How to View the Payer Markets

How to View the Payer Markets

Spring is an important time for the urgent care industry.  The main convention of the Urgent Care Association of America (UCAOA) will take place, along with the election of board members and new committee appointments.  Insurers publish rate filings and prior-year financials, and often many contracts are coming up for renewal.  And with all of this come fresh ideas on how the industry can work together to plot a brighter future.  It is a future with significant challenges and it is critical that the urgent care industry come together to help drive a national payer strategy.

February 2017: Dialing Back Growth? 2017 Forecast Issue

Five years ago a senior partner at a large private equity (PE) firm told me, "The urgent care market is a good market, but not a great market."

This made an impression on me for two reasons. First, this firm was then and still is actively invested in the urgent care market, although compared to its other holdings urgent care is a tiny fraction. Second, I used to work for a company owned by this firm and know firsthand that their predictions and observations tended to be on target.

His statement comes to mind again as we look to provide guidance on what might happen to the on-demand market in 2017. Are PE investors starting to view urgent care as a good market, not a great market? That is a fundamental question in this 2017 forecast issue. In this article, we will also rely on statements from some of our presenters a few weeks ago at our annual symposium in Scottsdale, as well as how clinic growth ended up in 2016
compared 2015.

The bottom line can be summed up as follows: The urgent care market will continue to grow in 2017, probably at a similar pace as in 2016, but that growth will not come as much from the PE-backed players. Instead, it will come from new entrants, like health insurance companies, and hospital systems. Retail clinic growth, which has been led by CVS Health's MinuteClinic subsidiary, continues to be a mixed bag and is entering another period of uncertainty. We expect net retail clinic growth to be flat or slightly positive in 2017. Telehealth will grow, but not as strongly in the acute episodic space as many investors had hoped.

January 2017: Less Robust but Still Growing 2016 Year in Review

2016 can best be summarized as a year of continued strength and growth with on-demand medicine. While at year end most of the healthcare industry was a little on edge with the prospect of the repeal and replacement of the Affordable Care Act, the on-demand sector was focused more on other drivers such as convenience, door-to-door times, locations and throughput.

In fact, this is our ninth consecutive Year in Review article covering what we believe were some
of the most significant developments in the on-demand space. Over that time there have been some bumps in the road for retail clinics, but the overall on-demand space has continued to grow and prosper consistently year over year despite economic downturns...

December 2016: 2017 ConvUrgentCare Strategy Symposium

All of a sudden, low-acuity has become strategic for health systems and large medical groups. It is a mass market that, if managed with a retail and hospitality mindset, can become a “funnel” for bringing new patients into the system, increasing or protecting market share, boosting overall patient satisfaction and acting as a change agent for the entire organization. Since 2008, this conference has gathered healthcare strategy and business development leaders whose focus is on the increasing “retailization” of low-acuity medical care.

Although there is a tremendous amount of attention on primary care today, this sector has never seen more competitive pressure. Retail clinics are beginning to practice chronic disease management; urgent care clinics are starting to act as medical homes; employers are opening worksite clinics with full primary care and specialty care services; 2017 may be a breakout year for telemedicine; and network development partnerships abound. At the same time, consumers are demanding convenience, price transparency and customer service. This is convergence. This is convenience. This is ConvUrgentCare.

Intended Audience
People who attend this event view walk-in medicine and employer solutions as a space that touches the greatest number of individuals in any given service area. As such, it is the most effective mechanism for pulling people into their system, both in the short term for acute episodic illnesses and injuries, and for longitudinal primary care. In other words, it represents a mass market of consumers who are vital to the survival of hospitals in a world moving to population health management. Also, we invite executives from large independent urgent care operators, payers, investors and researchers to attend to further build a dynamic experience and sense of community. By keeping the size of the meeting small, this highly interactive conference gets high marks for the amount of cross-learning that takes place.

What is ConvUrgentCare?
The term ConvUrgentCare (pronounced convergent care) captures the converging spaces of primary care, urgent care, retail clinics, employer worksite, near-site and occupational health clinics, as well as telehealth. Our call to health systems when approaching strategic planning – and in planning our agenda -- is to look at all of these spaces holistically, rather than as individual service lines and ask how they can work together to solidify your competitive advantage and reach the greatest number of 2017 ConvUrgentCare Strategy Symposium individuals. The walk-in/on-demand healthcare platform is a network in itself, and that network can serve as the foundation for driving transformation across payers and providers.

Why Attend?
The purpose of the gathering is to harness the best ideas for a long-term strategy that increases patient access and convenience, lowers costs and improves quality. It is the only conference with an integrated view of retail clinics, urgent care, worksite clinics, virtual medicine and primary care. The symposium is highly interactive, using a combination of case studies and discussion panels. To promote interactivity and networking, the number of attendees is limited and there is one concurrent session...

November 2016: The Changing Face of Primary Care Medicine

In June 1952 my father opened North Scituate Pharmacy in the northwest part of Rhode Island. Next door was the primary care office of Robert F. Spencer, M.D., whose character resembled the beloved and kindly Marcus Welby, M.D. There was even a pass-through window between the drug store and doctor’s office so patients could get their prescriptions filled before leaving. It was a simpler way of doing things.

The independent pharmacy and the family doctor are rapidly becoming history. Large retail chains now rule the drug store market; large, hospital-employed medical groups now rule the primary care market. The large retail drug chains seem to be thriving. But when it comes to large primary care practices, both senior leadership and providers wonder where it’s all going. Burnout, demanding consumers, fewer medical school graduates, administrative burdens, complex productivity goals and new competitors are all adding up to make primary care’s long-term survival somewhat of a question mark.

Are things really that bad for traditional primary care medicine? Should we really believe those observers who say things are only going to get worse?...

October 2016: ConvUrgentCare Technology Refresher – The Importance of Vision When Building an Urgent Care "Operating System"


By Bernie Kuhn and Crissy Carcamo

After several years of helping health systems develop and manage their urgent care platforms, we’ve come across some unique challenges. Many of these challenges are connected to the deployment and use of technology. But if we were to identify one common source of technology-related problems, it would be that management failed to connect its vision of the urgent care patient experience with the underlying technology architecture.

This high-level vision is critical and we call it the urgent care “operating system.” It is broader than the out-of-the-box practice management or electronic medical record systems that most IT vendors bring to the table because these systems are not tuned to do everything you will need over the next decade. It means spending more time and money at the front end, thinking through a model that creates that “Wow” experience for your on-demand patients. Though much of it involves technology, this kind of thinking impacts everything, from the size of the brick and mortar right down to the little things like how to design a counter for registration or the number of seats in the lobby. Thus, if you simply let technology drive your vision, you likely will end up with a center that reflects patient care 10 years ago. This month’s article is dedicated to the initial vision of your urgent care operating system, as well as the tactical technology and process design components that P&L owners must pay attention to.

September 2016: Primary Care On Demand – Is Physician Leadership Ready for Urgent Care 2.0?

This month HIMSS kicks off its Pop Health Forum 2016 event in Chicago. The lead media partner for the event is Healthcare IT News, which puts out a lot of pre-conference content. But in reading the articles about the strategies and tactics health systems should be employing for a successful population health program, very little is said about on-demand services. In fact, one article lists five steps to a successful population health framework and there isn’t a single mention of walk-in care. You’d think the journalists at Healthcare IT News (mostly millennials) would understand how difficult it is to get their generation in for an appointment.

At Merchant Medicine, all of this fits a pattern we have observed over the last two years. Despite the fact that primary care physicians feel under threat from retail and urgent care clinic operators, the traditional medical community appears to be blind to a unique opportunity. Under the right circumstances, we believe health systems and their employed medical groups can enter the walk-in space with what we would call “Urgent Care 2.0,” which is a primary care-urgent care hybrid of sorts. The model that we’ll describe is unique to health systems because their employed medical groups own the primary care relationships, at least in the payers’ minds. They are invested in and have the wherewithal to pull off population health management. And as a result, they can take advantage of the alternative payment models (APMs), many of which are not offered to, or bear far too much risk for, the independent retail and urgent care operators...

August 2016: The HMO Strikes Back

The CEO of a large managed care corporation was sitting in his office late one night, gloating over his latest acquisitions. Suddenly, with a puff of smoke and the smell of brimstone, Satan appeared before him.

Satan smiled at the CEO and said, "I have a proposition for you. You can win every health care contract you bid on, for the rest of your life. Your colleagues will stand in awe of you, physicians will fear you, and you will make embarrassing sums of money. All I want in exchange is your soul, and the souls of all your friends and the souls of all the shareholders in your company."

The CEO thought about this for a moment, then asked, "So, what’s the catch?"

That joke from the 1990s circulated just before managed care took a nose dive. But here’s a more recent joke.

A hospital CEO and his chief strategy officer were having a conversation about all the physician group acquisitions they had completed and the strategy executive asked the CEO, “What’s different about population health today compared to when we acquired all those practices for our managed care strategy in the 1990s?” The CEO thought for a moment and said, “What’s different is that today we measure things.” The strategy executive thought for a moment and asked, “What do we measure today that we didn’t measure in the 1990s?” Getting flustered, the CEO replied, “We measure how long we have before we retire.”

Clearly, whatever you want to call it, HMOs are making a comeback in the form of population health management. Physician group acquisitions have increased in parallel and many of those acquisitions are not generating the kind of downstream benefits many health systems were expecting. So is there really anything different this time around?...

July 2016: Population Health Drives Convergence – Mid-Year Review

Ten years ago when retail clinics were popping up like weeds, all you heard about was the land grab between MinuteClinic, Take Care and all the other competitors seeking out the best retail locations for their clinics.

“Today it’s a land grab for patients,” says Michael Pisani, managing director of the Healthcare Group at investment firm Houlihan Lokey. “Once you have the most lives, the game becomes a lot clearer.”

The game Pisani refers to is population health management. And he should know. He has more than a decade of healthcare and investment banking experience, much of it with the largest urgent care transactions. Houlihan Lokey is perhaps best known for handling recent transactions involving FastMed, one of the largest pure-play urgent care operators, and the sale of CareNow to HCA. Pisani has had a front-row seat to the underlying motivation behind the continued interest in urgent care medicine. He will also be one of our featured speakers at the next ConvUrgentCare Strategy Symposium in January.

Indeed, population health management seems to be at the root of virtually all of the activity we saw in the first half of 2016 among retail clinics, urgent care, telehealth, direct primary care and work site clinics.

But what nobody is really talking about is that this move away from transactional-based, fee-for-service medicine to value-based care isn’t moving as quickly as many people thought it would. Health systems that invested aggressively in risk-based healthcare delivery found themselves sitting on a lot less cash than the bond-rating agencies thought they should. And many health system executives quietly speak about at least another five years before value-based care becomes more strategic than fee-for-service medicine...

Symposium issue for Sept 2015

Survival and the Middle Picture

2016 ConvUrgentCare Symposium Issue

Managing a large enterprise in a predictable environment is tough enough.  But when it turns unpredictable, it becomes a complex web of cash flow management, hard decisions about your employees and leadership, and risky new strategic paths.  As many of you have heard me say, I lived through this in the mainframe computer business.

I have also said the business of taking care of people is no longer a predictable enterprise, and in many ways the hospital business model reminds me a lot of the mainframe business model.  Big computing fell victim to small computing.  High acuity is falling victim to low acuity.  Or better said, the lower the acuity level, it seems, the lower the predictability.  It is now all about questioning your assumptions.  Constantly.   

I am the host of our annual ConvUrgentCare Strategy Symposium and each year we try to bring together speakers that, when taken together, tell a story that helps you manage to an uncertain future.  The 2016 ConvUrgentCare Strategy Symposium is about looking at what we call “The Middle Picture.”  You have heard the big-picture talks from healthcare futurists.  About half of their predictions will come true, you just don’t know which half.  And there are conferences that go into the nitty gritty details on everything from facilities management to ICD-10.

But the middle picture is all about executing on future trends that we know are going to happen and building new teams and partnerships that are 100 percent committed to winning at their particular part of the challenge.

 

 

Health Plan Landscape for the Walk-in Operators

March 2016 - Health Plan Landscape for the Walk-in Operators
By Bernie Kuhn

The health plan industry survived the ACA implementation and the first few years of the new plan structures.  The rate of change isn’t slowing however.  Millions of newly covered lives (25% of which auto-renewed in January) on-boarded into the US health system.  Demographic trends and regulatory forces continue to change their business mix from group commercial to individual products.  But the effect of consumerism seems to be the big question.  High deductible plans haven’t driven price shopping so much as they’ve curtailed spending.  Plans have been making investments in consumer technology and engagement which will affect the walk-in business.

As this month’s newsletter is being prepared, the annual health insurance statutory reporting cycle is wrapping up and full year 2015 results hit in April.  Look for major announcements as plans merge for scale and to grow their Medicare Advantage volume (Aetna/Humana).  We expect to see several smaller Blue plans merge into larger plans.  Blue plans may compete amongst themselves (via Anthem/Cigna), and Aetna and UnitedHealth (via Optum) will continue to build their infrastructure as a service arm of health systems.  There may in fact be better money from running operations for health systems than in covering risk and chasing employers – the business case is pretty straightforward if/when a single or dual payer model occurs.  

 

May 2016 newsletter - initial content

May 2016 article by Rob Rohatsch

Making the Strategic Provider Staffing Decision

Throughout my career as an emergency medicine physician and as an entrepreneur in urgent care medicine, I have had the pleasure of working with many nurse practitioners (NPs) and physician assistants (PAs) in various staffing models.  In the emergency department (ED) during residency, they were typically assigned to a section of the department where lower acuity cases were triaged.  In my program, they were almost exclusively NPs.  They functioned fairly independently from the physicians but had full access when they had questions.  Their scope of practice in the ED was controlled by the triage nurse with protocols established based on the chief complaint of the patient.  There are some studies that suggest nearly 15% of all patients seen in an ED are seen by either a PA or NP.  After residency, as an attending physician in emergency medicine, I worked with primarily PAs under two different staffing models. In one large urban ED, I worked with PAs assigned to a ‘fast-track’ area of the ED and had patients triaged to them in a similar manner to my residency experience.  In a smaller ED I worked in, I worked along side a PA and we saw patients in an alternating fashion with no triaging based on acuity.  My experience as an ED physician indelibly etched in my mind their value in an acute care setting.

The US health care system is the most costly in the world, accounting for an estimated 20% of the gross domestic product by 2020.  In an attempt to mitigate this alarming statistic, the Institute for Healthcare Improvement (IHI) developed the Triple Aim framework in 2007.

    Improving the patient experience

    Improving the health of populations

    Reducing the per capita cost of health care

So how can we as operators of walk in healthcare services work towards the IHI goals?  Can something as simple as a staffing model change yield improvements in all three areas?  How do the policies of payers, government agencies, and other competing interests confound the ability to make a strategic decision on provider staffing models?  A review of the literature on the subject provides some interesting results. 

 

June 2016: Retail Clinics Revisited – Health Systems Are Showing a Renewed Interest

Unlike the urgent care market, the retail clinic market has seen inconsistent growth since its beginning in 2000. From 2005 to 2007 the market expanded rapidly. From 2008 to 2011 there were a host of closures, not only by venture-funded upstarts, but by some of the major retailers. More recently, some operators have grown consistently, such as MinuteClinic, The Little Clinic and RediClinic. But others seem to be in a holding pattern, such as Walmart, or are moving in a different direction, such as Walgreens. And one operator, Target Clinic, has gotten out of the business altogether.

More revealing is that our data on closures shows that more than 50 percent of retail clinics operated by health systems, most in Walmart or regional grocery chains, have closed.

Yet in the last year there has been renewed interest in operating retail clinics by health systems. This article will first explore the challenges associated with this particular type of walk-in platform and then address the factors that are causing this renewed interest by health systems.

Retail Clinic Challenges

Anyone with retail clinic experience will tell you that, despite seeming so simple, it is not an easy business. Granted, much of the patient traffic is for simple illnesses like sore throats, pink eye, sinus infections, bladder infections and ear aches. And these are low-acuity visits that can be handled with predictable workflow and fairly consistent clinical guidelines...

May 2016: Provider Staffing Decisions – The Strategic Fit of NPPs in the Walk-In World

By Robert Rohatsch, MD

Throughout my career as an emergency medicine physician and as an entrepreneur in urgent care medicine, I have had the pleasure of working with many nurse practitioners (NPs) and physician assistants (PAs) in various staffing models.  In the emergency department (ED) during residency, they were typically assigned to a section of the department where lower acuity cases were triaged.  In my program, they were almost exclusively NPs.  They functioned fairly independently from the physicians but had full access when they had questions.  Their scope of practice in the ED was controlled by the triage nurse with protocols established based on the chief complaint of the patient.  There are some studies that suggest nearly 15% of all patients seen in an ED are seen by either a PA or NP.  After residency, as an attending physician in emergency medicine, I worked with primarily PAs under two different staffing models. In one large urban ED, I worked with PAs assigned to a ‘fast-track’ area of the ED and had patients triaged to them in a similar manner to my residency experience.  In a smaller ED I worked in, I worked along side a PA and we saw patients in an alternating fashion with no triaging based on acuity.  My experience as an ED physician indelibly etched in my mind their value in an acute care setting.

The US health care system is the most costly in the world, accounting for an estimated 20% of the gross domestic product by 2020.  In an attempt to mitigate this alarming statistic, the Institute for Healthcare Improvement (IHI) developed the Triple Aim framework in 2007.
 
    Improving the patient experience
    Improving the health of populations
    Reducing the per capita cost of health care
 
So how can we as operators of walk in healthcare services work towards the IHI goals?  Can something as simple as a staffing model change yield improvements in all three areas?  How do the policies of payers, government agencies, and other competing interests confound the ability to make a strategic decision on provider staffing models?  A review of the literature on the subject provides some interesting results...

April 2016: Tough Talk Around Walk-in Medicine – The Top-10 Focal Points for Hospital-Based Urgent Care Operators

As a management consulting firm for hospital systems and large medical groups, we’ve seen a lot of behavior that we know won’t cut it in the walk-in world over the next decade. And as “outside experts” we are often asked to deliver some tough talk around the harsh reality of how our clients compare to the rest of the market. Those are difficult meetings, particularly with primary care physicians whose practices have been turned upside down and who have virtually no time to think strategically about the future. When it comes to walk-in medicine, hospitals and their employed medical groups are having a hard time.  

It’s not that system leadership and middle management are oblivious to how strategic walkin medicine is or that competition is moving into their service area. Quite the contrary; they are scrambling to get their act together. But there are usually two fundamental issues: First, while the employed medical groups of health systems, particularly the primary care providers, are seeking to promote access, they also remain stuck in what we call the “my patient-my approach” mindset. Second, this “my patient” mindset tends to result in each physician office going its own way in how it addresses access. And if there is a leadership vacuum, the result is that patients view your walk-in offering as confusing and chaotic.

This article is about executing on a business model that is as much a hospitality business as it is a health care business. That means getting the details right not just on the clinical side of the house, but on the facility, the finances, the team, and the marketing. Here’s our take on the "Top 10" most important focal points for competing in the world of walk-in medicine...

March 2016: Health Insurance Landscape for the Walk-in Operator

The health plan industry survived the ACA implementation and the first few years of the new plan structures.  The rate of change isn’t slowing however. Millions of newly covered lives (25% of which auto-renewed in January) on-boarded into the US health system.  Demographic trends and regulatory forces continue to change their business mix from group commercial to individual products.  But the effect of consumerism seems to be the big question.  High deductible plans haven’t driven price shopping so much as they’ve curtailed spending.  Plans have been making investments in consumer technology and engagement which will affect the walk-in business.

As this month’s newsletter is being prepared, the annual health insurance statutory reporting cycle is wrapping up and full year 2015 results hit in April.  Look for major announcements as plans merge for scale and to grow their Medicare Advantage volume (Aetna/Humana).  We expect to see several smaller Blue plans merge into larger plans.  Blue plans may compete amongst themselves (via Anthem/Cigna), and Aetna and UnitedHealth (via Optum) will continue to build their infrastructure as a service arm of health systems.  There may in fact be better money from running operations for health systems than in covering risk and chasing employers – the business case is pretty straightforward if/when a single or dual payer model occurs...  

February 2016: Growth Amid Shifting Players – 2016 Forecast Issue

Let’s imagine it’s the year 2020 instead of 2016.  Patients no longer have to wait in waiting rooms (if they don’t want to). Urgent care centers in large medical office buildings are a thing of the past. People pay $80 a month for unlimited primary care access.  The differences between retail clinics and urgent care centers have blurred. The independent urgent care operators not gobbled up already are those who jointly own their centers with health systems. And patients know ahead of time what services will cost instead of finding out 30 days later when the explanation of benefits comes in the mail.

It’s only four years away, but in 2016 we will see early evidence of that 2020 scenario. This year we expect the number of joint ventures to double or triple over 2015.  We’ll see more large urgent care players gobbled up by health systems or insurance companies. Direct primary care will start to show up as a legitimate option during employer health plan open enrollment season. We anticipate new architectural schemes for walk-in brick and mortar, pushing new limits for visibility, accessibility, and consumer friendliness.

Growth will continue in 2016, on both the urgent care and retail clinic fronts. Until now, most growth was focused on the top-50 metro areas.  Going forward anticipate more growth in markets ranked from 51-200. In other words, smaller metro areas will become hot. This growth will be at the expense of smaller hospital system medical groups who can’t move fast enough and are sitting on sweet payer agreements.

And mobile technologies will begin to play a big role in helping patients navigate care with little or no wait times. Telehealth will continue to expand, but as with last year, not as fast as many had expected, especially in the realm of lowacuity episodic illnesses...

January 2016: Still Going Strong – 2015 Year in Review

Eventually, you would expect that the urgent care market might slow down.  I happened in the retail clinic space and is starting to occur in the telemedicine space -- more on that later.  But in 2015 there was no evidence of an urgent care pullback anytime soon.  Clinic growth continued as it did in 2014.  And perhaps most telling were the acquisitions, both large and small, which also continued.

“A huge underlying factor in many of these recent urgent care transactions is health systems, which are emerging as a top bidder, whereas three years ago they were the lowest bidder,” said Gordon Maner, managing partner at Allen Mooney Barnes and a speaker at this year’s ConvUrgentCare Strategy Symposium.  “It clearly shows their interest in population health and coordination of care has skyrocketed,” he continued.  “There’s something about the post-Supreme Court decision time frame around Obama Care and the recent CMS readmissions policy where you can sense there is a big spike in health system interest and participation in the walk-in sector.”

But retail clinic growth also continued, as did the energy around worksite and near-site clinics.  As we approach the New Year and our next symposium, several themes are becoming clear:

• Traditional methods of primary care medicine are under threat and walk-in operators are a part of that threat.
• Payers are continuing to enter the walk-in space, but with a parallel track of continuing to acquire primary care practices.
• Large health systems appear to be gunning for a bigger piece of the urgent care action on a national basis.
• Local health systems are now routinely looking at joint ventures with independent urgent care operators.
• Retail clinics and telemedicine are struggling to find their identity amid all of this activity.

.

December 2015: Is It Time for Telehealth?

It seems like anytime you have a conversation about telehealth, the explosive growth is just a quarter away. Many of us forget that the same thing happened with “the World Wide Web” and “e-banking.” For those investors and operators suffering through the early stages of growth, progress seemed to take forever. And for the World Wide Web in particular, the dot.com boom hit a major interruption in March 2000, with many companies falling by the wayside.

But for the average consumer, before we realized it, the World Wide Web and e-banking were so prevalent that we’ve stopped using those terms.  

According to Jay Sanders, M.D., often referred to as the father of telemedicine and one of our keynote speakers at our next symposium, the same is going to happen to telemedicine.  “Before we know it,” he says, “it will just be medicine.”

Sanders is quick to point out that the real father of telemedicine, and the person who coined the phrase, is Ken Bird, M.D., from Massachusetts General Hospital.  In 1967, Dr. Bird connected two television cameras: one at a Logan Airport clinic in East Boston and the other at Mass General Hospital in the center of Boston.  He decided it would sound strange to call it “television medicine,” so he shortened the term to “telemedicine.”

That’s a fun story.  And it’s true.  But the point isn’t so much about the origin of the term telemedicine, but how long this industry has been around.  “I’ve been involved now for four decades,” says Sanders. “It’s taken a lot longer to take off than I thought it would.”...