Healthy Patients, Healthy Profits

05/01/2023
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    A value-based care approach rewards doctors for keeping patients healthy. (AP)
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    CVS Health is investing in primary care services. It bought Oak Street Health for approximately $10.6 billion. (AP/Gene J. Puskar)
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    People wait in line at a CityMD Urgent Care location in New York City, New York. (AP/Frank Franklin II)
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    Blood pressure screenings and other tests help doctors catch problems early. (Pixabay)
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Ever heard the phrase “An ounce of prevention is worth a pound of cure”? Big healthcare companies must have. Instead of just treating illness after it occurs, American healthcare giants want to cut costs by trying something different: keeping people healthy in the first place.

CVS Health Corporation owns both pharmacies and insurance providers. It plans to spend about $10.6 billion to buy Oak Street Health. That company runs clinics that specialize in treating Medicare Advantage patients. Those patients are typically 65 or older or are disabled.

CVS isn’t alone in eyeing this plan. Walgreens invested nearly $9 billion to acquire the urgent and primary care chain Summit Health-CityMD. That deal was announced shortly after CVS said it would buy home healthcare provider Signify Health for about $8 billion. Rivals like UnitedHealth Group have also beefed up their medical staffs.

The money trail tells of a rapid expansion in value-based care.

Wait a minute. Primary care, preventative care, value-based care. What’s the difference?

Primary care is the common type of care given by a family doctor or primary health physician. Those doctors perform yearly check-ups or treat the flu or an ear infection. If a patient needs specialized care, the doctor makes a referral to a specialist—like a dermatologist or gastroenterologist.

Preventative care is part of primary care medicine. It’s meant to help patients stay in good health. That might include immunizations or screenings to catch a health problem early, especially as folks get older.

A value-based care approach rewards doctors for keeping patients healthy. Medical staff focus on the quality of services over quantity. This approach could include primary and preventative care. It involves helping people stay on their regular medications, control chronic health problems such as diabetes, and avoid hospital stays and other expensive medical treatments.

Oak Street specializes in this kind of care. Its centers use doctors, social workers, and other providers to help people manage their health proactively.

In addition to running drugstores, CVS Health also covers more than three million people with Medicare Advantage insurance plans. Big insurers like that need a major presence in primary care to help control costs, experts claim. That’s a good thing as long as people—and not the bottom line—are the primary concern.

Oak Street CEO Michael Pykosz says many costs stem from patients with chronic health issues. If they receive only minimal care, they can wind up with big (and costly) medical problems.

“Solving that problem creates a massive, massive market opportunity for Oak Street Health,” Pykosz says.

If Pykosz is right, value-based healthcare might be just what the doctor ordered!

Why? Healthcare is both a business and necessity for life. It’s worth exploring approaches that may benefit both companies and patients.