New entrants are reshaping the physician market.
All roads in primary care medicine appear to be leading toward consolidation. Blame the “disrupters,” such as CVS Health, VillageMD, Amazon, Optum and Aledade, as well as health systems and IDNs around the country. Each has its own strategy. Some acquire physician practices and employ physicians, others work on a contract basis to provide independent practices with support for IT, marketing and administration. Either way, the impact of the disrupters on medical care is growing. So is their impact on medical sales.
“Sales representatives can no longer rely on one or two individuals in a practice to make buying decisions,” says Bruce Penning, executive director, medical field sales, Henry Schein. “They need to understand the alignment further ‘upstream.’ For example, is there a single person making decisions at the corporate level for all the satellite locations? Is there a Board? Is there an exclusive arrangement, or can these locations use multiple distribution partners? How often are formulary decisions made or updated? Is there flexibility in what can be purchased?”
Says Christian Flohr, corporate account executive, group purchasing organizations, Henry Schein, “The sales cycles for large customers are longer and more comprehensive. It can be a much simpler process to retain the business of an independent physician practice compared to the owned practices of a large IDN/health system or group practice. Often there are request-for-proposals and legal agreements involved, which can create the need to involve other teams such as implementations, operations, and legal. Much more planning and coordination is needed to service these types of customers.”
Kattrina Richardson, national vice president, sales, Edgepark, a Cardinal Health business, says, “There is still a lot to learn about how these ACOs [accountable care organizations] will drive strategy and initiatives across their providers. What is the decision-making process? Who are the key decision makers? How can our sales reps influence in the most efficient way? By understanding the overall ACO strategy, sales reps can align their offering based on goals and needs.”
“Our team expects consolidations to continue, regardless of who is doing the buying,” says Brad Hilton, senior vice president of primary care for McKesson Medical-Surgical. “Either way, we need to continue to show our value, being an expert in our field, and build strong, trusted relationships.”
Happening fast
The consolidation tango has heated up in the past six months, with major acquisitions and partnerships formed by national players like Optum, VillageMD, Amazon, CVS Health and Aledade. Activity has picked up at the local and regional level too.
Last year, consulting firm Bain & Company predicted that, along with the shift from fee-for-service to fee-for-value reimbursement models, physician shortages, consumerism and digital disruption will redefine market share in primary care. In its study, “Primary Care 2030: Innovative Models Transform the Landscape,” the company predicted:
1. Risk-bearing, population-specific models will grow nationally. They mitigate administrative complexity for clinicians and help bring about improved patient outcomes through tailored offerings and enhanced care coordination.
2. Primary care-owned by payers and payer-owned services companies will become one of the largest models, capturing up to 15% of the primary care market.
3. Retailers will grab 5% to 10% of primary care by 2030, outperforming traditional primary care providers on patient experience, increased access and convenience, particularly in geographically underserved areas.
4. Traditional fee-for-service will still be the largest model in 2030, but it stands to lose 15% to 20% of market share to alternative models that can provide enhanced patient experiences, better physician experiences and more collaborative, team-based care.
5. Virtual health will likely be embraced by young healthy patients and could climb to 20% market penetration by 2030.
“The population-specific focus allows the provider to tailor its capabilities,” says Erin Ney, M.D., Bain expert associate partner and co-author of the study. “In traditional settings, a clinician or clinical team takes care of a heterogeneous patient population, not simply in terms of patient characteristics, but in payer mix too. This complexity makes it more difficult to succeed in a value-based-care model.”
One firm pursuing a population-specific approach is Chicago-based Oak Street Health, which focuses on the Medicare Advantage population. (At press time the company was in the process of being acquired by CVS Health.) Meanwhile, Brooklyn, New York-based Cityblock manages care for Medicaid patients in five states and the District of Columbia.
Some companies focus on managing care for self-funded employers, that is, those that assume risk for making healthcare available to their employees, she adds. One such company, Denver, Colorado-based Everside Health, pledges to analyze employers’ population data and needs, identify and build health center locations, and hire provider teams.
The enablers
Another group in today’s changing market are so-called “enablers,” such as agilon health, Privia Health and Aledade. Enablers believe traditional independent providers need assistance moving toward value-based care, and they offer them population health analytics, data integration and care coordination tools, as well as processes and people, according to Bain.
Enablers fill a valuable niche, says Dr. Ney. According to Bain & Company’s 2022 Frontline of Healthcare Study, 80% of physicians say they want to provide value-based care, but as the upside and downside risk of doing so grows, their interest declines. “It’s not because they don’t see the merit,” she says. “It’s because making the transition is hard.” For example, independent practices may need assistance fulfilling multiple payers’ documentation requirements and implementing electronic solutions to help in aggregating and analyzing patient data. They may also need help improving the customer experience.
One so-called enabler, Bethesda, Maryland-based Aledade, works with more than 1,500 independent primary care practices and health centers. In February the company acquired analytics company Curia, which uses artificial intelligence to find risk gaps and predict the chances of adverse health outcomes in patients. In a pilot program, Aledade used Curia’s predictive algorithm to identify more than 8,000 patients with the highest risk for mortality, then worked with its primary care practices to enroll them in comprehensive advance care planning.
Sales challenges and opportunities
“We believe there will be continued consolidation of provider practices over the coming years,” says Kattrina Richardson. “There will be some shifting from product-only discussions to strategic opportunities around condition management, focusing on driving adherence to prescribed devices to help support better patient outcomes.
“Healthcare professionals need to focus first on patient care, but finding time on top of that to deeply know and understand individual insurance plan requirements is challenging,” she says. “Our team provides this education, which helps healthcare professionals with patient selection based on the requirements of the policy and helps speed up the time to therapy.”
Says Bruce Penning, “Healthcare continues to be more consumer-driven, and IDNs need to have many offerings to separate themselves from their competition. Patient care will continue to be pushed outside the four walls of the hospital whenever possible – just as we have seen a proliferation of urgent care, freestanding emergency rooms and surgery centers open across metro areas.
“I believe we will also see more IDN-branded specialties – cardiology, oncology, dermatology, gastrointestinal – make a push into ‘local’ neighborhoods,” he says. “Sales representatives will have to adapt by better understanding the corporate IDN ‘mission’ with how these practices are buying, while simultaneously providing the one-to-one service that independent practices have grown used to over the years. It is important to continue providing the ‘human touch’ in a space that is becoming more formularies-driven.”
Christian Flohr says, “Our sales teams must be astute business professionals. They can no longer rely solely on work ethic and product knowledge. They have to be trained and have knowledge on selling into complex corporate environments. It is more complicated now to reach decision-makers than it used to be. The time we have with those decision-makers is often limited. Our representatives must know how to navigate these settings in an impactful way.
“Henry Schein has done an excellent job at building a sales team that is ready and able to effectively reach these customer segments at various levels through the strategy of the fully integrated service team,” he says. “Our teams must constantly be learning and growing in order to understand the needs of today’s sophisticated non-acute customers.” An implementations team works with sales to ensure successful customer migrations, he says.
“Consolidation will continue to change our industry’s landscape in ways we can foresee and ways we cannot. The ability to adapt to those changes is vital. Sales representatives will need to continue to evolve as the industry does. Henry Schein’s leadership continues to follow the trends of the industry and works to prepare its sales teams for changes on the horizon.
“Representatives must continue to be industry leaders, serving as expert resources who can help customers select the best solutions for their needs, while having their finger on the pulse of trends in customer segmentation and where the market is heading.”
Sidebar:
The consolidation tango
Consolidation in primary care has heated up in the past few months. Some examples:
- October 2022: Optum, part of UnitedHealth Group, acquired physician group Kelsey-Seybold, which comprises more than 650 physicians and allied health professionals practicing at 35 locations in the Greater Houston area. The reported price was $2 billion.
- January 2023: VillageMD (whose biggest shareholder is Walgreens) finalized its $8.9 billion acquisition of Summit Health-CityMD, a provider of primary, specialty and urgent care, bringing the number of VillageMD’s provider locations to 680 in 26 markets.
- February 2023: Amazon completed its $3.9 billion acquisition of One Medical, gaining access to more than 200 brick-and-mortar medical offices in 26 markets and 767,000 members. Amazon and One Medical immediately began offering $144 year-long memberships, which include in-person office visits, drop-in lab services, 24/7 virtual chat capabilities and on-demand video chats.
- February 2023: CVS Health announced its intention to buy Oak Street Health for $10.6 billion. Oak Street employs 600 primary care providers and 169 medical centers in 21 states. Oak Street’s Canopy technology is said to be fully integrated with the company’s operations and used when determining the appropriate type and level of care for each patient. CVS reports having more than 40,000 physicians, pharmacists, nurses and nurse practitioners in its network.
- March 2023: CareFirst BlueCross Blue Shield in Baltimore formed what it called a “strategic alliance” with Bethesda, Maryland-based Aledade, an independent primary care network that provides more than 1,500 primary care practices in 45 states with tools (e.g., data analytics, guided workflows, payer relationships and onsite business support) to help practices deliver value-based care. The agreement came just four days after Aledade signed a 10-year agreement with Humana in which the insurer’s Medicare Advantage members will receive primary care from Aledade physicians using value-based arrangements.
Much is happening on the local and regional level too. For example, in January, Los Angeles-based Cedars-Sinai formed an agreement with Tia, which provides in-person and virtual care for women. Tia recently opened its second Los Angeles-area clinic, in Santa Monica, in collaboration with Cedars-Sinai following the success of its first local clinic in Silver Lake in 2021. The agreement with Cedars-Sinai calls for Tia to provide primary care, mental health care, and gynecological health and wellness services, while Cedars-Sinai will provide specialty care through its network of specialty providers and inpatient services. Tia will partner with the hospital system to open additional clinics this year in Pasadena, Studio City and Culver City. Tia now has operations in California, New York and Arizona.
In February, Lexington Clinic, a multispecialty medical group with 25 locations in Central Kentucky, signed an agreement with Austin, Texas-based agilon health to assist in Lexington’s transition to a full-risk, value-based care model beginning in 2024. agilon health provides technology, capital and other tools to a network of more than 2,200 primary care physicians in 12 states.