Researchers Analyze Policy Concerns Tied to Corporate Investment in Primary Care

Should healthcare policy leaders be concerned about the massive investments being made by corporate interests in primary care in the U.S.? A team of healthcare policy researchers believes they should be. Writing in The New England Journal of Medicine online on Jan. 7 in a Perspectives op-ed article entitled “Corporate Investors in Primary Care—Profits, Progress, and Pitfalls,” Soleil Shah, M.Sc., Hayden Rooke-Ley, and Erin C. Fuse Brown, J.D., M.P.H., make the case that, though Medicare beneficiaries enrolled in either Medicare Advantage plans or assigned to Medicare ACOs (accountable care organizations), could benefit from certain aspects of the corporate-investment-in-primary-care trend, the pattern of investments involved could potentially negatively impact health equity and access. The researchers are affiliated with the Stanford University School of Medicine and Stanford Law School, and the Center for Law, Health, and Society, Georgia State University College of Law.

The article’s authors write that, “On July 21, 2022, Amazon announced plans to acquire One Medical — a primary care practice with nearly 200 locations serving more than 700,000 patients — for $3.9 billion. The deal, if approved, would represent Amazon’s largest payment for a health care company to date. On September 5, 2022, CVS Health confirmed its acquisition of Signify Health, which offers in-home and traditional primary care, for around $8 billion. These deals,” they write, “reflect a broader trend in the United States toward corporate investment in primary care, driven by an increasing focus on “total-cost value-based care” — a model in which health care providers are paid to manage the total cost of care for their patients and the size of each patient’s capitated budget may be increased on the basis of the patient’s health risks and the provider’s performance on quality metrics. Though potentially beneficial for certain well-insured patients, the trend of corporate investment in primary care could threaten equitable access to care, raise health care costs, and reduce physicians’ clinical autonomy,” they argue. “Physicians, patients, and policymakers should understand what’s driving these investments, their potential benefits and risks, and possible policy levers for mitigating those risks.”

The researchers emphasize that, while “corporate interest in primary care practices is not new,” they are deeply concerned that “[T]he pace of recent investment is noteworthy. Between 2010 and 2021, the total capital raised for private investment in primary care in the United States increased by a factor of more than 1000 — from $15 million to $16 billion.” And, they write, both retail-owned and corporate-owned “corporate-owned primary care practices” (PCPs) involve complexities to be aware of. They write that “Corporate-owned primary care practices (CPCPs) can be grouped into three categories: retail-owned (e.g., Amazon, CVS, Walmart), insurance-owned (e.g., UnitedHealth Optum, Humana), and investor-backed (e.g., Agilon Health, Oak Street Health). Many CPCPs fit into more than one category; for example, Oak Street’s initial investors included Humana and private equity companies, and since going public, it has established a partnership with Walmart. The organizational structures of CPCPs vary with the market segment or payment model they are targeting (e.g., Medicare Advantage, Medicare or commercial accountable care organizations [ACOs], or direct contracting under the new ACO Realizing Equity, Access, and Community Health [REACH] model), but they all benefit from increasing the risk-adjusted payments they receive by engaging in more intensive and strategic risk coding, and they have market incentives to do so. CPCPs may also have resources that facilitate intensive coding practices — including proprietary coding software, robust beneficiary data, and additional administrative staff — that are less available to independent primary care physicians.”

Importantly, the article’s authors write, the ongoing growth of the Medicare Advantage market, which already accounts for nearly half of Medicare spending, is attracting corporate investors to primary care practices, “since such practices can aggressively beneficiaries’ diagnoses to draw higher payments.”

The researchers write that “We believe that policymakers and regulators need to consider these risks for patients, practitioners, and health care costs and apply their available oversight tools vigorously. Federal and state enforcers could expand antitrust scrutiny to these transactions to identify threats to competition. The Federal Trade Commission is reviewing the Amazon and CVS deals but could also evaluate smaller, incremental acquisitions of physician practices and transactions spanning multiple geographic and product markets.” Significantly, they argue, “The Centers for Medicare and Medicaid Services could limit opportunities for gaming the risk-coding system that determines Medicare Advantage payments, to prevent excess public dollars from being spent on coding efforts rather than improvements in care.” Ultimately, they say, the risks involved in corporate investments in primary care must be carefully weighed by policymakers, in order to ensure outcomes consistent with improved equity and access, rather than the reverse.

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