As new primary care models, including retail health clinics, continue to scale, the national supply of clinical providers will become even more constrained. For health systems, hospitals and medical groups, competition for the shrinking pool of nurses and doctors will intensify, according to a new analysis.
Patients have more choices than before with the increasing supply of new entrants like CVS, Amazon and Walmart and this is also leading to care becoming more fragmented and disintermediated from the traditional care journey, said Sanjula Jain, Ph.D., chief research officer and senior vice president of market strategy at healthcare analytics company Trilliant Health.
Patient panel sizes for new primary care entrants—like Walgreens’ VillageMD, CVS’ Oak Street Health and Amazon’s One Medical —average 584 patients per provider, which is far lower than the current patient-to-provider ratio of 944. These ratios suggest that the U.S. would need an additional 218,000 primary care providers to meet the needs of every American under the new entrant primary care model, according to Trilliant Health's "2023 Trends Shaping the Health Economy" report.
"These new entrants and retailers have been making their moves in healthcare for many years now. They're now further along in their journey where we can actually start measuring the effects of what types of patients they're seeing, what is their footprint for what services and what are the downstream effects," Jain said in an interview.
"We're all talking about burnout and how we can't meet the demands of patients and we can't recruit providers. And yet you've got these new models of care that are competing with traditional providers for the same limited resources. These models also are creating a different mathematical equation that will change how we determine the total number of providers we would even need to meet the existing demand. I think that's something to think about going forward. This is another way of thinking about fragmentation, not just on the patient side, but on the workforce side," Jain said.
Patients in the U.S. have yet to return to preventive care at pre-pandemic levels, according to Trilliant Health's report. Healthcare volumes declined across every care setting except emergency departments in 2022.
"What's interesting is given that volumes in healthcare across the board are still down, primary care volumes are down and now you have all these new options. And you have patients acting more like consumers than they ever have been before. And this is pretty much your 'Dr. Google' effect. You pair that with the fact that players like Amazon, CVS and Walgreens, their strategy is really, by design, to create a closed-loop system for low-acuity care," Jain said.
Alternative delivery models are largely transactional, she noted, and, therefore, disconnected from the broader healthcare system.
But when a consumer has a higher acuity health concern or more severe symptoms, those patients then have to "re-engage" with the traditional healthcare system to get higher-level services such as lab or blood work and to see medical specialists, she noted.
"It starts introducing this complexity of the incentive structure and business model. The more that patients rely on 'Dr. Google,' the more that they're going to these pharmacy retail models, as long as they are the first line of defense, that creates more and more fragmentation or disintermediation of what I would call the traditional care journey. As you think about more acute conditions over time, that's going to create more complications," she said.
These trends are occurring at the same time as the overall declining health status of the U.S. population. From 2019 to 2020, U.S. life expectancy declined by almost two years according to the Centers for Disease Control and Prevention. Excess mortality among younger individuals, who represent most of the commercially insured market, is increasing. In fact, cancer mortality is increasing for Americans ages 35 to 44, while decreasing for older age groups, according to Trilliant Health's data.
"We're already struggling to do primary care, we're already struggling with screenings, and yet, we're introducing this kind of transactional-type, first layer of care. It would suggest that that will probably compound the health status going forward. It will be interesting to see how it plays out over a couple of years, but we're already seeing those signs," Jain said.
Examining this issue from a cost perspective, Trilliant Health's research found that telehealth services, while opening up more access to care, may create duplication of service.
Nearly one-third (29.2%) of telehealth visits—excluding behavioral health—resulted in an in-person follow-up visit for the same clinic reason within three weeks, most commonly for general encounters and chronic condition management. This finding is consistent with the fact that the majority of physicians perceive the quality of care delivered via telehealth to be inferior to in-person care, according to a Health Affairs study.
Moreover, among all telehealth users in 2022, approximately half (49%) only used virtual care once, which may serve as another indicator of limited consumer satisfaction.
Tele-behavioral health visits also are often coupled with an in-person follow appointment, the data showed. When including behavioral health, more than half of patients (56.5%) who had a telehealth visit went on to have an in-person appointment with a doctor within three weeks.
"With that closed-loop system, if your symptoms don't resolve, you have to go back and start over to figure out what's actually happening. So that causes friction for the individual, that's a cost piece," Jain said.
Trilliant Health's dense 147-page report outlines 10 macro trends influencing the healthcare industry including demand for healthcare services, telehealth trends, the increase in GLP-1 prescriptions, competition from new entrants and healthcare costs.
The company's analysis is based on third-party data resources and the company’s proprietary all-payer medical and pharmacy claims database that informs longitudinal patient journeys for more than 300 million Americans. Original research insights featured in this year’s report are primarily gleaned from proprietary Trilliant Health data sets and analytic models that measure various dimensions of demand, supply and yield across the health economy.
The Trilliant Health provider directory was used to study 2.7 million physicians and allied health providers across the country. To measure yield, the report incorporates Trilliant Health’s health plan price transparency dataset which provides negotiated rate data for services by market across large national and regional health plans.
“As a health economist, I study healthcare through the lens of demand, supply and yield,” Jain said. "According to the laws of economics, when supply exceeds demand or demand is flat or declining relative to supply, price goes down. In healthcare, however, the inverse has been true for decades and the status quo is unsustainable for the health of Americans. Despite significant investments and initiatives to ‘transform’ the $4.3 trillion health economy, little has changed to date. Analysis of emerging and intensifying industry trends, however, suggests stakeholders may soon have no other option but to start playing by the immutable rules of a negative-sum game.”
The "winners" of healthcare’s negative-sum game will be stakeholders that deliver the greatest value for money, Jain said.
On the policy front, Jain noted that the new era of price transparency reveals the vast discrepancies that currently exist in rates across different markets, service categories and providers. The question going forward is, will negotiated rates migrate to the maximum price in a market, as the American Hospital Association argued, or instead regress to the mean price in a market, as typically happens with transparency in other industries and as has happened with quality measures.
"If employers, and possibly CMS, utilized health plan price transparency to leverage their purchasing power to demand value for money, market rates in the health economy could narrow significantly, as happened with airfares after deregulation of the airline industry," Jain wrote in the report.
"Health plan price transparency should catalyze unprecedented and frenzied competition to win the hearts and minds of the consumer and the payer that keeps the current U.S. healthcare system afloat: the employer. If it does, the winners in healthcare’s negative sum game will be those who deliver value for money," she wrote.