Corporate giants ramp up primary care deals

Primary care physicians see vast numbers of patients each year and offer significant market expansion opportunities, one of the key reasons why big payers, tech companies and other corporate giants are ramping up acquisitions of physician groups, The New York Times reported May 8.

But there also is an added financial incentive tied to the growing privatization of Medicare, with more than half of CMS' 60 million beneficiaries signing up for commercial payer policies under the Medicare Advantage program, according to the report. Medicare Advantage plans receive more than $420 billion in payments a year.

In addition, a Kaiser Family Foundation analysis published May 1 found that Medicare Advantage enrollment surpassed traditional Medicare for the first time in the program's history. Medicare Advantage enrollment reached 30.19 million members in January, compared to traditional Medicare's 29.63 million members.

"That's the big pot of money everyone is aiming at," Erin Fuse Brown, director of the Center for Law, Health & Society at Atlanta-based Georgia State University, told The Times. "It's a one-stop shop for all your healthcare dollars."

Several recent multi-billion dollar deals have seen more primary care physicians join large corporate entities including UnitedHealth Group's Optum, CVS Health, Walgreens Boots Alliance and Amazon:

  • Optum acquired several physician groups in the last year and now employs or is affiliated with more than 70,000 physicians — more than any organization in the country. It has also spent a combined $13.2 billion to acquire Change Healthcare, a healthcare data and analytics company, and LHC Group, a home health business.

  • CVS Health acquired Signify Health for $7.8 billion in May 2022 — outbidding UnitedHealth Group and Amazon, among others — and adding more than 10,000 clinicians to its network. This month, it completed its $10.6 billion acquisition of Oak Street Health, which added more than 170 medical centers across 21 states. 

  • Amazon has also been making healthcare strides. In February, it acquired One Medical — virtual and in-person primary care company — for $3.9 billion. The deal gives Amazon access to more than 200 physician offices and about 815,000 One Medical members.

  • VillageMD, which is majority owned by Walgreens Boots Alliance, completed its estimated $8.9 billion acquisition of Summit Health-CityMD in January. The deal combines Village Practice Management with Summit Health, the parent company of CityMD urgent-care centers, and adds more than 2,800 providers to its network. Payer Cigna has also invested in the combined company and will serve as a minority owner in VillageMD. 

The primary care market, now flooded with competitors, is expected to become a significant healthcare battleground, but some leaders on Capitol Hill have called for the Federal Trade Commission to dive deeper into these deals for potential antitrust violations. 

U.S. Sen. Elizabeth Warren, D-Mass., told regulators in March that she fears "the acquisition of thousands of independent providers by a few massive healthcare mega-conglomerates could reduce competition on a local or national basis, hurting patients and increasing healthcare costs."

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