Retail healthcare was poised to be a major disruptor. Unfortunately, in the past few months, Amazon, Berkshire Hathaway, and Walmart have all exited clinic and primary care spaces. While their entrance was a controversial choice, the undercurrent was hopeful. The quintuple aim’s goals are, in part, to improve access to care and improve quality of life for clinicians. Substantial growth outside of traditional hospital settings like this was poised to accomplish both, with more career options for doctors and nurses and more avenues to care for patients. From a business perspective, this would, in turn, drive the juggernauts of healthcare, payers and health systems alike, to adapt to keep up with the fresh competition.
Unfortunately, care delivery has an almost impossibly steep curve to onramp any outsiders looking to drive major changes. CMS policies can feel impenetrable even to inside experts. It’s not unusual for an established healthcare organization to debate the implications of a final call letter from CMS on a policy update to find the best path towards compliance and success. Additionally, there are truly monolithic organizations within healthcare that have what can feel like a monopolistic, vertically integrated hold on the industry itself. That level of control can disadvantage competitors, as well as physicians, other healthcare workers, etc. Healthcare is prime for disruption to improve quality of life for healthcare’s providers and patients, but clearing the hurdles of opaque policy and entrenched giants can feel impossible, even with extensive capital and past success across other industries.
One of the first challenges in healthcare comes from a lack of access to federal funding (especially after the disastrous launch of Direct Contracting) and the complexities of enrolling in its replacement, ACO REACH. Most of today’s healthcare giants didn’t face the uphill fight of establishing care with federal populations to gain access to those funds. They were already there, and as the system grew around them, so did their federal revenue streams. Without that access to subsidization and funding from HHS and CMS from jump, there was no way to deliver care to vulnerable populations enrolled in federal coverage like Medicare, Medicaid, MA, even ACA. And as stated up front, the Catch-22 of federal populations is you have to have already been caring for them to get paid for that care outside of the “small beer” of procedure based reimbursement.
To that end, when it comes to those behemoths of healthcare that not only have that legacy access and are so established through payer, provider, and all ancillary service integration (if not ownership), it’s not just a matter of delivering care, it’s navigating a system that they built to their own advantage. When single organizations have regional control over federal populations, are integrated in hospitals across the country, own clinics within those regions, and are able to optimize every dollar through owned and operated services, the challenge of just existing can feel dire.
It’s not just outsiders, either. Scope readers in ambulatory spaces know too well the uphill climb. These same challenges are faced by the growth of office-based procedures that Scope partner practices are driving nation-wide. However, as specialists that enable surgeons, dentists, and ASCs to improve throughput and outcomes rather than standalone clinics, there’s more momentum there. The explosive growth of ambulatory surgery centers is driving regulatory changes that allow more and more office-based facilities to take on more complex cases. By supporting this growing facet of care, more independent groups can solve systemic problems that can disrupt access to care.
Fundamentally, moving into primary care from the outside lacked that opportunity. Innovation from within seems to be, for now, the only path forward to continue to grow in any element of non-hospital care.
It can feel like a grim picture to read how difficult it was for these massive retail organizations to come up against so many challenges in entering healthcare. There is, however, hope. Come back next week and we’ll discuss other areas where retail does have an opportunity to enter, build, and even succeed in healthcare.
When anesthesia groups partner with surgeons operating outside the hospital, the real value offered to surgeons is how the anesthesia group can (and should!) become a holistic part of the team. It means the “outsourced” nature of the relationship is, up front, about relieving costs and workflow abrasion for surgeons. However, the anesthesia group should...
Last week, we discussed the exit from retail primary care by Amazon, Berkshire Hathaway, and Wal-Mart, and the challenges they faced in entering healthcare, particularly primary care and clinic spaces. Today, we want to talk about other paths that future investors can take to drive change, even working hand-in-hand with existing entities, helping all parties...
Retail healthcare was poised to be a major disruptor. Unfortunately, in the past few months, Amazon, Berkshire Hathaway, and Walmart have all exited clinic and primary care spaces. While their entrance was a controversial choice, the undercurrent was hopeful. The quintuple aim’s goals are, in part, to improve access to care and improve quality of...
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