialists in that they see the same patients for a long time, sometimes for decades. It's one of the things many of them love about their job.What are 6 care values? ›
Communication is central to successful caring relationships and to effective team working. Listening is as important as what we say. It is essential for 'No decision without me'. Communication is the key to a good workplace with benefits for those in our care and staff alike.
What are the 6 values known as the 6Cs which are important when working in health and social care? ›
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There are three overarching goals that make up the Triple Aim of healthcare: reducing costs, improving patient health, and improving quality of care.What are the three goals of patient focused care? ›
- Determine what is important to their patients.
- Collaborate with patients using patient communication like shared decision-making.
- Comfort and support patients through relationship building and empathy.
When we talk about care we are referring to the meeting the client's physical and basic needs, whereas caring refers to more of the humanistic, emotional needs. Oftentimes a family calls on a caregiver to provide the care component, while the daughter, son, spouse will provide the caring.Are doctors being replaced by nurse practitioners? ›
With a shortage of primary care physicians leaving more than 90 million people without access to primary care, according to the Health Resources & Services Administration, it is not surprising that NPs and PAs are filling the gap and being sought to do so.What are the most important elements of primary health care? ›
- Education on health problems and how to prevent and control them.
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I have excellent interpersonal skills and am extremely patient and resilient – these skills have helped me tremendously with the emotional aspects of the job. In addition, I am proficient in administering medications and am well-versed in safety protocols and guidelines."Why are you interested in working in healthcare answer? ›
I'm excited about this opportunity because of the organization's strong focus on empathy and patient care. In addition, my previous experience with ABC Clinic has taught me valuable communication, time-management and decision-making skills. I feel confident I can positively contribute to this healthcare organization."Why do you love being a primary care physician? ›
Primary care physicians are the backbone of our medical system. Becoming an Internist didn't make me wealthy, but I can pay most of my bills. More importantly, it gave me the privilege of knowing and interceding in the lives of my patients in ways that specialists never can. For me, that's the best thing I ever did.