Although primary care is typically less lucrative than other specialties, growing investments from large private equity and corporate health companies are driving a surge in primary care ventures, Angelica Peebles writes for Bloomberg.

The growth of primary care businesses

While primary care once largely consisted of solo offices and small partnerships, it is now dominated by hospital-owned clinics and corporate practices, Peebles writes. According to an analysis by the Physicians Advocacy Institute, around 70% of U.S. doctors worked for health systems or corporate owners at the start of 2021, an increase from about 62% at the start of 2019.

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Investors are also pouring billions into primary care companies, amounting to approximately $16 billion in 2021 alone. This is more than four times what was invested in 2020 and is a major leap from the $15 million invested in 2010, according to researchers from Harvard University.

Several large companies are also making a push towards primary care in an effort to control access to more expensive specialists and influence patients' treatments over time, Peebles writes.

For example, CVS Health plans to put doctors in up to 350 of its retail pharmacies. "What we're trying to really do now is primary care and wield significant influence across the continuum of health care," said CVS CEO Karen Lynch. Similarly, Walgreens Boots Alliance last year purchased a controlling stake in the primary care clinic chain VillageMD, which it previously partnered with to open new primary care clinics across the United States.

In addition, health insurers are expanding their primary care capacities. For example, UnitedHealth Group's Optum unit now has more than 60,000 physicians, around half of whom are in primary care (Daily Briefing is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group). In addition, Humana plans to open 26 new primary clinics under its CenterWell brand this year and will add between 30 to 50 more annually.

"It really is about moving the center of gravity, from patients being managed by hospital systems to really being managed by primary care doctors," said Annie Lamont, co-founder of the venture firm Oak HC/FT, which has invested in primary care startups like One Medical and VillageMD.

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A shift towards value-based payments

According to Peebles, this interest in primary care is partly motivated by a shift in how medical care is paid for. Private health plans, as well as government programs like Medicare, are increasingly turning towards value-based payment, which links doctors' pay to patients' health outcomes, rather than volume-based payment.

This means medical practices will have to change how they function, focusing on how manage chronic conditions and reduce preventable hospital visits. "If you're going to ultimately solve the cost crisis, we have to do a better job of taking care of people with chronic disease," said Tim Barry, CEO of VillageMD.

Separately, Zirui Song, an associate professor of health care policy at Harvard Medical School and a primary care physician at Massachusetts General Hospital, said moving away from a system of volume-based payments for providers could help reduce rising health care costs in the United States.

However, Song also noted that the flood of private investment into primary care may increase the risk that profit motives could eventually outweigh patients' best interests.

"The trust between a patient and a primary-care clinician is especially important for the patient’s care trajectory through the health-care system," he said. "If private equity somehow infringes on that relationship of trust between a patient and their health care providers, especially their primary care provider, then society should be more concerned about the current influx of private equity acquisitions within health care." (Peebles, Bloomberg, 2/10)