- [Narrator] Corporate giants like Amazon, United Health
and CVS are investing billions
into primary care practices,
with deals tapping into the nation's
$4 trillion healthcare market.
And it's part of a shift
in America's costly healthcare system
moving away from the traditional Fee-For-Service,
towards Value-Based care.
That model is about paying providers
for keeping patients healthy,
while a Fee-For-Service model is when medical providers
are paid based on the amount of services performed.
So why are companies spending billions
on primary care practices,
and what could the growing shift to Value-Based care
mean for doctors, patients and health insurers?
The US spends more per capita on healthcare
than any other developed nation,
but still fares worse on most major health measures.
Health experts say the incentives baked
into America's Fee-For-Service system
are part of the problem.
- So critics say that under the Fee-For-Service model,
it basically encourages providers to recommend
as many services as possible, which drives up the cost
of healthcare without necessarily ensuring
patients are at the forefront of care.
- [Narrator] Essentially, doctors are rewarded
for the volume of healthcare services they provide.
Now, companies like Amazon, CVS, and Walgreens
are tapping into the growing Value-Based care movement.
That model provides incentives to improve patient health
outcomes within hospitals and doctor's offices.
- In Value-Based care, the idea is to keep track
of the patient, to have more contact
between primary care doctors and patients,
and reduce the amount of time that people
actually spend in hospitals where the costs are very high.
- [Narrator] Those costs are high for patients
and health insurers.
Some private health plans and government programs
like Medicare have already adopted this model.
They want to move more of the healthcare system
to that approach, which makes providers accountable
for some or all of the cost of their patient's care.
While Value-Based care can be traced back decades,
the 2010 Affordable Care Act
accelerated the government's transition to this model.
- The government essentially said that
it'll start shifting a lot of healthcare
towards Value-Based care
with the idea being to control costs.
- [Narrator] Still, there can be downsides
to a Value-Based model.
- [David] A key concern is that patients might be delayed
in seeing specialists or in undergoing procedures,
and basically insurers and providers could be
doing that to prevent costs from escalating.
- [Narrator] One obstacle behind shifting
to a Value-Based model is a shortage
in primary care physicians or PCPs.
Because the US healthcare system rewards
more expensive procedures, medical students may prefer
to become cardiologists or surgeons.
- [David] The cardiologist makes close to $500,000
on average, whereas a primary care physician
will make around 200,000.
- [Narrator] In other countries,
PCPs compose a much higher proportion
of all practicing physicians.
For example, 45% in France,
compared to 12% in the United States.
Yet PCPs play a central role in keeping people healthy
and preventing problems before they begin.
- [David] What happens is many Americans
don't see a primary care physician.
They can't find one, or they can't get an appointment
for a month.
Many times people don't know they have something,
and they end up in a hospital
where they have to get a much more expensive procedure.
- [Narrator] To help reduce higher health costs downstream,
a host of companies are now spending billions
on primary care practices.
UnitedHealth, a massive conglomerate that includes
60,000 physicians and an insurance business,
is one of the furthest along in PCP investments.
Through its medical provider arm Optum Care,
it has been buying up multi-specialty physician practices
to provide care at home, virtually and on site.
The idea is to keep people out of the hospital,
because that's where the costs are highest.
Meanwhile, Amazon is planning to buy primary care company
One Medical, a practice that operates more than 180
medical offices in 25 US markets.
The $3.9 billion deal could give Amazon
a larger foothold in offering
healthcare services to employers.
The company CVS Health is also stepping into the mix
with a deal to pay $8 billion for Signify Health,
a company focused on in-home evaluations.
- Ultimately, CVS wants to be not only your pharmacist
and your insurer, through its AETNA arm,
but it also wants to be your village clinic.
- [Narrator] Then there's Walgreens.
After buying a controlling stake in startup clinic chain
VillageMD, it struck a roughly $9 billion deal
to combine with Summit Health,
a large owner of urgent care centers.
So how exactly do these companies plan to make money
off of these investments?
In practice, a Value-Based reimbursement model
means providing financial rewards
for better patient outcomes.
It can also be tied to a capitation system,
which pays healthcare providers a fixed amount
for each patient they deliver care to per unit of time.
This prioritizes the patient and cost saving over services,
which can significantly reduce health spending.
Still, some healthcare economists worry
whether this Value-Based approach
will benefit patients or just reduce costs
and improve the bottom line for providers and insurers.
- For example, a primary care physician
might be more reluctant to allow a patient
to go see a specialist
or to perform a more expensive procedure.
- [Narrator] Ultimately, some healthcare economists
say moving away from a Fee-For-Service model
could help temper ballooning healthcare costs in the US.
- [David] As more and more of these bigger companies
get into Value-Based care,
it's just going to accelerate the move
towards Value-Based care and away
from this Fee-For-Service model.
(bright cheerful music)