As Costco continues to gain market share in the hearing aid private market, CVS Health and Lucid Hearing are expanding their presence by opening more retail locations. In addition to this nationwide growth of corporate retail hearing aid centers, Walgreens is testing the waters with a Starkey partnership, and Sivantos announced last week the acquisition of TruHearing, a leading third party hearing aid contractor.
These roll-ups and forays into hearing healthcare by large corporations represent a larger trend in healthcare: the burgeoning senior market for healthcare and the mega-mergers of medical centers.
Thanks to the baby boomer generation born in the late 1940s and 1950s, the number of American senior citizens is rapidly growing. As the core of the baby boomer population reaches age 65, the senior population is projected to reach almost 85 million –approximately twenty percent of the total US population. As hearing healthcare providers are likely to have heard more than once, this equates to roughly 10,000 people turning 65 every day for the next two decades.
The swelling elderly population has and will necessitate more senior healthcare; a fact that is driving much of the corporate ventures into healthcare products and services, including hearing healthcare.
In fact, one market research provider estimates that the global home health care sector, just one part of the overall healthcare industry, should see revenues grow to $300Bn in 2020 from $180Bn in 2014 – a compound annual growth rate of 8%, while the hearing aid private market, according to another market research firm, is expected to grow annually by about 6% over that same time frame.
Consumer Demands Fuel Mergers
On another front, the corporatization of healthcare is being driven by the changing demands of consumers who want greater convenience and lower prices. That’s one reason big players like CVS Health, and most recently Walmart, the giant retailer, are eyeing deals with Aetna and Humana, respectively, to use their stores to deliver medical care.
An April 8 New York Time article suggests people are flocking to retail clinics and urgent care centers in strip malls or shopping centers, where simple health needs can usually be tended to by health professionals like nurse practitioners or physician assistants much more cheaply than in a doctor’s office. Currently, there are some 12,000 retail medical clinics already scattered across the country, according to Merchant Medicine, a consulting firm. These growing numbers of retail medical clinics is likely related to the fact that office visits to primary care doctors declined 18% from 2012 to 2016.
The new deals involving major corporations loom over doctors’ livelihoods, intensifying pressure on small practices and pushing them closer to extinction. Large corporate entities, such as hospital groups are eroding primary care practices: They employed 43% of the nation’s primary care doctors in 2016, up from 23% in 2010. These large hospital groups are also aggressively opening up their own urgent care centers, in part to try to ensure a steady flow of patients to their facilities.
The latest merger involves Walmart and Humana, a large insurer with a sizable business offering private Medicare plans. While their talks are in the early stages, one potential partnership being discussed would center on using the retailer’s stores and expanding its existing 19 clinics for one-stop medical care. Walmart stores already offer pharmacy services to attract older people.
In addition, the proposed $69 billion merger between CVS Health, which operates 1,100 MinuteClinics, and Aetna, the giant insurer, would expand the customer bases of both. The deal is viewed as a direct response to moves by a rival insurer, UnitedHealth Group, which employs more than 30,000 physicians and operates one of the country’s largest urgent-care groups, MedExpress, as well as a big chain of free-standing surgery centers.
While both CVS and UnitedHealth have large pharmacy benefits businesses that would reap considerable rewards from the stream of prescriptions generated by the doctors at these facilities, the companies are also intent on managing what type of care patients get and where they go for it. And the wealth of data mined from consolidation would provide the companies with a map for steering people one way or another. On top of these corporate partnerships, Amazon, JP Morgan and Berkshire Hathaway decided to join forces to develop a yet-to-be-determined of health care strategy for their employees, expressing frustration with the current state of medical care. Additionally, in California, Apple recently decided to open up its own clinics to treat employees.
Is Corporatization and Continuity of Care Compatible?
Ironically, as healthcare moves into strip malls and shopping centers, many traditional retailers, like apparel, shoe and department stores, long the backbone of these consumer meccas, are going bankrupt in droves. This rash of bankruptcies, according to a November 2017 Bloomberg Business report, is driving by a combination of factors, including the rise of on-line shopping and risky borrowing by private equity companies.
As healthcare moves into retail space, there is debate about the quality and consistency of care; a debate sure to heat up in hearing healthcare as roll-ups and mergers continue. Critics of retail healthcare clinics argue that patients are given short shrift by health professionals unfamiliar with their history. The same argument may intensify among hearing healthcare professionals who have long prided themselves on delivering personalized care and attention to their primarily older clientele.
“The quality of care that you see at a retail clinic is equal or superior to what we see in a doctor’s office or emergency department,” said Dr. Ateev Mehrotra, an associate professor of health care policy and medicine at Harvard Medical School, who has researched the retail medical clinics. “And while there is a worry that they will prescribe antibiotics to everybody, we see equal rates occurring between the clinics and doctor’s offices.”
Still, while the retail clinics over all charge less, particularly compared with emergency rooms, they may increase overall health care spending. Consumers who not long ago would have taken a cough drop or gargled with saltwater to soothe a sore throat now pop into their nearby retail clinic for a strep test.
On the other hand, traditional primary care physicians stress the importance of continuity of care, as many believe that it takes a long time to gain trust in a patient in order to treat them effectively. Will the profit motivations of corporations take priority over continuity of care in hearing healthcare is a question yet to be fully addressed, but the forces are in place to hasten its answer.
Sources: Reed Abelson and Julie Creswell, New York Times; Matt Townsend, Jenny Surane, Emma Orr and Christopher Cannon, Bloomberg Businessweek
*image courtesy nsightfortravel
