American health care is mired in rules and practices that make it difficult to improve access. Compared to other developed countries, American patients experience under-services, increased costs, and a high risk of not getting the care they need.
Some of the fixes are obvious. States must continue to expand Medicaid under the Affordable Care Act, for example, and the federal government must address physician shortages by lowering barriers to overseas-trained docs.
One idea that practically doesn’t make it to the list of opportunities to improve health care: standardization. Mergers and acquisitions generally have a bad reputation – in the medical world. It has resulted in fewer hospital systems and other businesses providing services, as well as fewer insurance companies paying the bills. Mergers are regularly blamed for reducing competition, increasing costs to consumers and, over time, limiting access to life-saving products and services.
However, not every health care deal is automatically bad, and Chicago could be the location for a good deal in a fast-growing part of the industry that needs to expand to realize its potential in serving hard-to-reach populations.
Chicago-based VillageMD (its main office is in the South Loop), backed by Walgreens, has agreed to pay Summit Health, which operates CityMD, nearly $9 billion. The deal follows a similar series of announcements from rival retailers CVS, Walmart and Amazon, which are also expanding healthcare capabilities through acquisitions and inward investment.
Momentum was building. For two decades, major retail chains have invested heavily in providing convenient and effective healthcare. Located in pharmacies, grocery stores, and “big box” stores, networks like CVS’s MinuteClinics offer care from nurse practitioners or physician assistants for relatively minor health problems. Patients can come in in the 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, chains are pushing into primary care for more serious conditions, making doctors available at stand-alone outlets, or via phone and virtual appointments.
Dedicating more retail space to personal health and wellness makes sense for brick-and-mortar chains, as consumers increasingly shop online for pharmaceuticals, groceries, diapers, makeup, and the like. The COVID-19 pandemic has accelerated the trend, and also made clear that major retailers, who have provided millions of vaccines, are becoming critical to providing care.
The primary care market in the United States is said to be worth about $260 billion, and it is understandable that treating patients like shoppers does not sit well with the established American medical establishment. Physician groups over the years have wondered if retail-owned clinics and offices are undermining the quality of care, overprescribing antibiotics, or disrupting doctor-patient relationships.
Research indicates The worst fears are unfounded.
Conversely, by providing same-day appointments after work or on weekends not far from home, retailers are reaching many patients who would otherwise forgo service altogether. Retail healthcare tends to attract patients who are younger than average and who often do not have regular primary care providers. Quality of service is generally about the same compared to other settings, and increasingly, retail chains are partnering with hospitals and health systems.
When the retail healthcare boom began two decades ago, some analysts thought the result would be lower costs, fewer emergency room visits, and greater accessibility in poor, rural areas where care is scarce. These benefits did not materialize to the extent expected.
There’s some evidence that costs are higher in general, mainly because more patients who wouldn’t get any service are now getting it — which is a positive development, from our point of view. Also, growth to date has been concentrated in relatively affluent urban areas, and the rate of emergency room visits for non-emergency conditions has not changed much because of these new options.
Give it time.
Consumers would love to have more choices about where they get help when they need it, and the growth potential is huge. A recent report from financial giant Bain and Co. that non-traditional companies could capture up to a third of the US primary care market by 2030. Along with the expansion of virtual care, including telemedicine and other fast-growing technologies, permanent gaps are finally being closed.
VillageMD claims that health care costs are generally inflated because a very high percentage of resources are devoted to mitigating the impact of chronic conditions and a very low percentage to preventing them from occurring in the first place. We hope to see this Chicago company, and other similar innovative retailers, pioneer new locations, strike new deals and expand the services they offer to consumers.
The result, we believe, will be more and better care for Americans in the future.
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