The recent announcement of Morgan Health’s $30 million investment in the start-up health plan Centivo was overshadowed just two days later by Amazon’s $3.9 billion agreement to acquire the subscription-based primary care network One Medical, the retail giant’s biggest move yet in the health care space and one of its largest deals ever. While it might be a coincidence that the two announcements occurred in the same week, they reflect an ongoing market trend in which both disruptors and more traditional players are betting on primary care as a way to deliver greater health care value.
Primary care delivers better health – and cost savings
There is a growing body of evidence to support the essential role of primary care as the base for the broader delivery system. People with better access to primary care physicians have better health outcomes – and even live longer life spans, according to research from 2019 conducted at Stanford University and Harvard Medical School.
Health systems that have a strong foundation in primary care tend to perform better not only in health outcomes but in cost. It stands to reason -- when more patients have relationships with a primary care provider (PCP), more of their health issues are handled at the primary care level. In addition, a good PCP in a well-managed network will refer patients to specialist and inpatient care smartly and appropriately, steering them to high quality, cost-effective providers.
This is the strategy at work in the best staff model HMOs. But employers have been exploring other delivery models with a strong primary care focus, such as onsite clinics, virtual advanced primary care, or even purely digital approaches.
Balancing virtual and in-person primary care
Virtual primary care networks, such as 98point6 and Teladoc, are being marketed as a way to increase access to, and utilization of primary care services. One challenge with virtual primary care is that, to provide truly longitudinal care, patients do sometimes require an in-person visit at a bricks-and-mortar facility. This may be the driver behind Amazon’s acquisition of One Medical. Amazon Care, which the company rolled out in 2019, provides largely virtual primary care, with some home visits with nurses. One Medical has well-established bricks-and-mortar facilities around the country, which gives Amazon Care the potential to provide a full range of virtual and in-person primary care. Of course, the special sauce that Amazon can bring to the table is the ability to seamlessly connect a patient to a larger health ecosystem – healthcare information and apps that offer suggestions and recommendations for health activities, convenient access to prescription drugs through Amazon Pharmacy, the ability to order food that meets health needs (via Whole Foods and Amazon Fresh) – and have it all connect back with their primary care doctor.
While Centivo is a full-service health plan, it places a strong emphasis on primary care via PCP assignment and other plan design levers. Members select a PCP from a specified network of providers, who either addresses member issues or, when appropriate, steers them to high performing specialists and facilities within the contracted health system. Morgan Health’s investment is emblematic of the current interest in the primary care market. In addition to a flood of investment dollars, we’re seeing ongoing consolidation as vendors try to strengthen their position in this area. This has occurred in another domain of primary care, employer onsite health centers, where companies such as Everside Health have acquired and consolidated former competitors.
Opportunities for employer plan sponsors
Ensuring a robust primary care base in any network offering is the overarching theme that these specific developments point to. A primary care strategy can operate like a “secret” high-performance network. Rather than announce to members that their provider choices have been limited to only a subset of a broad provider network, this approach can encourage the access to and relationship with PCPs who can both resolve issues and drive steerage to high-value providers in a more organic way—given that patients usually follow their trusted physician’s referral recommendations.
Of course, it’s important to take a step back from any new offering, however intriguing, to assess the value it can bring to your particular program. Start with your data. If, like most employers, you are still using broad PPO networks, it’s important to understand where care is being delivered. What percentage of your members are already seeing high-quality, efficient providers? How are your preventive screening metrics? What about the rate of preference-sensitive elective procedures like orthopedic surgeries that don't always need to be done? You need to know whether you have a problem – and, if so, what the specific issues are – before you can judge whether a new vendor or strategy can help you extract more value from the healthcare dollars you spend.