American health care is awash in rules and practices that make it difficult to improve access. Compared to other developed countries, American patients are underserved, overcharged and at high risk of not getting the care they need.
Some fixes are obvious. States should continue expanding Medicaid under the Affordable Care Act, for instance, and the federal government should address physician shortages by lowering barriers for foreign-trained docs.
One idea that practically never makes the list of opportunities for improving health care: consolidation. Mergers and acquisitions generally have a bad name — in the medical world. They have resulted in fewer hospital systems and other companies that provide services, and also fewer insurers that pay the bills. Mergers regularly get blamed for reducing competition, raising costs to consumers and, over time, limiting access to lifesaving products and services.
Yet not every health care deal is automatically bad, and Chicago could be the setting for a good one in a fast-growing part of the industry that needs to scale up to achieve its potential of serving hard-to-reach populations.
Chicago-based VillageMD (its head office is in the South Loop), backed by Walgreens, has agreed to pay nearly $9 billion for Summit Health, which runs CityMD. The deal follows a similar spate of announcements from retailing rivals CVS, Walmart and Amazon, which are also expanding their health care capabilities via acquisitions and internal investment.
The momentum has been building. For two decades, the big retail chains have invested heavily in providing convenient and efficient health care. Located in pharmacies, grocery stores and “big-box” stores, networks such as CVS’ MinuteClinics deliver care from nurse practitioners or physician assistants for relatively minor health issues. Patients can walk in during evenings or on weekends, times when most people don’t have to miss work, knowing in advance how much a visit will cost.
At the same time, the chains are pushing into primary care for more serious conditions, making physicians available in stand-alone outlets, or via telephone and virtual appointments.
Devoting more retail space to personalized health and wellness makes sense for bricks-and-mortar chains, as consumers increasingly shop online for pharmaceuticals, groceries, diapers, makeup and the like. The COVID-19 pandemic accelerated the trend, and also made it clear that the big retailers, which provided millions of vaccines, have become crucial in delivering care.
The US primary care market is said to be worth around $260 billion, and it’s understandable that treating patients like shoppers doesn’t sit well with the entrenched US medical establishment. Doctors’ groups over the years have questioned whether retail-owned clinics and offices undermine the quality of care, overprescribe antibiotics or disrupt doctor-patient relationships.
Research suggests the worst fears are unfounded.
On the contrary, by providing same-day appointments after work or on weekends not far from home, the retailers are reaching many patients who otherwise would forgo service altogether. Retail health care tends to attract younger-than-average patients who often do not have regular primary care providers. The quality of service is generally about the same compared with other settings and, increasingly, the retail chains are partnering with hospitals and health systems.
When the retail health care boom got rolling two decades ago, some analysts thought the result would be lower costs, fewer emergency room visits and greater access in poor and rural areas where care is scarce. Those benefits haven’t materialized to the degree expected.
There’s some evidence that costs are higher overall, mainly because more patients who otherwise would get no service are now getting it — a positive development, in our view. Also, growth so far is concentrated in relatively affluent urban areas, and the rate of emergency room visits for conditions that aren’t really emergencies hasn’t changed much because of these newer options.
Give it time.
Consumers love having more choices about where they get help when they need it, and the potential for growth is enormous. A recent report from financial giant Bain and Co. predicts that nontraditional companies could grab as much as one-third of the US primary care market by 2030. Along with the expansion of virtual care, including telemedicine and other fast-growing technologies, long- standing gaps finally are being filled.
VillageMD claims that health care costs generally balloon because too high a percentage of resources is being allocated to mitigating the impact of chronic conditions and far too low a percentage to preventing them from happening in the first place. We hope to see this Chicago company, and other similarly innovative retail players, pioneering new locations, making new deals and expanding the services they offer consumers.
The result, we believe, will be more and better care for Americans in the future.
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