Navigating Uncertainty
Strategic Paths for Primary Care in the Value-Based Care Era
In a landscape marked by stalled growth, strategic pivots, and failed ventures, medical practices are facing an urgent call to action. Our healthcare system agenda for value-based care – driven by CMS’ goal of all Medicare beneficiaries in value-based care arrangements by 2030 – demands access to quality primary care supported by interdisciplinary care teams and community services integration/partnership, all enabled by technology and efficient management. Large payors and private equity firms, recognizing this market opportunity, have made bold moves into this space, offering capital, business acumen, equity, and, importantly, the lure of strategic exits for medical practices striving for success and sustainability in value-based care (VBC) arrangements.
Despite the promising potential, reality has fallen short of expectations. Anemic growth, significant divestitures, and a cloud of uncertainty loom large. This situation affects everyone—from independent practices pondering their options to those recently departing such ventures or still part of them. However, it’s crucial to remember that you have the power to shape your future. Hit the pause button, reflect, and reassess your strategy. The future hinges on your strategic reassessment, using innovative “beyond medicine” approaches /partnerships, which can be powerful tools that can carve a path to viability and self-determination, ensuring that your practice survives and thrives in this ever-changing environment.
Where are we and why?
You’ve read the news. CVS is undergoing a strategic review that may impact Oak Street’s scale and rate of growth. Walgreens is closing stores and reconsidering its already reduced position in VillageMD. Optum Health is closing clinics in multiple states. And there are others. Why?
Payors are seeing declining margins in the Medicare Advantage business, putting pressure on profits, and forcing a reevaluation of investments. Private equity has soured on primary care to an extent. Second buyouts or IPOs, the source of value creation for these ventures, are not happening due to market conditions and underwhelming performance. More burdensome state regulations have made these investments more challenging and less attractive.
At times, an ill-conceived PE focus on cost-cutting over investing has left many medical groups in tension with their PE benefactors. This short-sightedness, together with underestimating the challenges of providing complex care in a “disintegrated system” to meet health-related social needs, has often compromised quality and prevented providers from realizing the promise of creating and benefiting from the value delivered.
Those of you who have been in the game for a while can reflect on past capital investment cycles in medical practices and the market upheaval that often followed.
What happened to the promise of VBC driving the demand and success for primary care, which lies at the core of these opportunities? It is still there. Given VBC’s awkward adolescent state, the outsized role PCP must fulfill today will only grow as VBC matures.
What are the options?
What options are possible? Health system partnership or employment is viable depending on your market and preferences. Health systems with strong balance sheets in some markets can make like-minded partners.
How about a novel idea: invest in yourself? Investing in your medical practice can carve a path to success in VBC, empowering viability and self-determination and ensuring your practice survives and thrives.
National players and payors are not going away. They must refine their economic model and relationship with PCP to create attractive, sustainable options. VBC demands nothing less. Your practice needs to be ready to stand out and thrive.
Providers are acutely aware that the evolution from FFS to VBC has introduced the twin dynamics of decreasing reimbursement and relentlessly increasing demands on the patient visit. The primary care model was built for FFS, not VBC. Practices need to shift to a new model that positions them for success in VBC. A strategic review of your practice and market can reveal viable options that maintain independence and foster self-determination.
By developing a comprehensive plan that charts a path to viability, you can reclaim control and ensure your practice thrives. This plan should focus on strengthening payor and value-based care contracts, growing market share, diversifying revenue streams, forming the necessary strategic alliances – including community-based organizations – adopting and embracing technology, and ensuring staff and operational efficiency.
Crucially, it must also incorporate two key features. First, embrace an interdisciplinary team model of care with staff working at the top of their license. Second, address the social determinants of health, enhancing patient outcomes and building a practice responsive to your community’s needs. Aligning with trusted community-based organizations that share the same mission and objectives is often the best approach strategically and tactically; however, primary care needs to “boundary span” the healthcare and social sectors.
Ramey Management Solutions, where expertise meets innovation
The dynamic landscape for medical practices calls for a strategic reassessment to navigate the uncertainties and seize the opportunities of value-based care. Investing in your practice is the key to achieving viability and maintaining self-determination. As you chart this path, remember that you don’t have to do it alone. RMS is purpose-built to guide medical practices through times like these with strategy, operations, payor contracting, and much more.
Reach out to us today to explore how we can help you. Together, we can turn these challenges into opportunities and secure the future success of your practice.