Healthcare spending projections in the US are off the charts, and everyone wants some of that money. Pharma companies are suing to stop Medicare from negotiating drug prices, and Walmart and Amazon are testing the healthcare environment. It won’t necessarily lead to better healthcare, but it will lead to more profits.
Americans spend a stunning amount of money on health: roughly 18% of GDP in 2021, far exceeding the rich-country average of about 10% Americans’ spending is forecast to rise by 5.4% per year over the next eight years (see chart), outpacing broader economic growth and accounting for almost one-fifth of GDP by 2031. Most of that spending will come from Medicaid and Medicare, federal programs covering healthcare costs for poor people and over-65s.
Drug companies know that the U.S. spends a lot of money on healthcare and want their slices to increase as we spend more. PhRMA, BMS, and Merck’s lawsuits have one end goal: getting their case in front of SCOTUS, which has been big business-friendly.
It’s not only drug companies. Retailers entering or expanding their primary-care offerings are also betting on consumer habits. The most recent Consumer Pulse Survey by Accenture, a consultancy, showed that nearly one-third of consumers—and more than one-third of those between 18 and 35—were open to getting medical care at a grocery store or big-box retailer, and more than 90% of customers would trust a retailer with their medical data. Retailers believe this sort of trust, along with their convenience (75% of Americans live within five miles of a Dollar General, and 90% within ten miles of a Walmart), is a winning combination.
Walmart is not the only big company expanding its medical offerings. Earlier this year, Amazon acquired One Medical, a concierge practice (meaning clients pay an annual membership fee) with offices in cities across America. Dollar General, a discount retailer, has partnered with DocGo, which runs mobile health clinics, and has launched a pilot program at three shops in Tennessee. Walgreens and CVS, both retail pharmacies, have robust primary-care offerings; last year, more than 5.5m patients visited a CVS MinuteClinic, making it one of the biggest providers in the country, and earlier this year, CVS completed its acquisition of Oak Street Health, an elderly-focused primary-care provider with offices in 21 states. What do these companies see in the medical business? The answer is simple and complex, befitting America’s byzantine and rent-filled healthcare system.
The sad part of this “greed” is that it won’t improve healthcare for most. It may be more convenient to go to CVS for an Rx for the flu, but for people with more severe health issues, this could be a problem. I remember an Urgent Care center I used while living in California. They had X-ray, MRI, and blood testing facilities, along with a cardiologist, oncologist, and pulmonologist. The owner said it was expensive to set up but wanted a “one-stop shop. That’s the answer. No more arranging for appointments with other doctors and waiting for test results.