Moving Patient Care from the Hospital to Retail Sites and the Home

Dr Keith Nelson

Attention Shoppers: Physical Exams in Aisle 7 . . .

There is a monumental transformation in the delivery of healthcare services occurring in the U.S. – moving non-critical patient care from traditional settings like hospitals and some physician offices to local retail sites and the home.  Recent examples of this evolution include Walmart’s built-from-scratch clinic initiative (Walmart Health) and a number of multibillion dollar healthcare provider acquisitions by large pharmacy organizations and insurers.

The primary drivers of this trend are lowering systemic costs and fostering patient convenience. And it seems like everyone’s joined the party – patients expect it, payers (including CMS) want it, and corporate disrupters are enthusiastically providing it.  The ultimate goal of these new corporate providers is similar – improve profitability through vertical integration, increased traffic and cross pollination with the core business offering(s) – but the approach of each varies.  Let’s look at some examples:

The aforementioned Walmart Health is a series of walk-in clinics attached to their retail stores that provide primary care, optometry and dental services with transparent pricing.  Although they built this model organically, they are receptive to acquisitions as is evidenced by their purchase of MeMD, a virtual care provider.

In contrast, other organizations are relying more upon the acquisition model. Here are some recent developments:

  • Amazon acquired PillPack (direct-to-consumer pharmacy) and One Medical (primary care)
  • Walgreens (pharmacy) acquired CareCentrix (home care) and VillageMD (primary care), which in turn bought Summit Medical/CityMD (primary and specialty care).
  • CVS acquired Signify Health (primary care) which adds to its home-grown Minute Clinic operation.

And then there’s the payers . . .

  • Optum (a subsidiary of UnitedHealth Group that offers pharmacy, healthcare technology and physician services) acquired Atrius Health and the Kelsey Seybold Clinic (both primary and specialty care) among many others including LHC Group (in-home and hospice care) and Refresh (mental health).
  • Humana acquired Kindred (home care)

Note the common game plan – build a core of primary care services which in turn drive hospital admissions, prescriptions, supplies, testing and, most importantly, the lucrative delivery of specialty care. Of course, it couldn’t hurt to have ownership in each of these categories as well as complementary extensions like dialysis, wound care, hospice, behavioral health and visiting nurse services, all of which are on the corporate radar.

This vertical integration enables, among other things, a significant ability to control costs, which is critical in our inexorable evolution toward a value-based, risk-sharing health system. And the most impactful way to lower costs is to effectively manage patients with chronic diseases like diabetes, hypertension, obesity, heart disease and cancer, which affect 50% of the population and consume more than 85% of healthcare expenditures. One way to do this is to have a continuous real-time view of each patient’s health status as they go through their daily lives which can be accomplished with the use of remote patient monitoring technology (wireless glucometers, blood pressure cuffs, weight scales, etc.) combined with regular intervention. This is particularly useful in managing the ballooning baby boomer long term care population (pardon the alliteration). Another interesting use of technology is the evolving trend to leverage a patient’s genomic data to facilitate personalized, and often preventive, medicine (note the acquisition of Lemonaid, an online telemedicine and pharmacy services platform, by 23andMe, a consumer genetics company).

To be clear, many of the providers whose organization has been acquired continue to see patients in their established locations, but the shift in ownership to a large corporation is usually accompanied by a commensurate change in service and/or charge structure (e.g. elevated prices, surprise facility fee, increased testing, etc.) as profit concerns take on more importance.

One more thing . . .
An additional noteworthy development related to patient care site redirection is the recent emergence of the hospital (not retail) – driven hospital-at-home phenomenon which enables some patients who need acute-level care to receive the care in their homes, rather than in a hospital. The payment to the hospital is the same as if the patient had been admitted, and the program expands the amount of available patient beds, and ostensibly reduces overall costs, improves outcomes, and enhances the patient experience.

Finally, it is important to bring attention to the concerns around privacy when it comes to corporations having access to patient data. HIPAA regulations prohibit the sharing of any protected health information (PHI) without the patient’s consent, but that doesn’t necessarily mean that the information can’t be used for internal marketing purposes “in order to better serve the patient.”  It’s indeed a slippery slope when you think about the fact that Visa and Mastercard know every doctor you’ve seen and their specialties (assuming you charged your copay or medical bill). So, it’s a brave new world. Similar to social media, I guess we’ll have to measure the benefits against both the known and unknown consequences.  In the interim, it seems we get the chance to shop and hopefully not drop.

Dr. Keith Nelson is the Director of Healthcare Strategy at Connection and is responsible for formulating and implementing Connection’s go-to-market strategy for the healthcare industry. His responsibilities include identifying and developing differentiated use case driven technology solutions for Connection’s healthcare clients, promoting Connection’s healthcare practice, and driving strategic client and partner engagement. Before joining Connection, Keith led the healthcare vertical at Ingram Micro. Prior to that, he was a consultant to the healthcare industry, providing guidance to hospitals, large physician groups and vendors in the areas of business development, marketing, finance and improving operational efficiency. Concomitantly, Keith worked with various private equity firms focusing on roll-ups in the healthcare sector. He has held senior management positions at MDNY Healthcare, HealthAllies (now a subsidiary of United Healthcare), and was the founder of the Renoir Cosmetic Physician Network. Prior to that, Keith spent ten years in private medical practice focusing on surgical reconstruction of the foot and ankle and chronic wound care. He has an MBA in Finance, as well as a Doctorate in Podiatric Medicine, and is Board Certified by the ABPM.

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