A seismic change to how patients access and pay for healthcare is happening. Should GPs try to fight this wave or surf it?
This weekâs announcement by Bunnings, Kmart and Officeworks owner Wesfarmers that they intend to buy InstantScripts for $135 million should finally get a lot of general practice owners and the major GP member organisations thinking.
Just how serious are our two largest retail groups â Wesfarmers and Woolworths â about health, how big do they see their fledgling healthcare businesses becoming, and how much is that likely to affect the general practice ecosystem in the long term?
Very serious, very big, and a lot are the likely answers to these questions â at least in the case of Wesfarmers (Woolies still seems to be tinkering, but if it gets serious as well, which seems likely, then Houston, weâre about to have a problem).
But so far hardly anyone is looking at where this might all be heading.
That is probably the way Wesfarmers and Woolies would like it for now.
Certainly no one is seriously contemplating how rapid growth in these businesses might impact general practice or the overall quality of healthcare delivery and thus, patient outcomes, across the country.
The first thing to consider here is that we have in these two companies (and perhaps before too long Amazon in Australia as well) the capital, the smarts, the data (and analytics capability), the distribution power, the existing customer base, branding and reach, the synergistic assets and the political influence, to rapidly build high volume, light touch, mostly virtual healthcare services across the country.
What happens to the general practice ecosystem if they do?
Both have been wanting to get into the pharmacy game now for years to extend their supermarket brands (Wesfarmers has since sold all of its Coles business) but were frustrated by the Pharmacy Guildâs ability to convince federal politicians to keep its members in a tight dispensing monopoly by arguing that care standards would drop if supermarkets stocked and dispensed drugs.
Now, apparently, they see a new way in.
A way that gets them legitimately into the pharmacy supply chain (albeit not in their supermarkets in the case of Woolies) and to broader health services as well: non-Medicare-based telehealth, surrounded by a fair bit of frilly window dressing and adjacent services and data.
Covid may have helped the strategists in these companies get over the line on their plans, but probably the rapid rise of some asynchronous telehealth startups such as Eucalyptus (notably, Woolworths was an early stage investor in this business), InstantScripts and Mosh has also emboldened them.
What might also be pushing them is how fast Amazon is rolling out such services and what is effectively a vertically integrated consumer virtual healthcare offering across the US, and the very real possibility that when it is ready, it will start rolling out the same strategy here.
To give everyone a little context on how serious Wesfarmers is, its healthcare business is now approaching $2.8 billion in revenue, it is its third-biggest business unit behind Bunnings and Kmart (it is catching Kmart very quickly but Bunnings is an $18 billion business so that may take a bit longer) and it has a data business plan that is hubbed in a one customer for all services view (called OnePass) which is closely following the Amazon data model in the US.
That model uses every data point on a customer including what books they buy and streaming content they watch, to sell them everything else, including health services.
Wesfarmers, with Officeworks, Kmart, Target and Bunnings, might have more consumer data to play this game than any other retail-facing group in the country.
This is not a world that the AMA, ACRRM and the RACGP have even begun to contemplate in terms of likely effect on their membership.
But if anyone thinks these forces arenât going to have a significant effect on GPs and primary care over time â as has been suggested to this publication a lot in the past when we have suggested Amazon might be wanting a piece of the primary care sector eventually â then probably you need to think a little deeper.
As a GP, GP owner or GP corporate, you should be looking through the prism of what is going on overall in telehealth already, and map it back to the strategy intentions of these players to make telehealth a key pillar of their business models.
Covid irrevocably changed the landscape for general practice by finally forcing the government to acknowledge how important telehealth is to system efficiency and patient and provider experience.
Hence the government started and continues to fund telehealth as a part of Medicare â albeit the cost is scaring them enough to put a load of restrictions around how they fund it and what for.
One of the key restrictions so far, backed to the hilt by the colleges and the AMA because they think it is going to protect their membership base, is that you canât get funding for telehealth if you donât see a patient face to face.
But the private sector and patients themselves are challenging the premise of this restriction.
One of the most interesting aspects of what has happened over the last three years is the growth of private telehealth in primary care, in spite of the government funding upwards of 40 million GP consults (mainly phone-based) at the peak of covid , and about 32.5 million per annum after.
You might imagine that in the face of so much free telehealth, the public would shy away from paying out of pocket for a consult, but not so.
Leave aside the very big immediate problems facing asynchronous consulting providers as a result of the Medical Board of Australia review and indemnity insurersâ refusal to insure the practice, for the time being (they are very big problems and we are on this next week in more detail but for sure this sector will be heavily impacted in a negative manner soon).
The growth of this market via players like Eucalyptus, Mosh and InstantScripts both during and post covid has been massive.
Based on the revenues of these players to date (there isnât great information to go on here, but there are enough information memorandums (IMs) swirling around investment banks and PE firms to get a sense of what they are), asynchronous consults per annum in Australia today might be well north of 8 million in number.
If you believe some of these companies IMs (and clearly Wesfarmers, who arenât stupid buying and selling stuff, as in the case of InstantSripts) the growth of these businesses in the last three years has been phenomenal (again, ignore the problems they are about to encounter).
InstantScripts looks like alone it has been doing over 1.8 million asynchronous consults per annum.
If you think that itâs just these fly-by-night marketing and tech groups growing outrageously because theyâve brought modern marketing to the sector and are just exploiting the young, then that theory sort of goes out the window if you consider that some of the major companies that are offering synchronous, video-only consults, look like they have been growing at much the same rate as their less scrupulous asynchronous cousins.
A very well known example is Doctors on Demand, which claims that for the past three years it has experienced growth of 140% per annum, including this last year post covid. Given the natural drop in demand that covid should have exerted on this business, if this is true then this group currently has escalating momentum in the space.
This despite the fact that it is a 100% video synchronous consulting group, and Medicare reports that of the 32.5 million consults it is rebating, less than 5% are video calls.
If you do some very basic back-of-envelope maths on what is going on here, you realise that already we have a seismic change in how patients are accessing primary care.
GP organisations might be smug about how much theyâre doing now, but if you believe our guesstimates of what is going on (below) and you compare the private dollar to the public, it looks a little scary for any GP group that thinks its bricks-and-mortar model wonât somehow be affected.
In fact, if you believe these calculations, GP practices and corporates have already been massively affected if you examine what has happened with a lens of opportunity cost.
In one respect, GP practices and corporates, have picked up the lazy â but also not insignificant âmoney. Medicare rebate money.
What is wholly surprising, and what should be a lot more on the minds of the GP owners and corporates, is the amount of money being left on the table in non-Medicare demand: demand that is being swept up efficiently by private companies, and which, no doubt, provides a strong clue as to why Wesfarmers, Woolies and Amazon are so interested in this market.
TMRâs scary set of guestimates on the telehehealth market in Australia
If you even half believe these figures, the colleges, the AMA and owners have a lot to think about in terms of what they are leaving on the table.
More than a quarter of the market is now private and is growing against what will likely stay a static Medicare market given the government can ill afford a rapidly growing public telehealth bill.
From a business perspective for any GP practice this trend says that they are very likely missing an emerging market of younger healthcare buyers, who simply arenât turning up to GP practices as much as they once might have as they are deferring far more frequently to the convenience of private telehealth.
They are also likely losing even more money by not leveraging their own customer base, choosing to have them use their services the old hard-to-access way, rather than offering them more flexible virtual options for a range of simpler services.
Wesfarmers, Amazon and Wooliesâ key strategy is to do the opposite: take their customers on a journey from their supermarket and retail stores into their healthcare offerings, with things like rewards schemes to incentivise them into the convenience of telehealth.
Have a look at Wesfarmers Health mission statement below. Reads pretty smart given the patient market that is evolving.
If Wesfarmers builds its health business in the manner it wants to the size it wants with this mission, do we think GP businesses wonât be affected?
Doctors on Demand is growing fast, is wholly video based, contracts over 100 doctors including 43 GPs, and its model is possibly one of the more genuine doctor and patient-centric plays in telehealth terms (Eucalyptus by comparison is a marketing and tech play, and they make that obvious). CEO Kirsty Garrett says covid triggered an ongoing desire, particularly among young Australian patients, for more variety and convenience in how they can access their health, and that desire is continuing to grow.
Of course Garrett should say this as it is a narrative that would appeal to her investors and shareholders.
But there is a whole lot of hard evidence now that is starting to back into what Garrett is saying.
Evidence that the colleges, the AMA and owners possibly arenât looking at honestly enough yet.
Garrett is surprisingly frank about the difference between what DoD does and what asynchronous outfits like Eucalyptus, Mosh and Instant Scripts do.
She says they are marketing companies with pretty cynical business models which donât have a patientâs best interest at heart in the end, whereas DoD is delivering a synchronous video service delivered by doctors, which people clearly want and which very clearly meets a need.
Possibly surprising to some, Garrett is keen on the idea of her group delivering integrated services with bricks-and-mortar GP owners and corporates as a means of practices being able to meet peak demand for access to services and as a means of them sweeping up business from their client base which they might be starting to lose if access to simpler services, such as repeat scripts and medical certificates ,becomes choked by a need to see just the practice GP in a traditional manner.
But she says a lot of bricks-and-mortar setups, and the colleges, so far largely view DoD as a competitor, rather than a potential partner.
The other big trend that the colleges, the AMA and owners might not be watching closely enough is the explosion of virtual care being offered by public and private hospitals, in a bid to help solve capacity and access issues.
There is not a hospital in the country today that isnât thinking about, actively planning or which has already launched a virtual ED and outpatient service.
If you read the early numbers, for instance in Victoria, then the strategy is working.
If hospitals have accepted that they can manage patients without having ever seen them and itâs an efficient and safe way to improve patient access and the system overall, then why are GPs in practices hunkering down and running the line that you must have to see a patient in person before you can do effective care?
Of course, in an ideal world, everyone would be seen face-to-face always.
And continuity of care with one GP or practice is entirely the right way to think and go.
But what the patient market is saying in telehealth, and in virtual ED in hospitals, is that you simply canât get to everyone that way and, in lieu of that, well delivered synchronous virtual care â video especially â is a good alternative service to offer.
The questions a GP owner, corporate and perhaps the colleges and the AMA might want to start thinking more carefully about in the light of Wesfarmersâ acquisition this week, and in light of the way the whole telehealth market is moving privately, might be:
- Is this trend a fundamental and now unstoppable disruption?
- Do we keep trying to beat them by saying itâs bad and calling for more regulation, or do we examine the tea leaves a bit more closely here, and see if we canât, in a safe and appropriate manner, join them?
