Two years ago, Bain & Company forecast major shifts in the primary care market as nontraditional players gain traction and grab more market share.
The consulting company is holding fast to that prediction, but evolving competitive dynamics and recent moves by some healthcare companies will change the playing field in the next five years, according to a new report.
Nontraditional providers, including retailers, payers and advanced primary care providers, are expected to capture 30% of the U.S. primary care market by 2030, according to Bain & Company’s new study. The organizations that will be the main providers of this care, and which care models will predominate, continue to change.
"The primary care landscape is experiencing significant shifts, and traditional and nontraditional models continue to evolve,” said Erin Ney, M.D., partner in Bain & Company’s Healthcare & Life Sciences practice. “Looking ahead to 2030, we believe the landscape will be defined by the ways in which providers adapt to changing competitive dynamics and succeed in value-based care delivery. Our research still suggests that nontraditional providers are poised to capture a growing portion of market share, but we expect a different mix among them. We anticipate payers will continue to invest behind primary care and population-focused models will continue to be well positioned to take on payment risk even in the face of regulatory headwinds, but significant questions remain about retailers’ ability to deliver comprehensive primary care effectively given the challenges they’ve faced.”
Payer-owned primary care could capture 20% of the market
Keep an eye on payers as they accelerate investment in the space, primarily through existing primary care delivery capabilities.
Healthcare payers are set up to navigate challenges in the primary care market, and Bain & Company anticipates payer-owned primary care will account for approximately 20% of the market by 2030.
"Having entered the care delivery space over a decade ago through their respective health services organizations, Optum and CenterWell, UnitedHealth Group and Humana have developed the differentiated capabilities required to manage complex primary care delivery," Ney wrote in the report. "In addition to network curation and physician practice management capabilities that support successful care delivery, these payers have extended key capabilities in care management, navigation, and coordination to their primary care practices.
CenterWell and its sister brand Conviva encompass Humana's primary care organization, which is the largest senior-focused primary care provider in the country. It's also expanding significantly and now encompasses close to 300 clinics that care for about 295,000 seniors. In July, Humana's CenterWell announced it was planning to open 23 clinics at Walmart locations in four states.
The health clinics will operate in space that previously held Walmart's own clinics, according to the announcement. CenterWell intends to have the locations across Florida, Georgia, Missouri and Texas fully equipped, staffed and opened by the first half of 2025.
Retailer primary care facing headwinds
Retailers have taken different approaches to primary care—Walmart built its own clinics, while some established partnerships with existing providers, such as Walgreens and VillageMD. CVS Health and Amazon went the acquisition route, buying Oak Street Health and One Medical, respectively.
Many retail primary care providers have shifted their approach over the past two years. Walmart, after opening 51 clinics, exited the space this year. Walgreens, which invested in VillageMD in 2020 and became the majority owner in 2021, is scaling back its clinics’ footprint and plans to reduce or sell its stake in the company.
These moves reflect a growing recognition of how challenging it is to succeed in comprehensive primary care, particularly while balancing the needs and goals of two very different business models: retail and care delivery, Ney wrote.
Bain’s new research shows that less than one-third of consumers are currently likely to visit a retail store or pharmacy for primary care needs beyond vaccinations and diagnosing common cold symptoms.
"Retailers that continue to pursue primary care will benefit from focusing on three key objectives: building the right model, investing to evolve their brand, and ensuring that the right healthcare expertise exists within their organizations," Ney wrote.
Providers supporting value-based care poised to scale
Advanced primary care providers are leading the shift toward population-specific care models, demonstrating better clinical outcomes and cost savings by addressing chronic and complex needs, according to the report. Advanced providers will continue to scale, particularly those focused on seniors.
To maintain their competitive edge, however, they will have to adapt to tighter economics and regulatory shifts. Medicare Advantage plans continue to face headwinds, including decelerating growth, updates to risk adjustment by the Centers for Medicare & Medicaid Services and star rating reassessments, Ney points out in the report.
"The ability to meaningfully lower the total cost of care while achieving high-quality clinical outcomes will become increasingly important, determining the winners and losers among these players," Ney wrote.
There is growing pressure on fee-for-service payment. Going forward, traditional primary care providers that want to remain independent will seek to partner with enablers that can help them successfully transition to value-based payment models.
Value-based care enablers like Aledade, agilon health, Privia Health, Pearl Health and Equality Health, to name a few, have been rapidly growing. Venture capital and private equity investment in value-based enablers also has been rising. Bain & Company now expects primary care providers that have partnered with value-based care enablers to hold around a 10% share of primary care lives in 2030, compared with the roughly 4% the company anticipated two years ago.
However, enablers are facing the same headwinds from increasing regulatory pressure as advanced primary care providers, Ney wrote.
Under pressure from population-focused disrupters and nontraditional providers, many traditional health systems face a challenging road ahead. In highly competitive markets, health systems will likely pursue different strategic paths such as becoming the preferred specialty and tertiary care providers for risk-taking primary care providers, according to the report.
"Another strategy would be to develop innovative care models that change the way the health system provides primary care. Consider what Corewell Health has done, segmenting its patients into cohorts in order to capitalize on the benefits of population focus, tailoring operational and clinical capabilities to the specific needs of different patient populations and payers," Ney wrote.
A third option might entail developing direct-to-employer models that allow for greater risk-taking.
"Ultimately, the primary care landscape of 2030 will be defined by the ways in which providers adapt to changing competitive dynamics and succeed in value-based care. The ownership structure will continue to evolve, with nontraditional providers poised to capture significant market share. Population-focused models, whether for care delivery or care enablement, will continue to be well positioned to take on payment risk but will face regulatory and reimbursement headwinds," Ney wrote in the report.