The concept of the “medical mall” is not new. Health systems and physician groups have long looked to build larger outpatient facilities that include several physician specialties, diagnostics, and outpatient procedure all under one roof—sometimes even converting defunct shopping malls. But recently some providers have questioned whether this “one stop shop” approach is delivering the value expected.
One CFO shared, the cost to build and operate these large facilities can be daunting: “we had two of these in our capital plan, but the real estate and construction costs are enormous. Given where margins are this year, we just couldn’t justify them.”
Others have also questioned whether their medical malls provide the value they anticipated. Another leader noted that “it seemed to make sense to put 15 primary care docs under one roof, which let us co-locate a host of other services. But patients told us they’d rather have primary care close to home. And a more distributed ‘low-key’ footprint might have been cheaper.” He also mentioned their operations fell short of the vision: “just because we have primary care and CT under one roof, doesn’t mean we can get a patient on the scanner right after their appointment.”
A physician group with two medical malls found that while they expected the vision to appeal to busy, commercially-insured patients, “it turned out that people with transportation issues or a lot of chronic conditions were the ones who chose to go there…it ended up being primarily a public-pay population, and we can’t support the cost.”
Consumers have rejected shopping malls for more distributed and technology-driven retail options. Given the cost of the medical mall, it’s worth considering whether they’ll apply the same logic to healthcare.
Telemedicine is supposed to make consumers’ lives easier, right? One of us had the opposite experience when managing a sick kid this week. My 14-year-old has been sick with a bad respiratory illness for over a week. We saw her pediatrician in-person, testing negative for COVID (multiple times), flu, and strep. Over the week, her symptoms worsened, and rather than haul her back to the doctor, we decided to give our health plan’s telemedicine service a try. To the plan’s credit, the video visit was easy to schedule, and we were connected to a doctor within minutes. He agreed that symptoms and timeline warranted an antibiotic, and said he was sending the prescription to our pharmacy as we wrapped up the call.
Here’s where the challenges began. We went to our usual CVS a few hours later, and they had no record of the prescription. (Note to telemedicine users: write down the name of your provider. The pharmacy asked to search for the script by the doctor’s name, which I didn’t remember—and holding up the line of a dozen other customers to fumble with the app seemed like the wrong call.)
We left and contacted the telemedicine service to see if the prescription had been transmitted, and after a half hour on hold, were finally transferred to pharmacy support. It turns out that the telemedicine service transmits their prescriptions via “e-fax”, so it was difficult to confirm if the pharmacy had received it. Not to be confused with e-prescribing, e-fax is literally an emailed image of a prescription, with none of the safeguards and communication capabilities of true electronic prescribing.
The helpful service representative kindly offered to call the pharmacy and placed us on hold—only to get a message that the pharmacy was closed for lunch and not accepting calls! Several hours later, which included being on hold for 75 minutes (!!!) with our CVS, my daughter finally got her medication.
Despite the slick app and teleconferencing system, the operations behind the virtual visit still relied on the very analog processes of phone trees and faxes—which created a level of irritation that rivaled trying to land Taylor Swift tickets for the same kid. It was a stark reminder of how far healthcare has to go to deliver a truly digital, consumer-centered experience.
On Tuesday, the e-commerce giant unveiled its latest healthcare endeavor, Amazon Clinic, a “virtual health storefront” that can asynchronously connect patients to third-party telemedicine providers. It offers diagnosis and treatment for roughly 20 low-acuity, elective health conditions—including acne, birth control, hair loss, and seasonal allergies—at flat, out-of-pocket rates. (The service does not currently accept insurance.) It also refills prescriptions, which customers can send to any pharmacy, including Amazon’s. At its launch, Amazon Clinic is available in 32 states.
The Gist: This is exactly the kind of venture at which Amazon excels: creating a marketplace that’s convenient for buyers and sellers (patients and telemedicine providers), pricing it competitively to pursue scale over margins, and upselling customers by pairing care with Amazon’s other products or services (like Amazon Pharmacy).
Its existing customer base and logistics expertise could position it to replace telemedicine storefront competitors, including Ro and Hims & Hers, as the leading direct-to-consumer healthcare platform, at least among those that don’t take insurance.
It bears watching to see how Amazon builds on this service, includingwhether it eventually incorporates insurance coverage, partners with health systems (similar to Hims & Hers), or connects Amazon Clinic to Prime in order to attract greater numbers of—generally young, healthy, and relatively wealthy—consumers.
In an Oct. 5, 2022, commentary, Ken Kaufman offers a full-throated and heartfelt defense of non-profit healthcare during a time of significant financial hardship. Ken describes 2022 as “the worst financial year for hospitals in memory.” His concern is legitimate. The foundations of the nonprofit healthcare business model appear to be collapsing. I’ve known and worked with Ken Kaufman for decades. He is the life force behind Kaufman Hall, a premier financial and strategic advisor to nonprofit hospitals and health systems. The American Hospital Association uses Kaufman Hall’s analysis of hospitals’ underlying financial trends to support its plea for Congressional funding. Beyond the red ink, Ken laments the “media free-for-all challenging the tax-exempt status, financial practices, and ostensible market power of not-for-profit hospitals and health systems.” He is referring to three recent investigative reports on nonprofits’ skimpy levels of charity care (Wall Street Journal), aggressive collection tactics (New York Times) and 340B drug purchasing program abuses (New York Times). Ken has never been timid about expressing his opinions. He’s passionate, partisan and proud. His defense of nonprofit healthcare chronicles their selfless care of critically ill patients, the 24/7 demands on their resources and their commitment to treating the uninsured. These “must have clinical services…don’t just magically appear.” Nonprofit healthcare needs “our support and validation in the face of extreme economic conditions and organizational headwinds. ”Given his personality, it’s not surprising that Ken’s strident rhetoric in defending nonprofit healthcare reminds me of the famous “You can’t handle the truth” exchange between Lieutenant Kaffee (Tom Cruise) and Colonel Jessup (Jack Nicholson) from the 1992 movie “A Few Good Men.” Kaffee presses Jessup on whether he ordered a “code red” that led to the death of a soldier under his command. When Kaffee declares he’s entitled to the truth, Jessup erupts,… I have neither the time nor the inclination to explain myself to a man that rises and sleeps under the blanket of the very freedom I provide and then questions the manner in which I provide it. I would rather you say, “thank you” and be on your way. Should American society just say “thank you” to nonprofit healthcare and provide the massive incremental funding required to sustain their current operations?
Truth and Consequences (Download PDF here)The social theorist Thomas Sowell astutely observed, “If you want to help someone, tell them the truth. If you want to help yourself, tell them what they want to hear.” In this commentary, Ken Kaufman is telling nonprofit healthcare exactly what they want to hear. The truth is more nuanced, troubling and inconvenient. Healthcare now consumes 20 percent of the national economy and the American people are sicker than ever. Despite the high healthcare funding levels, the CDC recently reported in U.S. life expectancy dropped almost a full year in 2021. Other wealthy nations experienced increases in life expectancy. Combining 2020 and 2021, the 2.7-year drop in U.S. life expectancy is the largest since the early 1920s. During an interview regarding the September 28, 2022, White House Conference on Hunger, Nutrition and Health, Senator Cory Booker highlighted two facts that capture America’s healthcare dilemma. One in three government dollars funds healthcare expenditure. Half of Americans suffer from diabetes or pre-diabetes.As a nation, we’re chasing our tail by prioritizing treatment over prevention. Particularly in low-income rural and urban communities, there is a breathtaking lack of vital primary care, disease management and mental health services. Instead of preventing disease, our healthcare system has become adept at keeping sick people alive with a diminished life quality. There is plenty of money in the system to amputate a foot but little to manage the diabetes that necessitates the amputation. Despite mission statements to the contrary, nonprofit healthcare follows the money. The only meaningful difference between nonprofit and for-profit healthcare is tax status. Each seeks to maximize treatment revenues by manipulating complex payment formularies and using market leverage to negotiate higher commercial payment rates. According to Grandview Research, the market for revenue cycle management in 2022 is $140.4 billion and forecasted to grow at a 10% annual rate through 2030. By contrast, Ibis World forecasts the U.S. automobile market to grow 2.6% in 2022 to reach $100.9 billion. Unbelievably, in today’s America, processing medical claims is far more lucrative than manufacturing and selling cars and trucks. According to CMS’s National Expenditure Report for 2020, hospitals (31%) and physicians and clinical services (20%) accounted for over half of national healthcare expenditures. This included $175 billion allocated to providers through the CARES Act. Despite the massive waste embedded within healthcare delivery, the CARES Act funding gave providers the illusion that America would continue to fund its profligate and often ineffective operations. It’s not at all surprising that healthcare providers now want, even expect, more emergency funding. Change is hard. Not even during COVID did providers give up their insistence on volume-based payment. Providers did not embrace proven virtual care and hospital-at-home business practices until CMS guaranteed equivalent payment to existing in-hospital/clinic service provision. Even with parity payment and the massive CARES Act funding, there was uneven care access for COVID patients. Particularly in low-income communities, tens of thousands died because they did not receive appropriate care. More of the same approach to healthcare delivery will yield more of the same dismal results. Healthcare providers have had over a decade to advance value-based care (VBC). I define VBC as the right care at the right time in the right place at the right price. Instead of pursuing VBC, providers have doubled-down on volume-driven business models that attract higher-paying commercially-insured patients. Despite the relative ease of migrating service provision to lower-cost settings, providers insist on operating high-cost, centralized delivery models (think hospitals). They want society, writ large, to continue paying premium prices for routine care. It’s time to stop. As a country, we need less healthcare and more health.
When I give speeches to healthcare audiences, I typically begin with three yes-or-no questions about U.S. healthcare to establish the foundation for my subsequent observations. Here they are. Question #1: The U.S. spends 20% of its economy on healthcare. The big country with the next highest percentage spend is France at 12%. How many believe we need to spend more than 20% of our economy to provide great healthcare to everyone in the country? No one ever raises their hand. Question #2: The CDC estimates that 90% of healthcare expenditure goes to treat individuals with chronic disease and mental health conditions. How many believe we’re winning the war against chronic disease and mental health conditions? No one ever raises their hand. Question #3: Given the answer to the previous two questions, how many believe the system needs to shift resources from acute and specialty care into health promotion, primary care, chronic disease management and behavioral health? Everyone raises their hands. This short exercise is quite revealing. It demonstrates that healthcare doesn’t have a funding problem. It has a distribution problem. It also demonstrates that providers aren’t adequately addressing our most critical healthcare challenge, exploding chronic disease and mental health conditions. Finally, the industry needs major restructuring.
The real questions about reforming healthcare are less about what to reform and more about how to undertake reform. The increasing media scrutiny that Ken Kaufman references as well as growing consumer frustrations with healthcare service provision, demonstrate that healthcare is losing the battle for America’s hearts and minds.
Markets are unforgiving. The operating losses most nonprofit providers are experiencing reflect a harsh reality. Their current business models are not sustainable. An economic reckoning is underway. The long arc of economics points toward value. As healthcare deconstructs, the nation’s acute care footprint will shrink, hospitals will close and value-based care delivery will advance. The process will be messy.
The devolving healthcare marketplace led me to ask a fourth question recently in Nashville during a keynote speech to the Council of Pharmacy Executives and Suppliers. Here it is. Question #4: As the healthcare system reforms, will that process be evolutionary (reflecting incremental change) or revolutionary (reflecting fundamental change). Two-thirds voted that the change would be revolutionary. That response is just one data point but it reflects why post-COVID healthcare reform is different than the reform efforts that have preceded it. The costs of maintaining status-quo healthcare are simply too high. From a policy perspective, either market-driven healthcare reforms will drive better outcomes at lower costs (that’s my hope) or America will shift to a government-managed healthcare system like those in Germany, France and Japan.
Like Ken Kaufman, I admire frontline healthcare workers and believe we need to make their vital work less burdensome. I also sympathize with health system executives who are struggling to overcome legacy business practices and massive operating deficits. Unfortunately, most are relying on revenue-maximizing playbooks rather than reconfiguring their operations to advance consumerism and value-based care delivery.
Unlike Ken Kaufman, I believe it’s time for some tough love with nonprofit healthcare providers. Payers must tie new incremental funding to concrete movement into value-based care delivery. This was the argument Zeke Emanuel, Merrill Goozner and I made in a two-part commentary (part 1; part 2) in Health Affairs earlier this year. It’s also why the HFMA, where I serve on the Board, has made “cost effectiveness of health (CEoH)” its new operating mantra.
While this truth may be hard, it also is liberating. Freeing nonprofit organizations from their attachment to perverse payment incentives can create the impetus to embrace consumerism and value. Kinder, smarter and affordable care for all Americans will follow.
We’re fortunate to be privy to many of the big, complex strategic issues being discussed in health system boardrooms and executive meetings these days: care model innovations, new investments in technology, the digital revolution in care, market-shaping partnerships, the future of the healthcare workforce, and on and on. It’s a precarious and strategically critical moment for incumbent systems in many ways. But we’re often reminded that the nuts and bolts of running hospital facilities still demands attention, even at a board level.
Case in point: the perennial discussion about what otherwise seems like a minor issue—parking. You’d be shocked how often parking comes up in board-level discussions (partly because many board members are older, active users of hospital services, who spend significant time looking for a place to park). We’ve been witness to knock-down, drag-out arguments about whether to charge for parking, and why more parking isn’t available for patients, physicians, and others.
At first it seems like a trivial issue, but of course it isn’t. In reality, it’s a tangible example of how much patient experience matters in the design and operation of healthcare delivery. We’ve also found it’s a useful analogy in explaining to leaders why “frictionless access” should be at the heart of digital patient experience as well—a poorly-designed digital “front door” can be just as frustrating as not being able to find an inexpensive and convenient place to park before a medical appointment.
Delivering reliable, affordable, high-quality care is critical, but getting the small experiential details (like parking) right can be incredibly impactful. Next time you visit a medical facility, think about what the parking experience is telling you about how “patient-centered” your provider really is.
Three years after it began piloting a primary care service for its employees that blended telehealth and in-person medical services, Amazon plans to cease operations of its Amazon Care service.
Amazon announced Wednesday afternoon that it would end Amazon Care operations after December 31. In an email to Amazon Health Services employees, Neil Lindsay, senior vice president of Amazon Health Services, said Amazon Care wasn’t a sustainable, long-term solution for its enterprise customers.
Amazon provided a copy of the email to Fierce Healthcare.
The decision only impacts Amazon Care and Care Medical teams and not Amazon’s other healthcare services.
While operating Amazon Care, the company “gathered and listened to extensive feedback” from its enterprise customers and their employees and evolved the service to continuously improve the experience for customers.
“However, despite these efforts, we’ve determined that Amazon Care isn’t the right long-term solution for our enterprise customers, and have decided that we will no longer offer Amazon Care after December 31, 2022,” Lindsay wrote.
“This decision wasn’t made lightly and only became clear after many months of careful consideration. Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term,” he said.
The online retail company piloted virtual urgent care and primary care service with its employees and their families in the Seattle region in 2019.
Amazon Care has since expanded rapidly with telehealth services available in all 50 states and in-person services in at least seven cities, including Dallas, D.C. and Baltimore. As part of its ambitions in healthcare, Amazon then focused on ramping up partnerships with employers and signed on other companies as clients including Silicon Labs, TrueBlue, Whole Foods Market, Precor—a Washington-based fitness equipment company that was acquired by Peloton—and Hilton.
Some industry insiders have said that Amazon Care struggled to gain a foothold with employer clients.
The company was on track to rapidly expand its hybrid care model to more than 20 additional cities in 2022, including major metropolitan areas like San Francisco, Miami, Chicago and New York City.
If the One Medical deal goes through, it would significantly expand Amazon’s foothold in the nearly $4 trillion healthcare market, specifically in the competitive primary care market.
One Medical markets itself as a membership-based, tech-integrated, consumer-focused primary care platform. The company operates 188 offices in 29 markets. At the end of March, One Medical had 767,000 members.
The deal also gives Amazon rapid access to the lucrative employer market as One Medical works with 8,000 companies.
The One Medical acquisition has not yet closed.
Lindsay said the company’s work building Amazon Care has deepened its understanding of “what’s needed long-term to deliver meaningful health care solutions for enterprise and individual customers.“
“I believe the health care space is ripe for reinvention, and our efforts to help improve the health care experience can have an immensely positive impact on our quality of life and health outcomes. However, none of these reasons make this decision any easier for the teams that have helped to build Amazon Care, or for the customers our Care team serves,” he wrote.
The decision to cease Amazon Care’s operations will likely mean some employees will be laid off. Lindsay said in his email to employees that many Amazon Care employees will have an opportunity to join other parts of the Health Services organization or other teams at Amazon. “Well also support employees looking for roles outside of the company,” he said.
Although the patient-centered medical home (PCMH) practice model was first conceived over 50 years ago, its rapid adoption coincided with the launch of ACOs and value-based care. Primary care practices which adopted the medical home model expanded access and support available to patients, enhanced focus on chronic disease management, and embraced team-based care, with a focus on practice and provider sustainability.
But despite the model’s success, a recent conversation with a physician leader suggests that some of most progressive primary care practices are looking to move beyond the medical home. A primary care physician himself, he leads a network of hundreds of doctors, with nearly all the primary care practices PCMH-certified. He shared that “the medical home model in its traditional form doesn’t quite encapsulate what we’re trying to do now”. In his mind, it now feels paternalistic, focusing on what physicians think patients need without paying as much attention to what patients want from their healthcare.
We started brainstorming how a “consumer-centered medical home” might look. Built on the foundation of the PCMH, it would deliver access on the patient’s terms, bringing care online and into the home. Team-based care, supported by technology and even artificial intelligence tools, would enable easy, ongoing communication with patients.
As the list grew, it became increasingly clear that while a small practice could adopt the PCMH, scale is critical for these enhanced capabilities—being able to deliver more services to patients without increasing provider burnout. A tall order for sure, but an exciting vision for primary care that builds consumer loyalty in a competitive marketplace, while keeping the focus on improved care management and outcomes.
We’re picking up on a growing concern among health system leaders that many states with “certificate of need” (CON) laws in effect are on the cusp of repealing them. CON laws, currently in place in 35 states and the District of Columbia, require organizations that want to construct new or expand existing healthcare facilities to demonstrate community need for the additional capacity, and to obtain approval from state regulatory agencies. While the intent of these laws is to prevent duplicative capacity, reduce unnecessary utilization, and control cost growth, critics claim that CON requirements reduce competition—and free market-minded state legislators, particularly in the South and Midwest, have made them a target.
One of our member systems located in a state where repeal is being debated asked us to facilitate a scenario planning session around CON repeal with system and physician leaders. Executives predicted that key specialty physician groups would quickly move to build their own ambulatory surgery centers, accelerating shift of surgical volume away from the hospital.
The opportunity to expand outpatient procedure and long-term care capacity would also fuel investment from private equity, which have already been picking up in the market. An out-of-market health system might look to build microhospitals, or even a full-service inpatient facility, which would be even more disruptive.
CON repeal wasn’t all downside, however; the team identified adjacent markets they would look to enter as well. The takeaway from our exercise: in addition to the traditional response of flexing lobbying influence to shape legislative change, the system must begin to deliver solutions to consumers that are comprehensive, convenient, and competitively priced—the kind of offerings that might flood the market if CON laws were lifted.
Massachusetts-based health system Wellforce recently appointed its first ever chief consumer officer, tapping an executive from a well-known sneaker brand.
Christine Madigan joined the health system to lead marketing and consumer engagement, Wellforce announced in January. She comes from New Balance Athletics, where she led the global marketing and brand management organization. Madigan was attracted to what she termed the “challenger brand” because of its nimble innovation strategy and its mission to help people live healthier. “I can’t imagine a more purpose-driven culture than that,” she told Fierce Healthcare.
“As a marketing veteran from consumer products, Christine understands the importance of envisioning and building services around consumer needs. She will be a great asset in improving and modernizing the way consumers engage with the health care industry,” David Storto, Wellforce’s executive vice president and chief strategy and growth officer, said in the announcement.
The move comes amid a rising trend in healthcare: executives sourced from outside the industry, and in particular from consumer brands, to lead innovation strategies. Fierce Healthcare spoke to several, some of whom have been in their roles for years. They agree that while there are many transferrable skills, there is also an advantage to being an outsider.
To Madigan, the core challenge remains the same business to business—understanding who the consumer is and the different ways they engage with one’s brand.
Aaron Martin, chief digital officer at Providence St. Joseph Health, who joined the health system from Amazon in 2016, echoed Madigan. “Bringing the patient focus—what we called at Amazon ‘customer obsession’—to Providence was key,” he told Fierce Healthcare.
Society is bombarded by healthcare marketing messages, Madigan noted. She wants to “drive some simplicity into the process.” While the system is built to provide reactive, acute care, Madigan sees preventive care as just as important. And a crucial part of facilitating that is establishing not only awareness of but trust in a provider. “Every detail matters in what you communicate in an experience,” she said.
And for organizations that don’t innovate, “somebody else is going to disrupt us,” Martin said.
To drive innovation at scale, Martin sees a disciplined strategy as key. At Amazon, that looked like picking an area to impact and measuring the value of closing that gap. Applying that to Providence, Martin worked with the clinical team to discover patients in need of low-acuity care were going to other providers instead of to Providence. So Providence launched ExpressCare, offering virtual appointments to recapture those patients and establish continuity of care.
Like Madigan, Novant’s chief digital and transformation officer Angela Yochem, who has held chief information officer roles at Rent-A-Center and BDP International, believes passive care is not enough to eradicate health inequities. “We’ve optimized for fixing things,” she said of the healthcare system. “I’d like to see the healthcare industry become more engaged continually. We need to understand our patients beyond what their last condition is,” she added, referring to social determinants of health.
“In retail, we used to say that customers shouldn’t have to shop our merchandising organizational chart,” said Prat Vemana, Kaiser Permanente’s chief digital officer, who transitioned in 2019 from chief product and experience officer at The Home Depot. To streamline how patients navigate an already highly fragmented healthcare system, Kaiser starts with the patient and works backward when developing digital experiences.
A challenge in healthcare, Vemana acknowledged, is the lag in data around health outcomes. Whereas in retail, results are immediately visible, healthcare is less straightforward. “We have to develop workarounds to get directional information while waiting to see the results,” he said.
The transformation of the sector won’t happen without diversity of thought and experience, Yochem said. It’s less about hiring from a particular sector and more about hiring from all over. Those people will have seen the potential for consumer engagement and will be able to “apply what we know to be possible,” Yochem said. Without those outsider insights in the insular sector, “you create an echo chamber, because you respond to problems in the same way.”
HENRY KOTULA 