Why Tech Giants Like Samsung, Apple, and Google Are Betting Big on Primary Care

▲Original Author: Paul Keckley

Last Friday, I visited a brewery in Asheville (located in western North Carolina, USA)—the Sierra Nevada Brewing Company. Although the company was only established this March, it has already gained considerable local renown, with several of my golfing friends describing it as “distinctive.” Indeed, their assessment proved accurate: the facility is expansive, thriving, and bustling with activity.

The company recently hired 300 new employees, including Terri, who served me my beer. She relocated from Florida to North Carolina for this position. While she explained that the job contributes to environmental sustainability, what truly attracted her were the additional benefits. On its official website, in addition to highlighting its original, nature-close brewing method using self-cultivated ingredients, the company also states: “In addition to salary, we offer our employees the following benefits: beer vouchers, on-site medical consultations, massage therapy, wellness programs, career development and promotion opportunities, and employee-exclusive beer camp events.”

I’m not particularly interested in beer, but Terri’s story caught my attention and reminded me of a similar experience I had previously. Last spring, I visited the headquarters of Zappos (a U.S.-based online shoe retailer). They provide on-site medical consultations for employees, covering a comprehensive range of primary care services. For “Millennials” like Terri (those born between 1984 and 1995), primary care entails far more than the simplistic notion of “seeing a doctor to get a prescription”—it is significantly more important than that.

Primary care is the frontline of healthcare reform. The demand for primary care is significantly greater than the demand from patients seeking treatment for chronic conditions or those with low-priority illnesses that do not require immediate intervention. The Affordable Care Act (ACA) expanded health insurance coverage by implementing Medicaid expansion across states and providing tax credits to eligible enrollees through health insurance marketplaces. The scope of primary care providers extends beyond Medical Doctors (MDs) and Doctors of Osteopathic Medicine (DOs) to include advanced practice registered nurses, among others. Under the provisions of the ACA, affordable and effective primary care premiums can be paid in installments, aiming to reduce unnecessary utilization of emergency department resources and hospital beds. In many respects, primary care is key to achieving healthcare reform. Controlling costs, improving efficiency, and expanding health insurance coverage are all exemplary innovative measures. However, the first priority must be addressing the issue of accessibility to primary care.

Below, let us provide a general overview:

1. The demand for primary healthcare services is expanding in both breadth and depth.

Statistical data show that 46% of Americans suffer from more than one chronic disease, and medical expenditures for this purpose account for 84% of total healthcare spending.(Data source: Moses, Matheson JAMA 2013). Most of these diseases are diagnosed in primary care settings, and one-third of patient–physician encounters involve initial treatment for mental health conditions.(Data source: AHA Future Scan 2015)。

Consumers of healthcare services, particularly Millennials and Baby Boomers, expect primary care to encompass all aspects of health, including physical well-being, mental health, and emotional stability. Moreover, they regard sound financial status and positive mental well-being as key determinants of their happiness. For instance, Palo Alto Clinic’s LinkAges initiative has achieved notable success in alleviating loneliness among the elderly while also reducing costs for enrollees. Similarly, the Blue Zones Project implemented in Naples, Florida, has addressed the social determinants of health that constrain access to primary care. Many such examples exist.Although many people remain uncertain about how the healthcare system operates (according to Altarum Institute), there is at least one point of consensus: most individuals regard primary care as the first step in healthcare system reform and believe that primary care is crucial to their health.

In addition, employers have begun to guide their employees and dependents to consciously utilize primary care services more frequently. According to the Health 2016 survey report conducted by the National Business Group on Health, 80% of employers opted for consumer-directed health plans with high deductibles, driven by their own interests. Their primary objective is to promote lifestyle changes, such as consulting healthcare providers when making decisions and encouraging employees to engage in more physical activity. For employers who self-insure, the amount they paid for claims that went unfiled exceeded $90 billion over the past year.(Data source: Oliver Wyman)。

2. Insufficient supply of primary healthcare services.

Among applicants to U.S. medical schools, 39% intend to pursue careers in primary care after graduation.(Data source: 2015 Applicant Survey). However, according to statistics from the Federation of State Medical Boards (a non-profit organization in the United States), 31% of currently active primary care practitioners are aged 60 or older, while 26% are between 50 and 59 years old. A large number of physicians are disappointed with the current state of primary care; 88% complain that they have too little actual contact time with patients, and 61% believe there is almost no sign of improvement in this situation.(Data source: Wolters Kluwer Health, one of the world's largest professional publishing groups)。

According to statistical data from the U.S. Bureau of Labor Statistics, there are 275,000 primary care practitioners in the United States, accounting for approximately one-third of all licensed physicians. The agency estimates that the shortage of primary care practitioners ranges from 28,000 to 94,000. However, these projected figures on the demand for primary care practitioners do not constitute the reason for the rise of telemedicine, remote consultations, and group visits; nor are they the factor driving the increased emphasis on value-based outcomes rather than visit volume. Furthermore, the data do not include primary care practitioners who employ non-conventional therapies.

3. The compensation levels in the primary healthcare sector are equally concerning.

Running a primary care practice is not only costly, but its income level also lags behind that of other medical professionals. Modern Healthcare, a U.S. weekly healthcare publication, compared data from 2014 and 2013 in its 22nd National Physician Compensation Survey. According to the survey, among the 20 specialties surveyed, seven saw an increase in compensation over the year. The largest increase was in urology, with a 5.3% rise, bringing salaries to a range of $355,600 to $482,000. In second place was invasive cardiology, with a 4.8% increase, resulting in salaries ranging from $404,801 to $598,600. In contrast, compensation levels were relatively lower in pediatrics ($185,500–$248,490), general internal medicine ($207,000–$266,200), and family medicine ($189,152–$250,255).

According to statistical data from the Medical Group Management Association (MGMA), primary care has the highest operating costs relative to revenue among all medical specialties. As a result, independently practicing primary care physicians lag behind other specialties in information technology investments, including the meaningful use of tools such as electronic health record systems. Consequently, many physicians ultimately abandon independent practice and seek employment with hospitals or other large healthcare organizations.

In the United States, the average cost of a single emergency room visit is $1,354, whereas the average cost of a visit to a primary care provider is less than $150. According to statistics from the U.S. Department of Commerce, as health insurance plans with high deductibles have become the predominant form of employee benefits, households spend an average of 20% of their discretionary income on healthcare. Based on 2015 data from Milliman, an international consulting and actuarial firm headquartered in Seattle, the average annual healthcare expenditure for a family of four in the U.S. was approximately $24,671.(Data source: Milliman Medical Index 2015). The copayment for a primary care visit at a traditional hospital is $23, while the cost for seeing a specialist is $36. However, in cases with high deductibles, patients are required to cover all expenses out-of-pocket, which prompts many individuals to delay preventive healthcare.(Data source: Kaiser HRET)。

For many non-traditional forms of primary care, insurance coverage is fragmented. For instance, yoga or massage therapy used as alternatives to opioid analgesics (alkaloids derived from the opium poppy and their derivatives, both endogenous and exogenous, primarily indicated for the treatment of moderate to severe pain) are not covered by health insurance. The same applies to health coaching and mental health counseling. Furthermore, most health insurance plans do not cover over-the-counter treatments or other forms of self-care.

4. The setting for primary care has shifted from private clinics or urgent care centers to retail locations or directly within workplaces, while leveraging technology to expand their connectivity.

An increasing number of healthcare professionals are beginning to provide primary care. In addition to general internists, family physicians, and pediatricians, a significant portion of the primary care needed by women is provided by obstetrician-gynecologists. In many communities, nurse practitioners, advanced practice nurses, physician assistants, and other professional medical personnel work together to deliver primary medical services to residents. Furthermore, numerous federally qualified health centers also offer these services. A 2014 survey conducted by the PwC Health Research Institute found that two-thirds of Americans stated they would turn to nurse practitioners or mid-level healthcare providers when facing primary healthcare issues. Additionally, polls indicate that when seeking primary medical consultation, people trust the advice given by retail pharmacists, with 56,000 such retail locations across the United States.

Many companies, such as CareHere, Sierra Nevada, and Zappos, address employers’ primary care needs through online consultation services while also attending to employees’ health requirements.

The United States has 6,400 emergency medical centers, a decline from the 9,000 recorded in 2011.(Data source: Urgent Care Association of America). Last year, the total number of consultations at these institutions reached three million, with 85% being occasional visits and the remaining 15% comprising regular primary care consultations.

The number of retail clinics continues to rise at an annual growth rate of 20%, currently reaching 1,841.

Supported by advances in science and technology, virtual primary care has emerged and expanded. Services such as online appointment scheduling, laboratory testing, and virtual consultations are rapidly growing. Providers offering these services include Teladoc, MDLive, American Well, Kura, Carena, CareClix, and others. Patient-held personal health records, shared with physicians and health advisors, have also become more accessible. As a result, primary care is shifting from traditional in-person visits to technology-enabled, professionally guided self-care that is not constrained by time or location.

Hospitals and other healthcare groups are beginning to prioritize investments in retail-based primary care., such as Providence Express Care in Oregon and Swedish Express Care in Washington, are joint ventures invested in by Walgreens (a U.S. retail chain of pharmacies and grocery stores).

59% of patients actively search for medical information online, while 27% share their experiences through social networks, primary care providers, or other individuals.(Data source: Pew Research Center, an independent polling organization in the United States)。

Biometric devices are beginning to see widespread adoption in primary healthcare, with tech giants such as Samsung, Apple, and Google betting heavily on this sector.

5. Payment methods are transitioning from "volume" to "quality." Healthcare reform regulations stipulate that convenient and effective primary medical insurance premiums may be paid in installments.

Since March 2010, the Centers for Medicare and Medicaid Services (CMS) has been striving to emphasize the importance of primary care in its healthcare initiatives, such as the Medicare Shared Savings Program launched in January 2012, the readmission penalty implemented in October 2012, and the hospital value-based purchasing programs introduced in October 2012. The implementation of these initiatives largely relies on highly coordinated primary care management. Medicare aims to have 30% of total payments to healthcare providers linked to alternative payment models by 2016, increasing this proportion to 50% by 2018. These alternative payment models are crucial for achieving the aforementioned goals.

According to statistics from the U.S. Centers for Medicare & Medicaid Services, in the second year of the Accountable Care Organizations (ACO) program implementation, 46% of the shared savings bonuses were allocated to primary care practitioners, 20% to specialists, and 27% to hospitals.

For hospitals and other healthcare institutions, assuming the cost and quality risks associated with resident health management programs requires them to interconnect individually, forming an integrated network that is differentiated by the intensity, capacity, depth, and scope of their primary care programs.

6. Investors and innovators have high hopes for primary care.

Oak Street Health operates seven primary care clinics in Chicago. In March 2015, the group entered into an agreement with New York-based Harbour Capital, which provided funding to support its expansion. Prior to this, 15 other companies had expressed interest in partnering with Oak Street Health. Many health insurance groups, such as Cigna, Humana, Anthem, Aetna, and UnitedHealth Group, along with several companies participating in Blue Cross plans, have acquired portions of primary care practices. Most of these insurers are developing retail healthcare strategies to complement their other investments.

For example, Iora Health, founded in 2012, is a healthcare startup headquartered in New Hampshire. The company has raised $42 million and opened a total of 11 clinics. In its practice model, patients pay a fixed monthly fee (ranging from $60 to $200) to gain unlimited access to primary care services provided by the clinics. The company plans to expand the number of clinics to 30 in the following year. Iora’s patients see their primary care physicians an average of 6.1 times per year, compared to the national average of 1.6 visits. Placing particular emphasis on individualized care, Iora also incorporates therapeutic approaches such as mindfulness and stress reduction to help lower costs for patients while improving their health outcomes.

So, what exactly is the key point?

The future model of primary care will inevitably differ from the past. It will comprehensively encompass all aspects of resident health management, which is fundamentally different from—and significantly more important than—our current medical insurance system. Below, the author outlines the distinctions between Primary Care 1.0 and Primary Care 2.0:

The evolution from Primary Care 1.0 to Primary Care 2.0 is an inevitable trend. Primary care institutions must reach a consensus internally: shifting their focus from “patients” to “individuals.” Only in this way can all investments made toward upgrading primary care yield substantial returns.

Asheville’s Nevada Brewing Company has not only attracted a large following of beer enthusiasts with its exceptional flavors, but its commitment to providing Primary Care 2.0 for employees is particularly impressive.

I asked Terri whether she had used any online consultation services since arriving here. She replied that she had only consulted a nutritionist, as she had not experienced any health issues thus far. Her colleagues spoke highly of Primary Care 2.0, noting that its underlying philosophy centers on the “whole person,” which aligns perfectly with her own values. After all, health is not something that can be resolved with just a few pills.

Compiled by Lü Xiaoyi
Editor: Mo Renying