healthcare intelligence report | july 2019 an … · 2019. 7. 3. · parting thoughts a convenient...

AN OPPORTUNITY TO RETHINK SUSTAINABILITYHealthcare Intelligence Report

© HANYS | July 2019

HEALTHCARE INTELLIGENCE REPORT | July 2019

PRIMARY CARE: AN OPPORTUNITY TO RETHINK SUSTAINABILITYPATIENT PREFERENCES ARE FUELING OUTPATIENT INNOVATIONS



Patient preferences are driving changes to the “front doors of care.” Healthcare providers are expanding, building and/or acquiring new outpatient primary care services – such as urgent care, retail clinics, virtual care, etc. – to engage potential and existing patients.

Opportunities abound in the still-growing and diversifying primary care market, but they aren’t traditional ones. The combined market impact of urgent care centers, retail clinics and telehealth offerings will likely diminish current and future revenue opportunities as patients seek more affordable, convenient care options.

Rethinking your growth strategy ought to include considering low-acuity care community options. It’s better to assess and take (or not take) action now than regret inertia later.

QUESTIONS TO CONSIDERWhile the evolution of primary care and the front door of healthcare take time, hospitals/health systems can’t sit back and relax. Choosing to add services or facilities means long lead times with construction and patient education.

If it makes sense in your market, adding primary care options has the potential to improve care coordination and patient satisfaction (and loyalty), while creating or enhancing existing community relationships.

Developing a specific understanding of primarycare opportunities requires answers to these questions:

• What is your long-term sustainability strategy as a healthcare player in your community?

• Have you mapped out your five-year organizational sustainability plans?

• What is your intended physical footprint outlook in the next five to ten years?

• What service line gaps have you identified? Do they include primary care?

• Are competitors or new market entrants filling those gaps?

• Can you identify and capture substantial market share for these identified gaps throughout your five-year plan?

• At what stage are you in the process of filling those gaps? Planning? Implementing? Building?

• Have you brought in marketing leadership to assess branding and promotion plans during the potential “go-live”?

• How does your marketing strategy cover the “top of the funnel” to get patients to see your brand as one that cares about their overall health?

• Are there business partners or allies that you can align with to achieve those goals?

EXECUTIVE SUMMARY



Within the last decade, primary care options have diversified. Individuals can choose convenient, lower-cost, lower-acuity settings known as the front doors of care — urgent care centers, telehealth providers and retail clinics — rather than opting for an emergency department or an office-based physician visit.1

For consumers, price and convenience matter. A lot.

For providers, urgent care centers and retail clinics can provide a critical flow of referrals and increase the likelihood of patient retention for profitable specialty services down the road.

The growing number of businesses and locations in this space has caused a slow

erosion of providers’ traditional patient base and subsequent headaches for healthcare executives. At the Becker’s Hospital Review 10th Annual Meeting in April 2019, a panel of three healthcare system executives said they are less afraid of disruption by players like CVS and Walmart and more afraid of the shift from inpatient to outpatient care settings.2

Yet, to date, most health systems and hospitals have been slow to adopt outpatient care settings such as telehealth or retail clinics.3 Continued organic growth in primary care demand, combined with consumer and provider preferences in these new options, mean potential opportunities for hospitals and health systems.



OFFICE AND ED VISITS ARE DROPPING WHILE OUTPATIENT VISITS ARE GROWING

Where patients are seeking care by the numbers4,5,6

Change in low-acuity conditions from 2008 to 20157

2008

0

110

50

25

75

2015

+119%

-36%

+214%

+600%

Year

Visi

ts P

er 1

,000

Mem

bers

Urgent Care Emergency Department Retail Clinics Telehealth

100 1,000Number of visits in the U.S. annually (millions)

125.7

136.9

883.7

Outpatient Department Emergency Department Physician Of�ces



THE CHANGING FACES OF PRIMARY CARE Urgent care, retail care, telehealth and direct primary care services have all flourished in size and scope in the past decades in both urban and rural environments.

Urgent CareUrgent care focuses on the delivery of primary care and ambulatory care services outside of an emergency room. Debuting in the 1970s, urgent care has especially blossomed in the last decade. Last year alone, the industry grew 8% and hit a valuation of $18 billion.8,9 It’s not hard to see why: Urgent care offers operators the promise of low margins and high patient volumes.

About 9,000 centers currently operate in the U.S. Their use has experienced significant growth recently (1,725% from 2007 to 2016), outpacing emergency department growth sevenfold.10

Most providers are more willing to operate urgent care facilities in urban and affluent areas. Out of the 350 urgent care centers located in New York state in 2015, 103 were in New York City.11 Research is also showing an appetite for urgent care in rural areas. From 2007 to 2016, urgent care services in rural areas had a higher increase of utilization (2,308%) compared to urban areas (1,675%).12

Retail CareRetail clinics are walk-in clinics located within retail pharmacies, supermarkets and

department stores. A concept first introduced in the early 2000s, there are more than 2,700 retail clinics today, with 75% of the U.S. locations operated by CVS and Walgreens.13

Retail clinics saw explosive growth in the late 2000s; from 2007 to the end of 2010, the number of retail clinics grew from 300 to 1,200 (400%).14 From 2010 to today, the growth rate of retail clinics has tempered a bit to 55.6%, but there is still room for expansion.

About 90% of visits to retail clinics are for simple conditions such as upper respiratory infections, sore throat and swimmer’s ear.15 While retail visits have traditionally made up a smaller portion of overall patient encounters, utilization and some service options are growing.16 Between 2011 and 2015, retail clinic visits nearly doubled to 24 visits per 1,000 commercial coverage beneficiaries.17

Like most brick-and-mortar primary care services, retail clinics are more likely to be located in affluent, urban areas.18 Retail clinical utilization has grown considerably in both rural and urban environments since 2007, but such growth has wavered for both settings. Thus, there’s interest in the setting as an alternative to traditional primary care, but the setting’s niche is still being explored.



Telehealth Despite all its potential in light of widespread smartphone and internet adoption, telehealth has yet to become a mainstream care option. Though the service has experienced some growth in recent years and more employer-sponsored health plans are covering the service, telehealth use represents less than 1% of total outpatient visits. This slow growth to date can be attributed in part to lack of consumer knowledge or promotion of the service.19,20

But telehealth growth will likely increase in areas such as low-acuity or behavioral health services. Telehealth could be a simple way to help increase referrals and engage patients at a new front door of care.

Direct Primary Care A new option cutting into inpatient visits is direct primary care. While DPC models vary,

generally, the provider delivers “high-touch” primary care, focusing on stellar patient-physician relationships, convenient access and traditional primary care services such as blood tests, vaccinations and wellness monitoring.

Multiple DPC companies have launched in the last two decades. Companies such as One Medical, Iora Health, Oak Street Health and Forward leverage branding and tech tools (televisits, online scheduling, etc.) to attract a largely urban, affluent patient population. Around 900 DPC facilities operate in the U.S. and several health systems, such as Catholic Health Initiatives, are launching DPC facilities.21

It’s still too soon to tell how these efforts lead to results, but this option adds another service line for organic growth and competition to consider when looking at primary care strategies.



PARTING THOUGHTSA convenient and accessible primary care service is one of the best ways for hospitals and health systems to attract new patients. Patients who enter through a system’s front door of primary care are likely to stay within the system for specialty care needs, equating to more higher-margin business in the future.

For companies entering your market, new primary care options are forward-thinking strategies designed to pick off easy admission margins from other providers. It’s competition, pure and simple.

It’s time for hospitals and health systems to re-evaluate their larger growth strategy and how low-acuity care may be included. Ultimately, the decision to adapt, and by how much, falls on each provider to decide. It is better to assess now and act if needed rather than realize too late that none of the new healthcare front doors in your community are yours.

“Primary care, urgent care, telehealth and other outpatient services are the future for the front door of healthcare. What providers have to decide is if they want to open those doors or not.”

– Brandon Edwards, CEO and co-founder, ReviveHealth



1. JAMA Internal Medicine: “Trends in visits to acute care venues for treatment of low-acuity conditions in the U.S. from 2008 to 2015.” Oct. 2018.

2. ReviveHealth: Brian Eastwood’s notes from Becker’s Hospital Review 10th Annual Meeting. April 2019.

3. Kaufman Hall: “Survey of major health systems reveals a greater emphasis on consumer-focused strategies but progress remains slow.” June 25, 2018.

4. CDC: “Hospital utilization.” Last reviewed: Oct. 7, 2015.

5. CDC: “Emergency department visits.” Last reviewed: Jan. 19, 2017.

6. CDC: ”Characteristics of office-based physician visits.” Last update: Jan. 23, 2019.

7. JAMA Internal Medicine: “Trends in visits to acute care venues for treatment of low-acuity conditions in the U.S. from 2008 to 2015.” Oct. 2018.

8. Occupational Health & Safety: “U.S. urgent care industry grew 8% last year.” Feb. 12, 2019.

9. Forbes: “Urgent care industry hits $18 billion as big players drive growth.” Feb. 23, 2018.

10. FAIR Health: “FH Healthcare indicators and FH medical price index.” March 2018.

11. United Hospital Fund: “Convenient care: Retail clinics and urgent care centers in New York state.” Feb. 2015.

SOURCES AND SUPPLEMENTAL READING



12. FAIR Health: “FH Healthcare indicators and FH medical price index.” March 2018.

13. RAND: “The evolving role of retail clinics.” 2016.

14. Ibid.

15. Ibid.

16. Health Affairs: “Visits to retail clinics grew fourfold from 2007 to 2009, although their share of overall outpatient visits remains low.” Sept. 2012.

17. Health Payer Intelligence: “Can retail clinics improve patient access, reduce costs for payers?” June 28, 2018.

18. RAND: “The evolving role of retail clinics.” 2016.

19. JAMA: “Trends in telemedicine use in a large commercially insured-population, 2005-2017.” Nov. 27, 2018.

20. Kaiser Family Foundation: “More employers are paying for telemedicine, but enrollee take-up has been relatively low.” Oct. 3, 2018.

21. American Hospital Association: “Hospitals begin to explore direct primary care plan models.” Oct. 22, 2018.

If we can help you with your printing needs, call us at (855) 853-5234.Check us out on the Web at hanysprintingservices.com.

hIgh-qualIty

affordable

tImely

PRINTED BY

For more information about the front door of healthcare or other industry issues, contact HANYS’ Managed Care division.

Jeffrey Gold, Esq. Senior Vice President and Special Counsel, Insurance and Managed Care 518.431.7730 [email protected]

Stefanie Pawluk Director, Insurance and Managed Care 518.431.7827 [email protected]

Victoria Aufiero, Esq. Director, Behavioral Health 518.431.7889 [email protected]

Anna Sapak Policy Specialist 518.431.7871 [email protected]

Bernouche Aristilde Executive Assistant 518.431.7890 [email protected]

HANYS’ MANAGED CARE TEAM

healthcare intelligence report | july 2019 an … · 2019. 7. 3. · parting thoughts a convenient...

Documents