CVS’s acquisition of Oak Street doesn’t address health care’s woes

CVS Health’s acquisition of Oak Street Health, a Medicare-focused primary care provider, for $10.6 billion is just the latest in a string of primary care clinic buyouts by other retailers and insurance companies. Amazon, Walgreens Boots Alliance, and Cigna have already thrown their chips on the table, investing in or outright purchasing primary care clinic organizations.

While these moves could help address the severely broken U.S. health care system, their motives and the solutions they offer are Band-Aids at best. Companies like Amazon, Walgreens, CVS, and others aren’t capable of solving the health care crisis, as they are so closely tied to the fundamentally flawed insurance fee-for-service infrastructure, which I believe has played a significant role in breaking the health care system to begin with.

Focusing on primary care, as CVS Health and others are doing, is a start. But I believe what’s needed is an outright rejection of the insurance-based infrastructure and an embrace of efforts to create a foundational primary care system that puts patients at the center of care with direct relationships with their providers. Known as direct primary care, this is a direct pay or membership model of primary care in which the provider is directly paid a transparent monthly fee by the patient or employer which unlocks close to unlimited services and support, removes barriers to care, reduces administrative burdens, and comes with a myriad of other benefits.

Dissatisfaction with the insurance-based health care infrastructure is at an all-time high. Insurance premiums are rising at a rate that far outpaces stagnating or slowly rising income. And that increase isn’t going to slow down anytime soon, with insurance premiums expected to rise another 6.5% in 2023. It’s no coincidence that two of the five largest companies in the U.S. are health care insurance conglomerates.

The results of the steep increase in health care costs are worrisome: Nearly 70% of health care providers report patients delaying care due to rising costs. One-quarter of patients hesitate to visit their doctor because they are afraid of surprise bills they can’t afford. The impact of this trend is likely to be felt for years to come, as diagnoses of chronic conditions that can be addressed with early treatment — which usually happen as a result of a primary care visit — increase five, 10, or 15 years from now.

Health care doesn’t have to cost as much as this. Preventive care has a $13 return on the dollar, which translates to billions annually for the U.S. health care system. But developing preventive care plans requires high-quality patient-doctor relationships — relationships that can’t be built in the average 18 minutes the average physician can spend with each of their patients (including filling out their charts).

Doctor-patient time is currently limited because the insurance-based infrastructure drives copious documentation related to payment that doesn’t add value to the practice or the patient. And the fee-for-service system prioritizes the quantity of patients seen over the quality of care they receive. With panels averaging from 1,000 to 2,000 patients per physician, it would take a 17-hour workday to provide the appropriate, guideline-recommended counseling to each patient — an impossibility. Doctors and patients are equally frustrated by this reality, although in the end, it is patients who suffer the most.

Dissatisfaction with the current health care system is coming to a head. It’s driving the creation of a system built on direct primary care that cuts out insurance middlemen, eschews fee-for-service payment, and refocuses the doctor-patient relationship. Patients or their employers pay affordable monthly fees for unlimited visits and basic care, with insurance still used for what it is meant for: covering unpredictable, high-cost events like emergencies and unexpected hospitalizations.

Under direct primary care, patients aren’t hit with unexpected bills, which empowers them to visit their doctor whenever they need to. Appointments are typically scheduled the same day or the next, and patients typically have a direct line to doctors they know and have established a deep connection with. Doctors are also able to spend more time with their patients, enabling them to develop cost-saving preventive health care plans.

This kind of system not only addresses patient dissatisfaction with the current health care system but also heads off another problem festering in the system: the country’s primary care provider shortage. Although the total number of physicians in the U.S. is on the rise, the ratio of generalists to specialists is among the lowest across industrialized nations. The problem is expected to get worse: Analysts predict a shortage between 17,800 and 48,000 primary care physicians by 2034.

Burnout is a significant contributing factor behind the shortage in primary care physicians. By enabling physicians to prioritize their work-life balance while providing even better care to their patients, direct primary care can be a long-term solution to narrow the shortage or primary care physicians.

So I have to ask: Why aren’t companies like CVS, Amazon, and Walgreens focusing their resources on direct primary care networks that have proven they can meet the desire for effective primary care in the U.S.?

The answers are likely complex and centered around convenience and perverse incentives. CVS Health Solutions, the parent company of insurance giant Aetna, has been focused on creating an end-to-end health care solution for quite some time. Acquiring Oak Street, which focuses on primary care for seniors, completes their portfolio of health insurance, pharmacy benefit management, retail health, and home health.

End-to-end solutions like this are convenient for patients and, critically, are less risky for their investors. But they’ll never cure the issues underlying the U.S.’s broken health care system. If CVS and others like them really want to make an impact, instead of promoting another Big Medicine solution that benefits insurance companies and providers more than patients, they should support the direct primary care networks that benefit patients and providers and can begin to fix the country’s broken health care system.

Zak Holdsworth is the co-founder and CEO of Hint Health, which provides membership management, billing, and payment software for primary care, urgent care, and specialty practices that offer memberships, subscriptions, or cash pay services, and supports some direct primary care providers.