NEWS FLASH: There’s No Money in Primary Care!

As we close out the year and head into a new one, it’s a time of reflection for all of us—successes, failures, things we’d change. Looking back, let’s consider the ash heap of corporate primary care failures. Riddle me this: why do corporations attempting to “reinvent” primary care in America keep failing? Walgreens with Village MD, One Medical (now owned by Amazon), WalmartHealth, and Forward all failed or are failing as we speak. Others have not fared well in the past. Most of these companies have deep pockets but cannot make corporate primary care work. Why is that? Occam’s razor seems to apply in this case: they fail because there is NO money in primary care. The daily grind of seeing patients and caring for them, the mental taxation, does not pay well. The only money in primary care comes from downstream referrals and prescriptions from a physician’s mighty pen. Hence, the only reason hospitals buy up primary care clinics left and right. (A primary care physician provides about $2M per year in referrals for labs, imaging, admissions, and specialist visits while getting paid about 10% of that as income.) And to make the value of primary care even worse, the overall spending on primary care is going down yearly from 6% in 2013 to 4% in 2020. On top of that, Medicare keeps cutting physicians’ payments as well. It’s no wonder primary care residency spots keep going unfilled and physicians keep selling out to hospitals. 

Primary care is dying before us, and no one is bringing in the crash cart. Government bureaucrats, hospital administrators, and insurance executives care little about primary care. It’s only a means to an end for them. As Dave Chase put it, primary care is the “milk in the back of the store,” a loss leader. No one values primary care. So, tell me, Ms. CEO, Mr. VC, or Mr. PE, leaders of corporate America, where is the money coming from? Simple. There is no money there. 

I’ve owned an urgent care clinic for 11 years and a DPC clinic for 10 years with some overlap in those clinics. Trust me, the margins are thin in primary care. If you don’t believe me, then ask any DPC physician. There’s little gold to be mined in most primary care clinics. I can only find three ways to attempt to dig more gold out of primary care clinics. 

1. Dramatically cut overhead. 

That means cutting staff, rent, or employee benefits or maybe finding cheaper supplies.  The latter supply issue would be minimal reductions for most clinics. Of course, a shrewd business person could cut all those expenses to really crush overhead. Most primary care clinics, especially DPC, run very lean so cutting overhead would be difficult and frustrating for physicians. Even still, corporate bosses could replace the physicians altogether, which leads us to number two. 

• Replace physicians with Nurse Practitioners (NPs) or Physician Assistants (PAs). 

This is an obvious way to dig out gold from primary care allowing massive cuts in overhead. This maneuver is a growing trend across hospital systems and corporate clinics. There are increasing amounts of online “degree mills” pumping out “providers” with little oversight it seems. Will these replacements that lead to short-term overhead cuts provide long-term benefits and quality? Be careful of what you ask for. 

• Increase the number of patient visits and/or increase the fees or add services.  

This one is straightforward. Corporate bosses could force the physicians to see more patients, increase the fees that are charged, or force the physicians to “up-code” the bills.  Or maybe they require all three. Finally, they could force new services on physicians to increase revenue. More work for physicians and more billing only leads to more frustration and abuse. It puts more risks on them as well. This is not a recipe for a long-lasting relationship, as far as I can see. 

Forward was the latest corporate failure in primary care, a direct primary care attempt no less.  Hundreds of millions of dollars down the drain. They thought Star Trek technology would make the difference to scale DPC.  Nope. Especially when the technology is not helpful. “Give us your money and step into our scanner.” No thanks. Primary care is about relationships, not money or technology; and the truth is relationships don’t scale. There’s no money in it. 

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