Special Focus: Primary Care and Retail Clinics

Strategic Considerations for Healthcare Providers

There is renewed focus on the role of primary care and preventive health in U.S. healthcare. Primary care is widely accepted as the gatekeeper for essential services provided by hospitals and specialists. It also serves as the principal vehicle to reduce the cost of chronic disease treatment and management. As a result, primary care delivery has evolved to include integrated physical and mental health services, prophylactic dentistry, nutrition, health coaching, over-the-counter and prescription drug dispensing, and more, with services accessible through modern physical locations and digital networking. This article explores changes to and trends in primary care delivery and why competing in primary care requires hospitals, health systems, and physician organizations to take a fresh look at their strategic positioning in a broader context.

Why the Sudden Interest?

The resurgence of interest in primary care is driven by these trends:

CHANGES IN EMPLOYER-SPONSORED HEALTH INSURANCE COVERAGE

49 percent of the U.S. population (156.2 million) have health insurance coverage through an employer. In 2019, the average annual premium for single coverage increased 4 percent to $7,188 and 5 percent for family coverage to $20,576. In the same period, wages increased 3.4 percent and inflation increased 2 percent. Among employers offering employee coverage, employees are increasingly responsible for paying more for their coverage: 18 percent of total costs for singles and 30 percent for families. And high deductible health plans (HDHPs), which have the cheapest premiums, are the choice for 28 percent of all covered workers and 45 percent of those who work in smaller firms. The number of employees enrolled in HDHPs has increased from 8 to 30 percent over the past decade.²

EXPANSION OF PRIMARY CARE INTO WORKPLACES

A third of employers (34 percent) with 5,000 or more employees operate worksite clinics. Mercer and the National Association of Worksite Health Centers report most employees are permitted to use the worksite clinic as their primary care provider. All feature routine preventive health services, treatment for uncomplicated medical conditions, and minor urgent care services. That’s up from 24 percent in 2012 and is expected to continue to increase.⁸

CONSUMER ACCEPTANCE

Consumers in all age groups want access to primary care services. They embrace holistic primary and preventive health services accessible in conveniently located clinics and digital connectivity. They are receptive to primary care provided in retail and worksite clinics and open to additional new provider models. In response, market activity in primary care by nontraditional players is significant. A few recent developments from disruptive competitors include:

Walmart Health opened its clinic prototype in Dallas, Georgia, telling its investors direct-to-consumer healthcare is a strategic opportunity for America’s biggest retailer.⁵

Amazon is digesting Pill Pack and Whole Foods to create a new consumer experience for health foods and medication management.⁵

In the last five years, Microsoft, Google, and Tencent have invested in more than 200 digital health startups. Google acquired Fitbit. Apple has introduced its iWatch and Facebook announced its Preventive Health App. These are all targeted, technology-enabled primary care services for consumers and payers.¹

Hospitals should consider four actions to be adequately prepared for the growing significance of retail health and primary care:

• Inventory Primary and Retail Health Services: Primary and retail health services encompass more than physicians and clinics. They incorporate a wide variety of services provided by nutritionists, social services agencies, dental and mental health professionals, and more.
• Develop a Long-Term Vision and Strategy for Primary and Retail Health in the Organization: For some organizations, it will be the formal gatekeeper to the entirety of services provided by the system. In others, it will be the focal point for managing targeted populations.
• Locate Primary and Retail Health Services for Maximum Impact: Convenience, access and ongoing connectivity to an organization’s full range of services depends on the physical locations of its primary care providers and programs and the digital technologies used to maintain relationships between consumers and providers.
• Innovate Primary and Retail Health Clinical Approaches to Keep a Competitive Advantage: The confluence of physical and mental health, integration of social determinants, alternative therapies and more effective engagement of consumers in self-care are certain to enhance the long-term clinical effectiveness of the primary and retail health strategy. They’re constantly changing as we learn more about what works and why.

Per Venrock Capital Ventures, “2020 will be the year the PCPs wake up and realize that they can earn more and be happier working independently of health systems. As a result, payers will try to tempt PCPs to break free by offering them higher reimbursement, start-up capital, and even subsidized office space and technology. We also think that we will begin to see a reprise of the 1990s with lower margin health systems tiring of losing money on their employed doctors and offer to sell them back their practices for peanuts.”⁶