Americans are fed up with the state of their country’s airline industry, but they only have themselves to blame. There was no public outrage when the FTC approved one airline merger after another that’s resulted in four carriers controlling 80 percent of the market. One didn’t require a Harvard MBA to figure out that what when four companies whose CEOs are beholden to Wall Street for their obscene compensations, consumers would get screwed.
Another factor leading to the dismal state of the airline industry was consumers’ singular focus on price and a willingness to accept atrocious service to save a few dollars on a plane ticket. The abandonment of consumer brand loyalty drove the airlines to focus exclusively on the pricing and revenue side of the business, resulting in them finding creative ways to squeeze more people on increasingly jam-packed flights. Airline passengers have demonstrated their capacity for abuse is unlimited if the price is right, and the airlines have responded in kind.
American healthcare is undergoing the same transformation the airline industry underwent in the previous decades, with corporations, some of them deceptively operating as “nonprofits,” rapidly consolidating and becoming healthcare behemoths. Despite arguments to regulators that consolidation leads to economies of scale resulting in lower prices, studies are conclusive that in healthcare the opposite is true. In healthcare, bigger is not better when it comes to patient care and cost.
Irreparably harmed
The practice of medicine may already have been irreparably harmed. U.S. physicians have been reduced to hired help and are expected to generate increased profits for their corporate bosses. Nearly 70 percent of U.S. physicians are employees of hospital systems, insurers like UnitedHealthcare, and private equity firms, according to a study released last year by the Physicians Advocacy Institute, a nonprofit focused on protecting doctors. The pandemic accelerated the trend of independent physicians selling their practices to corporations, so the percentage of independent doctors has likely declined further.
U.S. healthcare took another major blow on Thursday with Amazon’s announcement that it plans to acquire One Medical, a fast-growing healthcare chain offering discount concierge primary care. I’m very familiar with One Medical, having been a “member” since its early years and formerly one of the company’s biggest cheerleaders. I wrote this positive profile about the company in November 2019 singing the praises of three doctors who provided me with superior care.
Notably, all three doctors I featured are no longer with One Medical. Therein is the problem with the company’s business model.
A brilliant CEO
One Medical was founded in 2007 in San Francisco by a physician, entrepreneur, and “Man of Mystery” named Tom X Lee with the goal of enabling technology to disrupt healthcare. Google was among the companies that quickly embraced One Medical’s business model. For an annual “membership fee” of $199, which I’m guessing was waived for Google employees, One Medical members could book appointments online and be guaranteed to be seen at their designated time. One Medical’s offices are bright and airy, and as I recall, offered fruit infused water.
One Medical went into high gear in August 2017 when it named Amir Dan Rubin as president and CEO. Rubin is arguably the most capable and accomplished healthcare executive in America. He was president and CEO of Stanford Health Care when I lived in the Bay area and relied on doctors in that system; the quality of Stanford’s patient care under Rubin’s leadership was unrivaled and so was the entire patient experience. I had a physical one Friday afternoon around 2 pm and by early evening results of some of my blood tests were already posted on my patient portal. By 9 pm, my doctor had sent an email interpreting the results. My doctor’s responsiveness, as well as his staff’s, was always prompt.
Rubin also served as COO of UCLA Health, repeatedly ranked among the top U.S. hospitals. He also served as EVP and divisional CEO of UnitedHealth’s Optum division, a major acquirer of physician practices and the Darth Vader of healthcare.
MD-Lites
When I first discovered One Medical, it was a godsend. If I had a medical issue, I could go online and if my primary doctor wasn’t available, I could easily see another physician with quality credentials. I liked that my appointment time was guaranteed, but there was a tradeoff: The amount of time my doctor could spend with me was limited to 15 minutes, unless I was in for a physical, which allowed a 30-minute consultation.
Perhaps I’m mistaken, but I don’t recall seeing physician assistants and nurse practitioners being among the “providers” One Medical offered, at least in the Los Angeles area. If they were prevalent, I likely would have noticed, as I wouldn’t entrust my medical care to considerably lesser trained individuals, particularly if they aren’t overseen and monitored by licensed physicians.
While PAs and NPs argue they are just as good as real doctors, the clinical training they receive is a fraction of what licensed physicians must undergo. I’d liken physicians to master mechanics and PAs and NPs to techs trained to do oil changes. Anyone who cares to debate me on this point should read, Patients At Risk: The Rise of the Nurse Practitioner and Physician Assistant in Healthcare. The book is dedicated to Alexi Jamel Ochoa-Dockins, a gifted athlete who had the misfortune of being treated and misdiagnosed by a nurse practitioner when she fell ill and went to the ER of an Oklahoma hospital. Ochoa-Dockins died because she was too far gone when a physician determined what was wrong with her.
My previous commentary about physician assistants and nurse practitioners can be found here.
Disappointing credentials
Last week I needed medical care and went online hoping to see my designated primary care doctor, whose judgment and capabilities I trust. Unfortunately, he was away for a few weeks, and I looked for an alternative doctor. The few physicians who had appointments available graduated from obscure medical schools, one in a country I never heard of. The providers with appointments were very youthful PAs and NPs, who I doubt had many years of experience.
My suspicion is that top-tier physicians aren’t attracted to One Medical’s model, which is essentially drive-by medicine. Doctors who want to practice McMedicine likely would be drawn to a Teladoc company, which is where one of my former One Medical doctors now works. She was a great clinician but had no personality or warmth; I imagine she’s delighted having limited interactions with patients and not being responsible for monitoring their care.
The best doctors are going into concierge medicine, which only the wealthy can afford. Indeed, my former Stanford physician was tapped to oversee that hospital system’s concierge service. Quality primary care doctors who are still willing to treat the 99 percent aren’t taking new patients, at least in Los Angeles. I’ve received numerous primary care physician recommendations, but their practices are invariably full.
Brilliant move for Amazon
Amazon’s acquisition of One Medical is a brilliant move for a company whose CEO Andy Jassy has said disrupting healthcare is one of his primary goals. One Medical already has about 180 offices in some 20 cities, and Amazon has the financial and marketing might to grow the company quickly and aggressively.
Amazon knows as well as the airlines that consumers will gravitate to low prices, and I expect price transparency will soon be among One Medical’s selling points. Amazon can keep One Medical’s costs down by mostly employing physician assistants and nurse practitioners and promoting primary care treatment as a commodity service not requiring advanced training or considerable expertise. An added bonus is that studies show physician assistants and nurse practitioners prescribe more drugs, a likely boon for Amazon’s recently acquired pharmacy business.
Amazon excels at efficiency, and the company will no doubt examine and refine One Medical’s processes, including the amount of time doctors spend with patients. Instead of 15- and 30-minute patient increments, imagine the extra profitability if only 12 and 27 minutes were allotted, allowing providers to see even more patients during their shifts. It won’t surprise me if in short order One Medical begins to charge a premium to see a real doctor, much like the airlines charge more for extra legroom or window and aisle seats.
Amazon could also benefit from One Medical’s patient data, enabling the company to improve its already fine-tuned marketing capabilities. If a One Medical patient is diagnosed with a cold, the information could be shared with Amazon’s Grubhub partner, which in turn could offer a chicken soup promotion.
Amazon’s acquisition of One Medical marks the entry of another ravenously profit driven company into U.S. healthcare, furthering the corporatization of U.S. medicine. Consumers would be wise to consider the likely consequences while cooling their heels at the airport because of flight cancellations or waiting on hold hoping to talk to someone about their lost luggage.