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News Amazon will spend $3.9 billion on doctor-staffed clinics will make the business of buying primary care physician practices much more expensive for retail rivals.

Amazon’s proposed acquisition of One Medical comes during a period of unprecedented competition for primary care doctor practices with Walgreens opening hundreds of physician-staffed clinics with partner VillageMD while Walmart launches its doctor-staffed clinics under the Walmart Health brand in several new markets. Meanwhile, CVS Health, which has long staffed its more than 1,100 in-store clinics with nurse practitioners is also rolling out more primary care models that include physicians.

“Coinciding with physician workforce shortages, volatility, and workplace disaffection is the growing presence of non-traditional players such as retail outlets, insurance companies and private investor groups that now actively recruit physicians and/or acquire their practices,” the doctor staffing companies AMN Healthcare and Merritt Hawkins said in their recently released review of physician recruiting incentives.

Physician compensation is already on the rise as patients return to see their doctors in-person after the Covid-19 pandemic and government shutdowns caused practices and clinics to close in 2020 and primary care salaries tumbled briefly.

Before the pandemic hit, the average starting salary from Merritt Hawkins’ 2019/2020 report for internal medicine physicians was $276,000, which tumbled to $244,000 in the 2020/2021 report at the pandemic’s peak. Though internal medicine starting salaries aren’t quite back to where they were before the pandemic hit, the average starting salary for 2021/2022 was $255,000 and continues to rise, compensation analysts say.

With Amazon’s backing, One Medical will have a huge financial war chest to expand into a primary care market that already includes well-capitalized hospitals and health systems that are buying up doctor practices along with the new retail rival entrants.

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In the case of Walgreens, the company is opening hundreds of doctor-staffed clinics through its $6 billion investment in the primary care company VillageMD while CVS has an array of outpatient expansions in the works from creating in-store HealthHubs with hundreds of new items to forming relationships with physicians to adding new healthcare services to the more than 1,100 CVS MinuteClinics across the U.S. that are staffed by nurse practitioners.

This year, Walmart is opening five new doctor-staffed “Walmart Health” centers in the lucrative Florida market. Like the healthcare services the retailer’s Walmart Health business has rolled out in 20 locations across Arkansas, Georgia and Illinois in the last three years, the Florida facilities will feature an array of primary medical services, urgent care including X-ray services, dental and eye care, and behavioral health services as part of a new model being replicated into other markets.

All of these retailers are entering a space that is rapidly evolving and requires the latest in technology to meet patient care needs and customer demands. Amazon and One Medical indicated they would be ready for the challenge and be looking to expand.

“The opportunity to transform health care and improve outcomes by combining One Medical’s human-centered and technology-powered model and exceptional team with Amazon’s customer obsession, history of invention, and willingness to invest in the long-term is so exciting,” One Medical chief executive officer Amir Dan Rubin said in the statement announcing the deal with Amazon. “There is an immense opportunity to make the health care experience more accessible, affordable, and even enjoyable for patients, providers, and payers. We look forward to innovating and expanding access to quality healthcare services, together.”

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