Bain & Co. says traditional providers will shrink faster than previously projected.
By Daniel Beaird
Two years ago, Bain & Co. predicted that nontraditional care providers, including retailers, payers, advanced primary care (APC) providers and others, would capture 30% of the primary care market by 2030.
Bain recently updated its projection reflecting three things: the strategic repositioning of major retailers and APC providers; accelerated growth of payer investment, primarily through existing primary care delivery capabilities; and greater growth for enablers. Bain expects the share of primary care patients served by traditionally pure fee-for-service providers to shrink faster than it had previously projected.
Nontraditional providers are spearheading the adoption of advanced risk-bearing value-based care payment models. Namely, fully capitated models. To succeed, it’s critical to deliver improved clinical outcomes at lower total cost of care and that requires considerate investment in resources like people, technology, tools and analytics to better manage patient populations.
Retailers face significant challenges
Nontraditional providers continue to help transform primary care and will account for about one-third of the market in 2030, according to Bain. Even after retailers have struggled to adapt to the healthcare market and shifted their approaches during the past two years. Retailers face three challenges: operational complexity, brand perception issues and regulatory and financial challenges.
Bain’s research shows that most consumers associate retailers with convenience for low complexity and episodic care like vaccinations and evaluation of common cold symptoms rather than comprehensive primary care services, which require chronic disease management and continuity of care with a provider.
“It takes time to shift brand perception amongst consumers and it can take years of investment to build a brand associated with high quality care delivery,” said Erin Ney, MD, partner of healthcare and life sciences at Bain & Co.
Clinical care also requires meeting rigorous standards while managing reimbursement pressures, especially in risk-based models like Medicare Advantage. The clinical, administrative and regulatory complexities of healthcare delivery are very different from those of retail or pharmacy.
Some retailers like Walmart have built their own clinics, while others have established partnerships with existing providers or acquired primary care delivery assets. But many have shifted their approach. Walmart exited the space, and Walgreens is scaling back its clinic footprint. These moves recognize how challenging it is to succeed in primary care.
“For retailers building care delivery business models in house, developing the necessary execution know-how requires a team with deep clinical, strategic and operational healthcare expertise,” Dr. Ney said. “Scaling primary care demands a long-term commitment to workforce development, infrastructure and navigating these complexities effectively.”
Payers better positioned
Retailers have believed population-focused models are well positioned to take on the risk of value-based care and so does Bain. But Bain positions payers, rather than retailers, in a better light to navigate the challenges.
Having entered the care delivery space more than a decade ago, UnitedHealth Group and Humana – through their health services organizations Optum and CenterWell – have developed the differentiated capabilities required to manage complex primary care delivery. Their healthcare expertise, financial resources and data and analytics capabilities position them well to scale primary care effectively.
“Payers are well positioned to navigate industry challenges and scale effectively,” Dr. Ney said. “They have the financial resources to invest in the capabilities that are required to succeed in value-based care, from labor to technology, tools and analytics.”
They have a considerable advantage to stratify risk and adjust patient engagement strategies, focus on population health management and help patients navigate, coordinate and manage care through their data and analytics, care management and care navigation capabilities.
Health systems pursue different strategic paths
What about traditional providers like hospitals and health systems?
Bain expects them to pursue different strategic paths. One is to become the preferred specialty and tertiary care provider for risk-taking primary care providers. Dr. Ney says this secures referrals but requires the health system to be highly competitive on specialty care utilization and cost.
She also suggests other strategies to develop innovative care models that will change the way the health system provides primary care or developing direct-to-employer models that allow for greater risk taking.
“These health systems must assess how their existing primary care assets impact their overall business and mission, carefully weighing the benefits and costs of investment in this space,” she said.
Those looking to reinvent will focus on bridging gaps in key areas such as enhancing patient experience, deploying digital and technological advancements, improving care management and adopting a more multidisciplinary approach to care delivery.
But health systems don’t have to go alone. Multiple enablers are already helping them advance their adoption of value-based care by providing several of these key capabilities. These providers are partnering with enablers to get assistance with the capabilities that will support their transition from fee-for-service to value-based care reimbursement models.
“But health systems with high relative market share will be more insulated from such pressures, allowing them to maintain their competitive positions longer without undergoing significant change,” Dr. Ney said.