Demand for primary care projected to slow as Amazon, Walmart pose a growing threat: report

Patient demand for primary care and surgical care services remains below pre-pandemic levels, and patient visits "delayed" or "deferred" during the COVID-19 pandemic may be permanently lost, according to a new analysis.

At the same time, the number of commercially insured patients decreases while healthcare costs continue to rise. Patients also have more choices than before with the increasing supply of new entrants like CVS, Amazon and Walmart making consumer loyalty more difficult to capture. These trends all pose significant competitive threats to traditional healthcare providers, said Sanjula Jain, Ph.D., chief research officer and senior vice president of market strategy at healthcare analytics company Trilliant Health.

"Despite there being more care options, whether that's new entrants, whether that's telehealth, patients, at large, across the country have not returned to pre-pandemic care patterns and that's the bottom line of what's affecting everyone's business model," Jain said in an interview.

In a 146-page report, Trilliant Health outlines 13 macro trends influencing the healthcare industry including population migration, telehealth adoption, competition from new entrants and healthcare costs.

Trilliant Health’s analysis found that several long-term trends were exacerbated by the COVID-19 pandemic, creating new challenges for every stakeholder in the health economy.

The company's analysis is based on third-party data resources and the company’s proprietary all-payer claims database that informs longitudinal patient journeys for more than 300 million Americans. Trilliant Health executives aim for healthcare stakeholders to use the report to develop evidence-based strategies to compete.

Primary care growth projected to be anemic with increased competition

After more than two years of below-average national primary care utilization, volumes in the first quarter of 2022 were 0.2% higher than in 2019. However, primary care trends vary significantly by market. Urgent care volumes are higher and primary care is approaching pre-pandemic levels, driven by COVID-19-related care, the report found.

The national median incidence rate for primary care is projected to nominally increase (1.7% CAGR) between 2022 and 2026. As a result, by 2026, Americans are projected to need 1.2 primary care visits per year on average, which is only 0.1 more visits above observed 2021 levels, the analysis found.

While demand for primary care services varies significantly across core-based statistical areas (CBSAs), a majority (62%) of CBSAs have experienced primary care volume declines compared to pre-pandemic levels. These declines and variances were driven by several factors including population migration, excess mortality rates in adults and missed care due to COVID-19 that is now permanently lost.

The COVID-19 volumes also underpin the massive increase in urgent care volumes seen over the past two years. While urgent care volume was 31% higher in the first quarter of 2022 compared to the first quarter of 2019, as much as half of that utilization is attributable to COVID-19. As a result, urgent care volumes represent a larger proportion of a declining number of primary care encounters, Trilliant Health analysts wrote in the report.

Notably, after removing COVID-19-related care (vaccines, testing and treatment) and behavioral health services, all other combined healthcare encounters were down by 6.2% between the first quarter of 2019 and the same quarter this year.

These trends are hitting as the total available market of commercially insured patients is shrinking, according to the company's analysis. From a financial perspective, commercially insured Americans account for the majority of profitable revenue across health economy stakeholders. However, the share of commercially insured Americans dropped 0.6 percentage points from 2020 to 2021.

“For decades, commercially insured patients have been the lifeblood of the health economy, and the secular decline in the percentage of that group is detrimental for every health economy stakeholder. Additionally, Americans have been slow to return to primary care and preventive screenings post-pandemic, and many of those who have returned are choosing urgent care and retail clinics in lieu of traditional primary care providers,” said Trilliant Health CEO Hal Andrews in a press release.

During the pandemic, many patients missed critical health screenings, including cancer screenings. Trilliant Health’s report shows there were fewer cancer screenings over the past few years for many of the most prevalent cancer diagnoses. For instance, cervical cancer screenings declined most dramatically, declining by 26.5% from 2019 to 2020 and again by 11.3% from 2020 to 2021.

Fewer cancer screenings over the past two years suggest that higher patient acuity will manifest in the future, Trilliant Health analysts said in the report.

"If we look at why patients are avoiding care, I think we shouldn't underestimate the fear factor that patients have. The pandemic just truly scared away patients. There's also declining trust. If you look at how patients rank different stakeholders across the health economy, from providers to help insurance companies, trust has declined," Jain said.

The report found that from April 2020 to December 2021, while all stakeholders saw declines in trust among American consumers, doctors (-23%) and hospitals (-21%) were disproportionately affected.

"I also think affordability is a big issue. So especially thinking about all the inflation and discussions about recession," she added. "It's really problematic as we think about going forward is that the magnitude of folks returning probably isn't going to change overnight."

Retailers represent a significant threat to established providers

At the same time, as demand for healthcare services lags, several established retailers have entered the primary care market, including Amazon, Walmart and CVS. These retailers have millions of customers, national presence and enterprise scale, representing a significant threat to traditional providers like hospitals and health systems.

However, Trilliant Health’s report also shows why these new entrants will face extreme competition among each other for patients.

“As leading retailers and payers begin to commoditize low-acuity services and the Congressional Budget Office proposes price caps on medical reimbursement, the business model of every health economy stakeholder is pressured," Andrews said.

Women's health is a bright spot in the market

While demand for all women’s health care declined during the early days of the pandemic, visit volumes have stabilized above pre-pandemic levels. In the first three months of 2022, women’s health care visits were up nearly 2% compared to the same period in 2019. For routine women’s health care services, demand was up 31.6% in the first quarter of 2022 compared to the first quarter of 2019. Additionally, demand for behavioral health services among women increased by more than 26% in the first quarter of 2022.

However, while women are engaging in routine healthcare services, women are still more likely than men to not have a primary care provider relationship (53% versus 47%). Additionally, women and men are returning to care in different settings. Men are disproportionately using urgent care while women are more likely to be returning to non-hospital outpatient settings like retail clinics.

How to "reengage" patients in the healthcare system

Healthcare providers need to develop strategies to "reengage" patients in the healthcare system, Jain said, in order to drive visit volumes. 

"We have to go old school. We really have to think about how we meet patients where they are. So should we be thinking about public health campaigns and literally setting up those public health fairs out to the community and encouraging people to go get a blood panel workup," she said.

"I think there's a responsibility of every stakeholder, whether you're a provider, whether you're a payer, whether you're a pharmaceutical company, to really say 'How do we remind patients that it's important to go see your doctor for cancer screenings?' I would encourage folks to really go back to basics—it's part marketing, but truly, it's part education. I think we all have a responsibility to convey the magnitude of the potential public health burden that this could manifest in going downstream," Jain said.

Other major points from the report:

  • Provider organizations should prepare for slower demand growth in major surgical services. In contrast to perennial forecasts of 3%-5% growth, Trilliant Health’s report highlights how national median incidence rate for major surgical service lines are projected to increase nominally (2% CAGR) between 2022 and 2026.
  • Behavioral health demand outpaces other service lines. Visit volume nationally has remained more than 15% above pre-pandemic levels. In 2021, prescriptions for antidepressants and anxiety became the second-most prescribed therapeutic, representing approximately 19% of seven selected drug categories, following antibiotics (25.5%) and supplanting opioids, which fell to third (15.4%).
  • Telehealth demand remains below pre-pandemic highs. Even as the number of telehealth suppliers continues to increase, demand for telehealth services was 37% lower in the first quarter of 2022 compared to its peak in 2020. Nearly half (48.7%) used telehealth only once, while 80.5% accessed telehealth fewer than five times.