Save Lives, Cross Sell: Healthcare Giants Buy Primary Care Practices For Increased Share in the “Big Pot of Money” – The Average Joe
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    Save Lives, Cross Sell: Healthcare Giants Buy Primary Care Practices For Increased Share in the “Big Pot of Money”

    victorlei

    May 10, 2023

    Large corporations are increasingly holding more control over the American healthcare system. All in the name of saving lives profits.

    Diagnose, heal(?) and cross-sell

    Healthcare giants and insurers are buying up primary care practices — which can then send patients to their network of hospitals, insurance groups and pharmacies.

    Like UnitedHealth Group, which owns a major insurer with ~50M customers and employs 70K+ doctors in a network of urgent care or surgery centers, several others have made their own acquisitions in recent years:

    • Amazon bought One Medical for $4B.
    • CVS Health is buying Oak Street Health for $11B.
    • Walgreens acquired a majority stake in VillageMD for $5B.

    Today, ~70% of doctors are employed by a hospital or corporation, and experts are worried that this trend will lead to higher prices and lower quality services in favor of profits.

    Healthcare groups yet to be gobbled up: CareMax (NASDAQ:CMAX) and Privia Health Group (NASDAQ:PRVA).

    “The big pot of money” that is Medicare

    The federal government pays private insurers $400B a year, an incredibly lucrative area for healthcare providers. Roughly 5% of One Medical is enrolled in Medicare Advantage — but it makes up half of its revenue.

    However, privatization may also be having negative effects on healthcare quality:

    • Grand Rapid’s Dr. Beth Kozak says she’s working longer hours to give more diagnoses — which qualifies for federal reimbursement under Medicare.
    • And “it’s not because I’m giving better patient care… It’s all tied to the billing.”

    On top of these issues, the industry is dealing with doctor burnout, worker shortages and underinvestment. Politicians have raised concerns over large acquisitions, but none have been blocked yet.

    Diagnosis: Bearish American health.

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