Can a Subscription Model Fix Primary Care in the US?

Lambert here: By Betteridge’s Law, no.

By Bernard Wolfson, Managing Editor for California Healthline, who served most recently as business editor of the Orange County Register. Previously, Bernard was the Register’s health care business reporter, covering the rollout of the Affordable Care Act. In a prior stint at the Register, he was a Pulitzer Prize finalist, along with two colleagues, for a groundbreaking report on cost vs. quality at 30 local hospitals. Originally published at Kaiser Health News.

In April, San Francisco-based primary care company One Medical revealed an eye-popping compensation package for its chief executive and chairman, Amir Dan Rubin. His $199 million payday, particularly noteworthy at a company that has yet to turn a profit, made Rubin the second-highest-paid CEO in the United States last year — but only on paper.

About $197.5 million of his pay is in stock options. For Rubin to get all that cash, the stock of One Medical, traded as 1Life Healthcare, must rise sharply over the next seven years, to nearly triple its current price.

In short, his compensation is less a quick jackpot than a general statement of One Medical’s ambitious vision of primary care that is more accessible, technologically enabled and patient-friendly, while cutting health costs for employers and individuals.

Loads of other firms, ranging from small start-ups to larger, more established companies, are selling similar concepts of new and improved primary care.

Some offer it directly to individuals; others target Medicare enrollees. Perhaps the most promising customers are employers, who insure an estimated 157 million U.S. workers and their dependents, and have long been frustrated with spotty primary care and perpetually rising health costs.

The “direct” primary care companies, as they are often called, face stiff competition from one another as well as the large regional health systems and their affiliated physician groups, which still dominate the field.

Analysts say these emerging primary care companies have significant room for growth because of mounting frustration with the medical status quo and because they currently have only a tiny share of the $260 billion U.S. primary care market.

“I think that, ultimately, they’re going to grow in acceptance and accumulate patients and attract clinicians that want to provide a different level of care,” said Richard Close, managing director of health equity research at Canaccord Genuity in Nashville, Tennessee. But he added that “all of these companies combined could grow very significantly and just put a dent in the overall system.”

Also vying for a share of the primary care market are urgent care centers and walk-in clinics at retailers such as Target and pharmacies such as  CVS, in addition to telehealth companies like Teladoc and Doctors on Demand.

In a sharp reminder of the competitive challenges ahead, the share prices of One Medical and Teladoc sank in mid-March after Amazon announced plans to begin offering its telehealth and home visit service as an employee benefit nationwide.

“Amazon is a threat, because Amazon knows how to appeal to consumers,” said Gary Kurtzman, a Wharton Business School lecturer and managing director of Prostasia Health, a health tech investment advisory firm.

The appeal of these companies has grown as employers increasingly seek to address a shortage of high-quality primary care and reduce spending on the health of their workforce, said Ellen Kelsay, CEO and president of the Business Group on Health, which represents large employers.

Studies show a strong correlation between access to primary care and lower spending on expensive medical services such as ER visits, surgeries and hospital admissions. Yet in the United States, primary care accounts for only around 5% to 7% of total health spending, compared with 14% in the 36 member nations of the Organization for Economic Cooperation and Development.

The big bet of One Medical and companies like it is that greater spending on primary care will fatten their bottom lines while reducing overall health costs for their clients.

A study published last year in JAMA Network Open showed that employees of Hawthorne, California-based SpaceX who got most of their primary care at One Medical’s on-site health clinic generated 109% more in spending on primary care but 45% less on health care overall than those who used One Medical infrequently or not at all.

These direct primary care companies typically offer a digital platform as the first point of contact, which enables members to make appointments and text, email or video chat 24/7 with their medical providers.

They wed that technology to brick-and-mortar clinics staffed by doctors, nurse practitioners and medical staff, where members can go for checkups, prescription drugs, lab tests, scans, vaccinations, physical therapy and mental health visits. The patients generally get more time with their providers than in a traditional medical office.

One Medical’s focus is improving health care for “multiple stakeholders simultaneously,” Rubin said in a recent interview with KHN. “How do we delight consumers, serve employers and payers? How do we make medicine the best environment for providers to work in?”

Part of the company’s answer is to put doctors on salary rather than paying a fee for every visit. That eliminates the pressure to book a lot of visits, which Rubin said helps physicians spend more time with each patient.

One Medical will offer its combination of telehealth and in-person visits in 22 metropolitan areas around the United States within a year or so, up from nine in 2020, Rubin said. It had nearly 600,000 members at the end of March, up 31% from a year earlier. When One Medical started in 2007, it sold only individual memberships, for which it currently charges $199 a year. But it has since moved increasingly into the employer market. Anecdotally, its patients are happy with the care they get.

“One Medical says your appointment is at 10 a.m., and my nurse practitioner is walking out at 10 a.m. to get me,” said Kathleen Wiegand, 63, a One Medical member in Washington, D.C. “I’ve never had to wait for an appointment.”

Brentwood, Tennessee-based Premise Health is the biggest player in the employer segment of the direct care market, with over $1 billion in annual revenue, 11 million employer-sponsored members via 1,600 large corporate and municipal employers and about 850 health centers. Most of those centers are at the worksites of its corporate and local government customers.

“Our bet going forward is that it’s the combination of digital and physical access that will drive sustained value and better experience for the member, instead of pure digital or pure physical,” said Jami Doucette, president of Premise.

Doucette said his company provides an entry point to medicine that is “an alternative to primary care physicians owned by hospitals who are driven by volume of expensive procedures.”

Eden Health, a start-up headquartered in New York City, provides a similar service to small and midsize employers, and is also contracting directly with commercial real estate companies that want to provide on-site medical facilities for the businesses that are their tenants.

As the pandemic eases and many workers return to offices with safety on their minds, providing on-site medical care can help commercial landlords command higher rents, said Matt McCambridge, Eden Health’s 29-year-old co-founder and CEO. “What the landlords are trying to do is craft an amenity package that allows them to be a class-A, high-end location, and health is really a key part of that,” he said.

San Francisco-based start-up Forward Health, on the other hand, markets itself exclusively to individuals. It charges a flat monthly fee of $149 for access to digital health, in-person visits and technology the company says can scan for signs of skin cancer, perform genetic analyses and return comprehensive blood test results in 12 minutes.

While positioning themselves as “disrupters” in an industry that emphasizes volume of services over health, many direct care companies nonetheless participate in the networks of their members’ health plans, and some receive fee-for-service payments from those plans.

One Medical, for example, gets about 37% of its revenue from such payments.

“That’s just the way the U.S. health system is organized. If you want to easily serve people, you say, ‘Hey, I accept your insurance.’ And if you want to easily serve employers, you say, ‘I’m in your network,’” Rubin said.

“But the powerful thing is that without changing how the system pays, we can still reduce the cost of care,” he added. “We don’t have to wait for some mythical unicorn of a reimbursement system to get these kinds of results.”

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

21 comments

  1. ambrit

    As the pundits like to say; “It looks good on paper.” Could the present ‘wave’ of such institutions be skimming the “cream” of the population, health wise, and reaping the rewards that guarantees while the ‘rest’ of the population, more risk prone, languishes and, seriously, dies?
    I come at this from the perspective that Public Health should be fully public. Eliminate the private corporate segment and it’s rent extraction reason for existance, altogether.
    American National Health.

    Reply
    1. hoonose

      As a now retired internist, I agree with you. This is much like Concierge medicine. It can work in big cities for those patients with the means. But not for rural areas like mine, and not for most of those on SS.

      Many times, this sort of system does not cover specialists and/or hospitalizations. And those are big expenses that might require another HC policy at the same time.

      Where it can work is in lowering the cost of some outpatient testing. Such as the ability to access expensive MRI at a much lower price point. Sometimes low enough that a temporary membership can make sense. But few patients know this.

      Reply
  2. KLG

    My day job revolves around selecting and preparing medical students who are likely to practice as primary care physicians in rural, underserved, and underrepresented areas. Being the subversive I am, I recently put this up in my office:

    “The field in which the claims of individual commercialism come into most immediate conflict with reputable of social values is that of health. That is true both for curative and preventive medicine.”

    Chapter 5, “A Free Health Service”
    In Place of Fear
    Aneurin Bevan, 1952.

    This “subscription model” is all well and good. But it does not remove individual or corporate commercialism. And that is why, following ambrit, it will work only at the margin for comparatively rich and healthy people…which is no doubt the PMC objective.

    Regarding the PMC, I read this night before last: Virtue Hoarders: The Case Against the Professional Managerial Class, Catherine Liu. A direct hit! Highly recommended.

    Reply
  3. synoia

    Yet in the United States, primary care accounts for only around 5% to 7% of total health spending

    Fixing the wrong (5% to 7%) problem? Addressing the remaining 93% would be a better focus, starting with the Cost of Medical Education. If one graduates with a debt around $500,000, what has the new Doctor learnt?

    Medical Practice or debt management?

    Reply
    1. Felix_47

      Having put one kid through med school I have to say that 500K number is on the high side. At current Ivy League rates you are looking at about 300K with no discounts and that includes living expenses. That compares with college which would be the same. So I guess college and med school at Harvard or Yale or Columbia or Cornell would run you 600K but not 500 for the medical part alone. Very few people pay rack rate. Some schools like Columbia and Harvard have large enough endowments that they don’t want the students to graduate with any loans or debt and most all do that. If worse came to worse you can always let the Army or any federal service like the Indian Health Service or Public Health Service pay and pay the Army back with six years of service which is basically the training you would be doing anyway since a medical degree alone is essentially worthless. You need five or six years of residency which is paid at about 60K per year. My point is that the whining about the high cost of med school to justify the rip off of fee for service is just that……whining. And the idea that someone should go into medicine to get rich, which we are seeing more and more of, is criminal. Now that the US has a gross excess of doctors (half of all surgeries are estimated to be unnecessary…..let alone MRI scans) the best thing we could do is put them all on government salary. Let the government fund med school……It already is for those that go into Federal service for six years. The period of health care that is most important is the few minutes after trauma or other disaster. Who is the treater? Normally the fireman paramedic. If they dont succeed the chances of you making it after you hit the ER door and fee for service are minimal. They are on salary. Their training is funded. They get good retirements. Their malpractice risk is covered. It is harder to get into the fire department than med school. You have to have a relative to pull strings. The problem with fee for service is that you get what you pay for and doctors are smart and well educated so they know how to twist facts to generate more work. This is unconcious but in our litigious world no doctor is criticized for doing too much…….and doctors are at severe risk if they do too little. Which lead to the one thing that really could be addressed…..tort reform. Although doctors win most malpractice cases the threat of it has made the practice quite cumbersom and expensive. And the premiums in some specialties like neurosurgery or orthopedic surgery or cardiac surgery are astronomical. Last time I checked in Florida in perhaps 2007 the rate for ortho was over 250,000 per year. You are going to get a lot of unnecessary surgeries when the doctor has to pay 2000 bucks in insurance to see ten patients in a day. And we are not going to get health care reform or tort reform with our current political system. I just don’t see how when we have a lawyer in chief and the rest of the Indians are mostly lawyers. And our lawyer in chief basically is a good representative of a typical graduate of a tier 2 or 3 law school meaning the mentality of an ambulance chaser as almost all the graduates of his law school ended up having to do tort law because the big firms and big public entities don’t hire them. So this lawyer mentality of eat what you kill is what these lawyers want and expect in doctors. They need it to prosper in workers comp and personal injury which becomes their bread and butter. Most all doctors I know are in favor of a national system with doctors on salary with no bonuses for patient satisfaction or production. They just want to do their job as they were trained. Pleasing patients means giving them what they want even if it is not going to do much which is very very expensive. So freeing doctors to do what they are trained to do and ensuring that their retirement is predictable and funding their med school……all a lot like England…….makes a lot of sense.

      Reply
      1. MG

        I bet those same doctors would want no reduction in their salary either and would want those bonuses tied to patient volume and patient satisfaction built into their salary.

        I appreciate the increasing administrative burden on physicians and issues that the implementation of EMRs has caused.

        Almost every single physician I deal with professionally and personally always moans about their annual pay and complains about how they underpaid. It especially true for male physicians.

        PCPs, especially in rural areas, have some merit to this argument but it is simply not born out against any other benchmarks including physician pay in any other country. Yes their debt burdens are considerably more but so is their annual pay and opportunities to make considerable income on the side.

        One of my best friends in the local Rotary chapter is a dermatologist. She has a tough personal act to balance a family which includes 3 children but she thinks she is radically underpaid despite making at least north of $350k annually and working just 40-45 hours a week. She rarely is in the office outside of 9-5 daily. Personally I think she is very unrealistic about how underpaid she think she is given her work schedule.

        Reply
      2. synoia

        I have friends and acquaintances, some where between 20 and 40 families, who’s children are Doctors and Dentists, and they state that $400,000 to $600,000 debt is common.

        Reply
        1. KLG

          It all depends…

          On carried over undergraduate debt and the medical school attended and whether a conscious decision to borrow by rich families has been made (yes, this is a thing). The current average debt for private medical schools is well under $200,000. This includes Harvard, Stanford, and Yale, who admittedly do have more money available for grants and scholarships. Less for public medical schools and their students who pay in-state tuition. There are public medical schools who court out-of-state students so they can gouge them. Most physicians who aren’t stupid about it manage to pay off their debt within 5-7 years of finishing residency. That leaves the average-age student with 30 years of clear sailing into an inviting retirement. For now ;-)

          Caribbean medical schools are generally more expensive and only at a handful do students qualify for the “less expensive” loans available to American students in on-shore medical schools. Those who have to borrow to attend one of these usually for-profit, teach-to-the-test medical schools get comprehensively hosed, while sometimes being responsible for arranging their own clinical rotations in the States. Those who are rich but can’t get into a US medical school can come out OK.

          None of this is defensible, but a parent who bemoans the debt load of his physician child is sometimes making a not-so-indirect argument for her little precious to rake in $1-3M a year as an interventional cardiologist (mostly from Medicare patients who need the intervention) or “aesthetic” dermatologist (cash, and lots of it).

          Reply
          1. juno mas

            Not all doctors are alike. Cardiology is a specialty and usually requires two more years of study than a primary care physician. (PC’s are what is in dire need today.)

            My primary care physician appears (to me) to work much harder and longer into the day than my cardiologist. I have both. (As well as an orthopedic surgeon, oncologist, dermatologist, but no shrink (too carazy.)

            Many doctors specialize for the money.

            Reply
      1. Jokerstein

        Monty Python nailed this fifty years ago:

        Vicar:’ It’s about this letter you sent me regarding my insurance claim.

        Devious: Oh, yeah, yeah – well, you see, it’s just that we’re not, as yet, totaly satisfied with the grounds of your claim.

        Vicar: But it says something about filling my mouth in with cement.

        Devious: Oh well, that’s just insurance jargon, you know.

        Vicar: But my car was hit by a lorry while standing in the garage and you refuse to pay my claim.

        Devious: Oh well, Reverend Morrison, in your policy… in your policy… here we are. It states quite clearly that no claim you make will be paid.

        Vicar: Oh dear.

        Devious: You see, you unfortunately plumped for our ‘Neverpay’ policy, which, you know, if you never claim is very worthwhile, but you had to claim, and, well, there it is.

        Vicar: Oh dear, oh dear.

        Devious: Still, never mind – could be worse. How’s the nude lady?

        Vicar: Oh, she’s fine. (he begins to sob)

        Devious: Look Rev, I hate to see a man cry, so shove off out’ office. There’s a good chap.

        Reply
  4. Linda Elkins

    I’m currently having severe and numerous health problems due primarily to taking the Moderna Vaccine back in March of this year. I only have regular Medicare (and am thankful for that) as I cannot afford any additional paid insurance premium and the state of Tennessee is too cheap to have expanded Medicaid, which I would be eligible for. I know the Doctor and clinic /hospital bills are quickly mounting up and I have no way to pay them other than sleeping in my car. Our health system has NOTHING to do with health, and EVERYTHING to do with greed!! One of the more severe problems I am experiencing has actually gotten much worse since seeing a specialty provider and undergoing numerous tests, with more scheduled!! They have no idea what has caused this; and seem oblivious to finding out; only in sending me for more appointments, more tests, and more money; that I don’t have!! Meanwhile, my Sister-in-law who lives in Australia has been hospitalized for close to a month with numerous problems she had let languish while living here in the United States; and when she is finally made whole she won’t owe a penny or have to loose everything she has. We are a shame!!!!!

    Reply
  5. Petter

    I admit to not reading the whole article but is this not a just modification of the HMO concept, or am I missing something?

    Reply
      1. KLG

        Concierge Medicine: Home of the Lousy Doctors who do very little except stroke their clients’ egos. And wallets.

        Thanks, Yves. Take your time, but we also want you to hurry back :-)

        Reply
  6. Geo

    “on-site medical facilities for the businesses that are their tenants.”

    So we’re moving from employer-provided insurance to employer-provided healthcare? What could go wrong?

    “I sold my soul to the company store”

    Reply
  7. Susan the other

    I like the sound of Forward Health. It could be extended to a surgical service as well. Not as cheaply, but by cutting out all the insurance grift and graft and providing services without extortionate fees I could see this whole idea leveling health insurance and possibly the high cost of drugs right to the ground. And maintaining good medical diagnostics and treatment at prices cheaper than all the boondoggle we now have, especially all the surprise billing. I’d love to see all the ‘non-profit’ profiteering hospitals come hat-in-hand to Forward Health just to keep from going extinct. Dinosaur Land.

    Reply
  8. Anon

    Hello commentariat, I’d like to chime in with my experience using One Medical:

    As a service, it was pleasant. Schedule an appointment (condensed down to 20-30 minute appointment windows), walk in, receive service, and then you’re on your way. There was a lot of flexibility in appointment times and they even had service on weekends, which helped when I needed to get immunized for an overseas trip. The time I used One Medical was back in 2015-2017, when, perhaps as a starting point to gain market share or boost goodwill, they had partnered with BCBS (which was my insurance provider at the time) to reduce the cost of the annual subscription (we all know that with healthcare, there’s a catch) from $200/year to $100/year – maybe it was $50, I can’t remember now. They were also unique in having an app at the time, which allowed for scheduling appointments and seeing reminders as to what health metrics to follow up on, which was unique at the time, maybe not so much now.

    For whatever reason that I was never really privy to, BCBS and One Medical had a falling out. Apparently, One Medical didn’t want to subsidize the subscription for BCBS clients anymore, since all of the other insurance companies had their clients pay the full $200/year. So, after much back and forth, they stopped offering the subsidy and faced with a free doctor vs. one that charged $200/year, I went with the free path, as most sensible people do.

    Reply

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