Healthcare News of Note: Amazon closes its deal with One Medical, touts opportunity to scale a new primary care model

• Amazon says its finalized purchase of One Medical sets up the companies to revamp the primary care experience for a large customer base.
• Adverse events occurred in nearly one in four cases among 2,809 random hospital admissions, according to a study of 11 Massachusetts hospitals during 2018.
• Midlevel practitioners such as nurse practitioners and physician assistants are increasingly replacing emergency department (ED) doctors, especially in models backed by private equity companies.

Over the past few weeks, I have found these industry news stories that should be of interest to healthcare finance professionals.    

1. Amazon completes its purchase of One Medical, looks to disrupt primary care

Amazon has completed its acquisition of the primary care chain One Medical, the companies announced Feb. 22.

The $3.9 billion deal, first agreed to in July, was allowed to close after a deadline passed for the Federal Trade Commission (FTC) to file to halt the acquisition on antitrust grounds. However, the FTC theoretically can attempt to unwind a transaction even after it has been consummated.

Amazon and One Medical said their vision is to transform the primary care experience for consumers. One Medical has more than 200 office locations in 26 markets, with more than 800,000 members, many through employer-sponsored insurance. The plan is for those numbers to grow under the Amazon umbrella.

“If you fast forward 10 years from now, people are not going to believe how primary care was administered. … Customers want and deserve better, and that’s what One Medical has been working and innovating on for more than a decade,” Amazon CEO Andy Jassy said in the announcement. “Together, we believe we can make the healthcare experience easier, faster, more personal and more convenient for everyone.”

The plan is to combine One Medical’s care model with Amazon’s funding and platform. Among the features of the One Medical experience, according to the announcement, are:

• Around-the-clock access to care via an app, with extended in-office or remote consultations available within one day
• Comprehensive care using a medical-home approach that offers longer appointment times for preventive care, some acute care, chronic disease management and behavioral healthcare
• Clinical and digital integrations with leading hospital networks across the U.S.

Industry implications

The deal’s ultimate impact may not be known for a while, Francois de Brantes, MBA, a senior vice president with Signify Health, said last July during the National Primary Care Transformation Summit.

“The jury is out on whether they’ll create that true value proposition for employers that shows that they can moderate [cost] trend rates,” de Brantes said. “If they can do that, then everyone should be shaking in their boots.”

Amazon’s track record with healthcare disruption is bold but checkered. It was the lead entity in the much-ballyhooed Haven initiative with Berkshire Hathaway and JP Morgan Chase, but the venture was shuttered less than three years after forming. And Amazon Care, a primary care and urgent care platform, was halted last summer after a three-year run.

— Nick Hut, HFMA senior editor

2. Adverse events occur in nearly 25% of hospitalizations, study shows

Adverse events occurred in nearly one in four cases (23.6%) among a random sample of 2,809 hospital admissions, according to a study of 11 Massachusetts hospitals during 2018.

The results of the retrospective cohort study, which assessed “the frequency, preventability, and severity of patient harm in a random sample of admissions,” was published Jan. 12 in the New England Journal of Medicine.

Additional study results

Among additional key findings:

• 222, or 22.7%, of 978 adverse eventswere judged to be preventable, and 316, or 32.3%, had a severity level of serious (i.e., caused harm that resulted in substantial intervention or prolonged recovery) or higher.
• There were seven deaths, one of which was deemed to be preventable.
• Adverse drug events were the most common adverse events, accounting for 39% of all events, followed by surgical or other procedural events (30.4%).

“These findings underscore the importance of patient safety and the need for continuing improvement,” wrote the authors.

3.  Private-equity-backed staffing firms replacing ED physicians with midlevel practitioners

Emergency department doctors are “increasingly being replaced by nurse practitioners and physician assistants, collectively known as ‘midlevel practitioners,’ who can perform many of the same duties and generate much of the same revenue for less than half of the pay,” according to a Feb. 13 Kaiser Health News article.

PE investment in healthcare

According to the authors: “Nearly $1 trillion in private equity funds have gone into almost 8,000 health care transactions over the past decade, according to industry tracker PitchBook, including buying into medical staffing companies that many hospitals hire to manage their emergency departments.”

American Physician Partners — one of the private-equity-backed staffing companies mentioned in the article — “employs fewer doctors in its ERs as one of its cost-saving initiatives to increase earnings, according to a confidential company document obtained by KHN and NPR,” wrote Nashville Public Radio’s Blake Farmer and KHNs’ Brett Kelman.

“In a statement to KHN, American Physician Partners said this strategy is a way to ensure all ERs remain fully staffed, calling it a ‘blended model’ that allows doctors, nurse practitioners and physician assistants to provide care to their fullest potential,” wrote the authors.

Two other ER staffing firms mentioned in the article are “TeamHealth, bought by private equity firm Blackstone in 2016, and Envision Healthcare, bought by KKR in 2018.”

Robert McNamara, MD, a founder of the American Academy of Emergency Medicine and chair of emergency medicine at Temple University, was quoted in the article as saying, “These staffing companies have been among the most aggressive in replacing doctors to cut costs. It’s a relatively simple equation. Their No. 1 expense is the board-certified emergency physician. So they are going to want to keep that expense as low as possible.”

HFMA bonus content

• Read the Feb. 24 article “Hospital price transparency update: Regulatory enforcement soon could become stricter, CMS leaders say” by Nick Hut, senior editor.
• Listen to the Voices in Healthcare Finance podcast episode “Vaccination: Good for the community, the industry and your bottom line,” where podcast host Erika Grotto chats with Jacob Braude, of ZS, to discuss his firm’s latest research on vaccine hesitancy.
• Read insights from some of the columnists in the February issue of hfm magazine, including Joe Fifer: “Why finance leaders require the courage to lead”; Susan Dentzer: “How to design a national strategy to end the healthcare workforce crisis”; and David Johnson: “The end of traditional nonprofit healthcare business models?”