Primary care is the front line in health reform and is much bigger than physicians that see patients for their ailments and minor emergencies. The Affordable Care Act (ACA) expanded insurance coverage through expansion of state Medicaid enrollment, and tax credits offered eligible enrollees in health exchanges. It defines primary care more broadly than MDs and DOs, including advanced practice nurses and others as part of the mix. And it places a premium on accessible, effective primary care services to reduce inappropriate utilization of hospital emergency rooms and avoidable admissions. In many ways, primary care is the key to health reform. Expanding insurance coverage while improving outcomes and managing costs are a perfect storm unless access to primary care is at the center of these efforts.
Demand for primary care services is expanding in breadth and depth
46% of Americans have one or more chronic conditions, representing 84% of all medical expenditures. (Moses, Matheson JAMA 2013). The majority of these are diagnosed and treated in a primary care setting, including initial treatment for mental illnesses representing one-third of their interactions (AHA Future Scan 2015).
Consumers, especially Millennials and young Baby Boomers, want a holistic approach to their primary care: physical health, mental and emotional health, and wellbeing associated with their financial and spiritual state is core to their well being (Healthways). Programs like Palo Alto Clinic’s LinkAges’ effort to address loneliness among seniors resulted in better outcomes and lower costs for its enrollees. Blue Zones programs in communities like Naples, FL, address social determinants of health that limit access to primary care services, and so on. Though the majority in the population remain confused about how to navigate the health system (Altarum Institute), most view primary care as the system’s front door and consider a primary care relationship essential to their well being.
And employers are driving their employees and dependents to more deliberate use of primary care services: according to the National Business Group on Health 2016 Survey, 80% of employers have implemented a consumer directed health plan with a high deductible feature in their benefits, and lifestyle changes including shared decision-making with their providers and increased physical activity are their highest priorities. Costs for non-claims-related health cost self-insured employers more than $90 billion last year (Oliver Wyman).
The supply of primary care services is inadequate
39% of applicants to US medical schools anticipate a career in primary care (2015 Applicant Survey). But, according to the Federation of State Medical Boards, 31% of physicians in an active practice are over the age of 60, and another 26% are between 50 and 59. Many physicians are burned out or frustrated: 88% complain they have too little time to spend with their patients, and 61% see little progress in fixing (Wolters Kluwer Health).
Per the US Bureau of Labor Statistics, the number of primary care physicians is 275,000, or roughly one in three practicing clinicians. The projected shortage is 28,000 to 94,000 based on its analysis. But these forecasts of physician demand in primary care do not account for telemedicine, tele-consults, group visits, and new incentives to reward value, not volume (visits) and do not include utilization of non-allopathic providers of primary care services (Bipartisan Policy Center Report on the Future of the US Healthcare Workforce by the Deloitte Center for Health Solutions, 2013).
The economics of primary care is problematic
The costs of operating a primary care practice are high and physician take home pay is low relative to their peers. According to Modern Healthcare’s 22nd Physician Compensation Survey that compared 2013 to 2014, 7 of the 20 specialty groups saw pay increases led by urology (+5.3% to range of $355,600-$482,00) and invasive cardiology (+4.8% to range of $404,801-$598,600). By contrast, pediatrics (range $185,500-$248,490), general internal medicine ($207,000-$266,200) and family practice ($189,152-$250,255) were all down.
Per MGMA, primary care overhead is highest relative to revenue of any specialty. As a result, independent primary care practitioners lag other specialties in IT investments including meaningful use, and many become employees of hospitals or larger groups as a result.
The average costs for a hospital ED visit is $1354 versus a primary care visit averaging under $150 nationwide. According to the US Department of Commerce, the average household spends 20% of its discretionary spending on healthcare, with high deductible plans becoming the dominant form for employee benefits. Milliman puts the total costs for a family of four at $24,671 this year (Milliman Medical Index 2015). The average co-pay for a primary care visit to a traditional practice is $23 versus $36 for a specialist. But in a high deductible plan, individuals are out-of-pocket the entire amount, prompting many to delay preventive care altogether (Kaiser HRET).
And insurance coverage for many non-traditional forms of primary care is sporadic: yoga or massage therapy for pain management in lieu of opiod painkillers, is rarely covered. Health coaching and mental health is piecemeal, and most plans are mute about over-the counter therapeutics and other forms of self care.
The settings for primary care services are shifting from private medical practices and urgent care centers to retail and workplaces locations with technology extending their connectivity
Primary care is delivered by a widening array of providers: in addition to general internists, family physicians, and pediatricians, a significant majority of primary care for women is provided by OB-GYNs. Nurse practitioners, advanced practice nurses, and physician assistants deliver a significant amount of primary care along with health professionals in community and federally qualified health centers provide primary care. And the two-thirds of the US population say they’re comfortable seeing a nurse practitioner or mid-level provider for their primary health needs (PWC Health Research Institute 2014) and polls suggest pharmacists in the 56,000 retail settings are trusted for primary care counsel.
Companies like Care Here and others are addressing employer demand for primary care through on-site clinics to address workforce health needs, as is Sierra Nevada, Zappos and many others.
There are 6400 urgent care centers in the US, down from 9000 in 2011 (Urgent Care Association of America). Last year, they accounted for 3 million patient visits: 85% of these were episodic, 15% for routine primary care.
The number of retail clinics continues to increase access: there are 1841 today increasing at 20% annually.
Technologies are enabling “virtual” primary care; i.e. online access to appointments, lab tests, e-consults are exploding (i.e. Teladoc, MDLive, American Well, Kura, Carena, Care Clix et al). And the availability of Personal Health Records owned by patients and shared with their clinicians and advisors is changing primary care from a visit-dependent model to technology-enabled guided self-care anyplace anytime.
Hospitals and health systems are investing in retail primary care: Example; Providence Express Care and Swedish Express care in Oregon and Washington– a joint venture with Walgreens.
59% of healthcare consumers are active online seekers of health information, and 27% share their experiences with their primary care providers with others via social networks (Pew Research Center).
Biometrics devices useful in primary care health are exploding in use: Samsung, Apple, and Google are among technology stalwarts making big bets on “extended primary care.”
The transition in payments from volume to value aka ‘Health Reform’ places a premium on effective, efficient, comprehensive primary care services.
Since passage in March, 2010, CMS has been relentless in expanding the significance of primary care in its programs: the CMS’ Medicare Shared Savings Program (begun January 2012), readmission penalty (October 2012), and hospital value-based purchasing programs (October 2012), depend heavily on well-orchestrated primary care management. These alternative payment programs are central to Medicare’s goal is to pay 30% of its total provider outlays by 2016, and 50% by 2018.
In the ACO program, of the 97 that achieved savings bonuses in the second year of the program, 46% of the bonuses went to primary care physicians, 20% to specialists, and 27% to the hospitals, per CMS.
For hospitals and health systems, assuming risk for costs and quality in population health management programs requires a clinically integrated network of connected providers that’s differentiated by the strength, capabilities, depth and scope of its primary care services program.
Investors and innovators are making big bets in primary care
Oak Street Health, a 7-site primary care practice in Chicago, had 15 suitors before partnering with New York based Harbour Capital to fund its expansion in a March, 2015 deal. Cigna, Humana, Anthem, Aetna, United and many of the Blue Cross plans have purchased primary care practices, and most are “building out” retail health strategies to complement their investments.
Example: Iora Health, a New Hampshire based PCP start-up launched in 2012 raised $42 million and opened 11 clinics. In its model, patients pay a flat monthly fee of $60-200 for unlimited access to its primary care services. The company expects to operate in 30 locations next year. Iora members see primary care providers 6.1 times/year vs. 1.6 for the population overall where the focus on the “individuals” via mindfulness, stress reduction and other modalities of care intended to reduce their overall costs and improve their well being.
So what’s the key take-way?
Primary care in the future is not the model of the past. It’s a new, more holistic approach to population health management that’s dramatically different and significantly more important to our system of care. The distinctions between Primary Care 1.0 and Primary Care 2.0 are stark:
Each of these distinctions is challenging. Together, they’re transformational. They’re about systems of care, not a collection of services that share space and risk. They’re about technology-enabled, guided, self-care management for individuals in social networks connected to their care teams. They’re about systems of care that focus on persons, not facilities that focus on patients.
The second curve challenge for hospitals is bigger than the change in payer incentives from volume to value.
The opinions expressed in this article are those of the author and do not necessarily represent the views of Guidehouse Inc. The information contained in this article is a summary and reflects current impressions based on industry data and news available at the time of publication. Any predictions and expectations noted herein are inherently uncertain and actual results may differ materially from those contained in this article. Guidehouse undertakes no obligation to update any of the information contained in the article.