Can Innovation In Primary Care Slay The Healthcare Leviathan? (2 Of 2)

This is Part 2 of a two-part series on innovation in primary care. Part 1 covered the importance of primary care, and the reason that investors have bet $16B and counting into primary care with the belief that there is an opportunity to control healthcare costs, provide better care, and return value to shareholders. Part 2 covers who the innovative players in primary care are, how they compete, who is likely to win, the future of the primary care physician, and whether any of this can help to slay the healthcare leviathan.

The recent news that Amazon acquired One Medical created waves of media attention, much of which focused on Amazon’s aspirations in healthcare but missed the crucial point: why primary care? And it further missed the fact that, while Amazon should never be taken lightly, there has in fact been a renaissance in primary care quietly playing out over the past decade or so.

The question of whether Amazon can meaningfully impact healthcare costs, quality and patient experience misses the more important questions: who else is also innovating in primary care, what are the different approaches, and which ones are most likely to succeed (and why)?

Who Are The Players, And How Are They Different?

“Trust is quite literally the basis for our exceptional clinical, experiential, and financial results. Our chronic condition outcomes are 75% better than industry benchmarks. Much of this is due to our proactive, longitudinal model of care that is built on trusting relationships,” says Fay Rotenberg, CEO of Firefly Health, a virtual-first primary care company.

For Firefly, building trusted relationships with patients means engaging them in a way that most patients will not be familiar with: frequently and proactively. The company touts data showing they have clinically relevant interactions with their patients 45 times per year; this compares with an industry average of 1.2 primary care visits per person each year (or up to seven per year in a Medicare population).

Firefly’s mission is clear: healthcare that’s half the cost and twice as good. Founded in 2016, the company has been focused on serving working age populations with health benefits; this has required the company to contract with commercial health plans and market and sell directly to patients and their employers. To aid in its growth, in 2021 Firefly raised $40M to create its own health plan, allowing the company to get closer to employers and individual consumers (who in many cases are patients of Firefly’s already) while giving itself the opportunity to keep the savings from delivering high quality care at a lower cost.

When asked why the company chose to focus first on a working age population, Rotenberg’s answer was simply “It’s not as crowded.”

What Rotenberg is referring to is the robust innovation in primary care focused on senior citizens, also known as Medicare beneficiaries. In a country with 61 million Medicare beneficiaries and an additional 10,000 people turning 65 every day, Medicare represents perhaps the largest market opportunity for primary care startups that believe they can simultaneously deliver higher quality care while driving down costs.

CareMax, Cano Health, and Oak Street Health are three such primary care companies focused on serving the Medicare population; One Medical joined them in 2021 when it acquired Iora Health. Unlike Firefly, all four deliver care primarily through bricks-and-mortar facilities, which is likely in part to better serve the population they focus on, who are accustomed to in-person care.

These companies are all growing rapidly; the first was founded in 2007, and today they collectively represent $4.8B in revenue. They’re also now all publicly traded, which suggests both investor enthusiasm and confidence in growth prospects and ability to reach profitability. Much of the investor enthusiasm for these entities stems from the fact that they represent a new category: “payviders.” Instead of receiving payment for each visit they conduct, payviders contract with Medicare Advantage plan sponsors or with Medicare directly and receive a fixed fee for all care they provide to a population for a given year.

“By taking on the full risk of the health for most of the Medicare beneficiaries for which we care, all of our effort is focused on healthy outcomes,” says Dr. Ali Khan, Chief Medical Officer for Value Based Care Strategy at Oak Street Health. Oak Street’s operational focus on Medicare beneficiaries in underserved areas seems to be paying off with patients, as the company touts a Net Promoter Score of 90.

If there is tremendous innovation in the Medicare space, one area that has historically not seen much investment is Medicaid. “Many providers cannot effectively engage with Medicaid populations, largely due to the myriad of social factors affecting the health of these individuals,” explained Kameron Matthews, MD, JD, FAAFP and Chief Health Officer of Cityblock Health. Fortunately for Medicaid beneficiaries, Cityblock was founded and designed explicitly to serve these populations. Matthews notes that while the company operates its own clinics, it works closely with community-based organizations, health plans and expert providers to tailor care plans to the individual. As the company’s financial model is value-based, it also has the flexibility to invest in dynamic ways to meet its members’ needs.

Beyond the startups that operate primary care centers, there are also tech-enabled managed service companies such as ApolloMed, Privia Health, Agilon Health, and Aledade. These companies contract with independent primary care practices, providing them with clinical, operational and technology playbooks and support services to help them move toward value-based payment models. Though each has a slightly different model, the gist is the same: the company aggregates primary care practices and uses that collective power to enter into risk-based contracting arrangements with health plans, betting that they can help the practices operate more efficiently and save money through scale of back-office operations.

While these companies – sometimes called care platforms – don’t actually run the clinics themselves, they are seeing success both in the market. Among the three publicly traded companies (Agilon, ApolloMed and Privia), they support physicians who represent an average of 732,000 members, have grown to an average $1.3B in annual revenue, are growing at a 36% growth rate, and have an average market capitalization of $5.3B.

Further, it’s not just early stage firms who are investing heavily in primary care. While CVS and Amazon’s recent bidding war to acquire OneMedical may have generated the most attention of late, many healthcare incumbents have been refocusing on primary care.

For instance, Northwell Health, a not-for-profit system with nineteen hospitals in the New York metropolitan and Long Island area, launched Northwell Direct in spring 2020. Northwell Direct is an independent for-profit subsidiary offering primary care and ancillary clinical network services to employers in the New York metropolitan area. One of the company’s early clients for primary care services is Whole Foods, for which the two companies developed a unique care model with a heavy emphasis on nutrition, health coaching, and care navigation.

Nick Stefanizzi, Northwell Direct’s CEO, agrees with Cityblock’s Matthews about Covid-19 as being a driver for a renewed focus on primary care. “People haven’t gotten the care they’ve needed over the past two years [due to the pandemic]. Part of what we’re trying to do with our primary care offering is to get ahead of the potential adverse compounding effects of this.”

Geisinger, a 10-hospital system in Pennsylvania, is likewise investing significantly in primary care. “As an integrated system, we have all the parts – hospitals, clinics, community programs, health plan, partners, students – that are needed to innovate across the continuum of care, including primary care,” explained Jaewon Ryu, MD, JD, president and CEO of Geisinger Health System.

For Geisinger, addressing primary care means developing and tailoring programs that are specific to the communities they serve, and building organizational capacity to support primary care. This includes:

• 65 Forward, a senior-focused concierge primary care offering that integrates social activities with medical care locations
• Geisinger At Home, a program for patients who are less able to leave the home
• Abigail Geisinger Scholars Program, which offers free tuition for medical students who focus in primary care at Geisinger

Finally, a survey of the players involved in primary care would not be nearly complete without a recognition of the tens of thousands of independent primary care physicians who have been and continue to care for tens of millions of patients. “The main advantage to being in independent primary care is the opportunity to build deep trust and longstanding relationships with patients, and to deliver personalized care that reassures patients they are the first priority,” says Fong of Elation Health.

Fong sees tremendous potential for both “enterprise” primary care players (such as Firefly, Oak Street and Cityblock) as well as independent primary care physicians. Elation supports independent primary care physicians with a clinical-first EHR that prioritizes the physician-patient relationship, and gives them practice tools and resources to migrate to a value-based payment world.

“Primary care clinicians need space to care for their patients — less administrative burden, less wasted time — and they need to be fairly paid for the value they bring to healthcare — so that more clinicians can realistically choose and stay in primary care where they’re desperately needed,” explains Fong.

How Do The Players Compete, And Who Will Win?

Independent vs enterprise vs hospital employed. Facility-based vs virtual-first. Clinic operator vs care platform. Working age patients vs seniors. Primarily physician-led vs team-based care. Medicare as payer vs Medicaid vs commercial. Provider vs payer vs pay-vider.

So many different dimensions of choice for each of these players to make in terms of how they serve patients and, in turn, compete: for patients, for payers, for clinicians, and for capital from investors.

Firefly Health (enterprise, virtual-first, clinic operator, working age, team-based care, commercial, payvider) designed its efforts intentionally, based on co-founder physician Andy Ellner’s research at Harvard Medical School’s Center for Primary Care. The company’s virtual-first approach is predicated on the belief that replacing the “annual wellness visit” with a relationship based on frequent clinical interactions, supported by a care team (including primary care physician, nurse, behavioral health specialist, and health guide), can lead to a better care experience and reduced medical spend. And per the chart below, Firefly believes its team-based and virtual-first approach can be a significantly more capital-efficient model that allows for more rapid and low-cost growth.

The impact of decisions made along these dimensions have a dramatic impact on the business operations, financial profile, and ultimate scalability of each company. For instance, an analysis of One Medical (which was focused on serving a working-age population before its acquisition of Iora Health) and Oak Street Health (which serves Medicare beneficiaries and goes at risk as a payvider) highlights several differences:

• One Medical has an average of ~5.5x the number of member patients per facility
• Oak Street Health has average revenue per member that is ~16x higher than One Medical’s
• Oak Street Health spends ~6x per member on direct care compared to One Medical

These numbers, higher or lower, do not suggest ‘better’ or ‘worse’ approaches to care or financial performance; rather, they reflect the operating and financial outcomes from structurally different business models, reimbursement mechanisms, risk appetite, and patient needs. Because Oak Street contracts with Medicare (and Medicare Advantages plans) to take on full risk and cost of care for their patients, their revenue per patient is substantially higher than One Medical, and they have true ‘skin in the game’ to reduce the cost of care.

Oak Street’s approach is bearing fruit over time: while they tend to lose money in the first year of patient relationships, as they build trust with those patients and help improve their health, they start to see decreased medical costs. Likewise, their facilities become more profitable over time.

Clinical models also have an impact on how primary care physicians and care team members spend their time, and the number of patients they can see. Dr. Khan of Oak Street Health explained that Oak Street keeps its provider panels to about 500 patients per primary care physician, so its physicians can spend more time with each patient, during visits and between them. On the other end of the spectrum is Firefly Health, whose team-based approach allows for each physician to oversee a significantly larger number of patients (5,000), who regularly interact with different members of the care team..

With all of the different approaches toward primary care, is there any commonality upon which these different players compete? Absolutely. Regardless of whether an independent primary care physician, part of a hospital system (such as Geisinger or Northwell), part of a larger corporate endeavor (e.g., CVS or Optum), or an enterprise primary care startup (Oak Street or Firefly), every approach will need to address and find ways to differentiate on both the supply side and demand side of the equation. Among the most important factors they will compete on:

Supply Side

• Physician satisfaction (and pay): With physician burnout rates reported near 50% and a recent study suggesting that primary care physicians in particular are overburdened, creating a healthy work environment for PCPs is critical to every organization seeking to compete effectively (and for the long haul). No wonder that part of “care platform” Agilon’s recruiting pitch is its ability to help primary care physicians better care for patients while also increasing their annual income from $180,000 to $300,000 and above.
• Team-based approach: Virtually every startup and incumbent alike has recognized that, if primary care is to achieve its aspiration, it must meet the whole needs of the patient beyond the temporal acute (or periodic) medical issue. This means implementing some form of team-based approach to addressing a broader swath of needs.
• Ability to build and manage a network of specialists: If primary care organizations are to reduce costs, they must effectively build out and manage relationships with a network of high quality specialists. Specialists and inpatient care is where the lion’s share of medical expenditures come from; this is one reason why Oak Street Health acquired RubiconMD, a platform connecting PCPs with specialists to enable fast, inexpensive and privacy-preserving e-consults.
• Effective use of technology: From back-office operations (e.g., billing, quality reporting, network management) to clinical operations (e.g., EHR, care plan development) to patient engagement and access (e.g., remote patient monitoring, telehealth, chat), most founders and investors in primary care believe there is a more effective and scalable way to operate a clinic and build relationships with patients. Of course, if technology alone were the answer, it would already be solved. What is more important than the technology itself is how it is designed for use within clinical workflows, and whether consumers will find it valuable enough to use and continue using.
• Operational efficiency, scalability, and cost of capital:While investors (and this author) believe that primary care is exceptionally well positioned to drive enormously value, save costs, and reap the benefits thereof, it ultimately is up to the operators of these organizations to demonstrate that they can do so efficiently, at scale, and return value to shareholders according to the expectations they have set forth. Already there are skeptics starting to doubt the ability of “tech-enabled services” in healthcare to leverage technology to reach meaningful scale and provide a materially different financial profile than the existing, fragmented players.

Demand side

• Customer and patient acquisition: Patient acquisition is the lifeblood for virtually any provider group (and is also why even care platforms tout their ability to help PCPs with patient recruitment), regardless of whether the group is under the traditional fee-for-service model or value-based care arrangements. Patient acquisition can come directly from providers’ geographic footprint and proximity to a community (e.g., Carbon Health), or through selling to employers (e.g., One Medical), contracting with Medicare directly (e.g., Oak Street Health) or from selling a health plan with an integrated virtual-first offering (e.g,. Firefly Health and UnitedHealth Group).
• Patient satisfaction: A common theme among all of the new entrants is a relentless focus on patient satisfaction, and the resulting promotion of the results of Net Promoter Score. One of the big bets that each organization is making is that they can create a more compelling, higher value, and ultimately more satisfying experience for patients, one that (i) is enough to generate positive word of mouth, (ii) can be used to attract new patient customers, and (iii) creates a “sticky” experience for the patient whereby s/he wants to maintain a long term relationship with the provider and organization.
• Timely interventions, coaching and guiding: The overarching value proposition of primary care (and the reason investors are pouring billions into the space) is the ability of primary care to intervene at the right time and in an effective manner in order to reduce downstream medical costs. For primary care organizations working with working-age populations, these interventions can come in the form of guiding patients to lower cost generic drugs, keeping them more adherent to therapy and out of the emergency room, guiding them to higher quality and lower cost specialists, and avoiding low-value procedures when there’s an alternative.
• Proof of outcomes: While all of the above matters, the proof – for investors and certainly Medicare Advantage plans, state Medicaid agencies, and employers – is in the pudding. The ability to show credible outcomes via peer-reviewed journal publications is the gold standard for each one of these primary care organizations, and the reason why every one has invested in clinicians and former academics in order to investigate and work with partners to repeatedly study various outcome measures. (See below for chart with select companies and available outcomes data).

So if markets are a competition, who will win in the primary care space?

To answer, it may be worth considering a question posed by John Lynn and Colin Hung: is the primary care relationship dead? After all, as they astutely point out, it used to be that primary care physicians made house calls, were pillars of their communities, built relationships with families over decades, and were always the first call when a health or medical issue arose in the family.

Now? Now when patients have a concern or an acute symptom, many of us pull up our phones and consult Dr. Google. And at least one study suggests this makes for better patients. Which raises the question: if patients consult Dr. Google, and use Google to route themselves to the appropriate specialist, what value is a primary care physician to a patient?

Whether it’s Dr. Google or WebMD or a Mayo Clinic site, this is the crux of the matter for primary care: primary care organizations are not competing with each other. They are competing with ever-improving technology that may obviate the need for the ‘gatekeeper’ type of role that HMO’s wanted them to play back in the ‘90s.

To survive and thrive, primary care organizations must become more than gatekeepers. In order to do this, they must develop meaningful relationships and trust with their patients. As in most contexts, trust here contains three elements:

1. Integrity: does the patient believe the PCP or PCP team is honest and forthright?
2. Benevolence: does the patient believe the PCP or PCP team has her best interests in mind, even before their own?
3. Competence: does the patient believe that the PCP or PCP team is more valuable and insightful, and consistently provides more meaningful and easier to follow guidance than Dr. Google?

Finally, even beyond trust, the depth of the relationship matters. Only if a patient has a meaningful and long term relationship with her primary care team is she likely to have the presence of mind to think of them (and not Dr. Google) when an intervention is needed.

Primary care organizations are not competing with each other. They are competing with ever-improving technology (e.g., Dr. Google, WebMD) that may obviate the need for the ‘gatekeeper’ type of role that HMO’s wanted them to play back in the ‘90s.

This may be the reason that Rotenberg of Firefly Health says that even as they build their health plan, trust and relationships are still the key. “We are embedding trusting relationships at the core of our health plan. We also believe (and have seen) that members are much more apt to trust their care team/primary care providers than their health plan or navigator. By converging these functions into one care team, we are able to lead with care / trust even as a health plan,” Rotenberg noted.

So, who should we want to see win the primary care battle? Those who successfully integrate technology into their practice and patient relationships for the purpose of tightening the very human bonds and further fostering those human connections seem likely to do well. Firefly Health and others seem to be figuring out the right way to do that.

At the end of the day, we should want every primary care organization to win. Realistically, they won’t be fighting each other, but working together to tame the healthcare leviathan.

But a question remains: with all of the resources and capital brought to bear in primary care, what does the role of the humble primary care physician – now surrounded by a full care team – look like in the future?

What Is The Future Of The Primary Care Physician?

So what becomes of the sacrosanct primary care physician-patient relationship? And what role does the primary care physician (at times referred to as the ‘quarterback’ of healthcare) actually play within the care team?

“Let’s talk about the definition of primary care. It is becoming much broader than the traditional view — and it should be. It should encompass everything that is the first touch for the patient in the healthcare system,” said Fong of Elation Health.

Based on the care teams that most primary care organizations are investing in, it does seem that Fong is right. Team-based care is becoming the norm.

At Firefly at least, the answer is clear: the primary care physician is the chief medical decision-maker on the team.

When asked which member of the care team should “own” the relationship with the patient, Ann Greiner of the Patient-Centered Primary Care Collaborative answered the question simply: “The patient should decide who she wants the primary relationship with.”

Can Primary Care Slay The Leviathan?

Whether Amazon is successful with its acquisition of One Medical or not, one thing is certain: the company sees an opportunity in primary care. And it’s not the only one: CVS, UnitedHealth Group, Geisinger, Northwell, Oak Street Health, CareMax, Cano Health, Privia, Agilon, ApolloMed, Firefly, Cityblock, and many others are making the same bet. And supporting them and independent primary care providers alike are technology companies like Elation Health.

It of course remains to be seen if these companies can succeed. These organizations are not for the faint of heart, and in particular traditional facility-based clinics are highly capital-intensive. After all, many now are speculating that One Medical sold to Amazon because it knew it had to raise about $300M in a rapidly deteriorating macroeconomic environment.

But with healthcare spend at $4 trillion, and one study suggesting that as much as $935 billion of that is wasteful, the opportunity is too big to ignore. With the outcomes many of these (and other) companies are showing, perhaps the biggest question is not whether investing in primary care is a good bet or not, but rather how long it will take to generate a return, and which of these organizations will manage their growth wisely enough to reach real meaningful scale.

Will primary care slay the leviathan? That may be too much to ask of one sector alone. But it’s an awfully good place to start trying.