Platforms might make it easier for physicians to be independent again. Do they want that?
My undergrad degree in the history of health & science (really) doesn’t come up that often. But I’m super excited when it does. And a few weeks ago, a funding round announcement made it relevant.
One of the core themes of the history of American health policy is that providers have long prized their independence. They’ve seen themselves as artisans of their craft, holistic practitioners of the art of medicine. (Whether that’s a narrative driven by the providers or by provider-oriented lobbying groups like the AMA is another topic entirely.) This commitment to independence has not only dashed the hopes of decades of health policy reformers, but also created a kind of cultural resistance to organizing providers in big practices and corporate entities.
That is, until the last few decades, when providers have proven willing to sell their independent practices and join up with big health systems and insurers.
Take this history—along with Marc Andreessen’s and Jim Barksdale’s quip that money can only be made by bundling and unbundling—and you can see why it’s so interesting that a startup with a platform making it easier for independent providers to set up virtual practices just got funded.
To be upfront, I don’t have any relationship with Capable Health. I’m just interested in the idea behind it. Capable Health, a seed-stage company, intends to build a platform that would make it easier for independent providers to set up virtual practices. Rather than building the infrastructure from scratch, doctors wanting to start providing care virtually could set up shop with Capable Health.
A history of independence
In broad strokes, American health insurance policy reform has been stopped by two things. First, the House Ways & Means Chairman getting into some kind of scandal (see: Wilbur Mills, an incident with the Tidal Basin, and the death of Nixon’s health insurance plan, and, to a lesser extent, Dan Rostenkowski, a postage scandal, and the collapse of Clinton’s plan).
Second, a concerted effort led by providers and provider lobbying groups to emphasize that government-led health insurance could result in providers losing their control over the patient’s care.
But over the last 40 years, this commitment to independence has started to soften and shift.
In his seminal book The Social Transformation of Medicine, originally published in 1982, Paul Starr suggested that medicine was becoming more corporate, and that physicians were likely, over the coming decades, to stratify into four groups: “owning, managing, employed, and independent.” Part of this trend, he wrote, was that “the profession is no longer steadfastly opposed to the growth of corporate medicine.”
Between the managed care revolution and the growth of entities like UnitedHealth and UPMC, which act as insurance providers while employing doctors, Starr’s prediction came true. By mid-2021, nearly 70% of U.S. physicians were employed by insurers, health systems, or corporations like private equity chains.
(At the same time, it’s not fair to say that physicians have entirely lost their independence. Just getting a group of surgeons to use the same types of instruments is still a challenge for many hospitals. It is fair to say that physicians are now exerting these clinical judgments within a corporate structure over which they have very limited influence.)
A future of unbundling doctors?
In light of this history, I’m very interested in Capable Health’s early thesis. According to the company’s press release announcing the seed funding, “Healthcare providers can now launch their own branded digital clinic using Capable's platform to guide their patients seamlessly through onboarding and sign up, deliver personalized care plans to keep patients on track with their health goals, and connect patients and providers directly through messaging and video chat.” The platform makes it easier for physicians to open their own virtual clinics, or for entrepreneurs to open a new virtual clinic and bring on providers.
For me, the open questions are:
Are there physicians who want to open a new virtual clinic and can’t?
I can definitely see this being true. As I’ve written about before, health systems have really struggled to get telehealth off the ground, making it much harder on providers who want to do telehealth. This is especially true for providers who want to provide a unique telehealth experience, maybe in a specific niche or with a specific framing—many of the telehealth options out there right now are commodified platforms with limited customization.
Will the challenges of running a virtual clinic be different enough from brick-and-mortar to entice physicians over?
One of the big selling points for physicians joining a larger entity was that they didn’t have to run the day-to-day operations. They could be part of a (large, money-making) enterprise that handled HR, supply chains, IT, billing, and other major parts of the operation. With other companies providing the infrastructure, perhaps more independent-minded providers will see the opportunity to take back some of the operations.
What is the physician quality of life as part of a big entity, compared to being part of a smaller, independent entity?
I think this is one of the biggest determining factors for whether more doctors are likely to go independent, but it’s hard to find data.
While I was writing this, Chrissy Farr published a post about the lifestyle of telehealth providers that made me think there’s more of a chance for doctors to want to open their own virtual clinics than I originally thought, although obviously there are other factors than simply remote work lifestyle:
I don’t actually have a conclusion. I don’t know if Capable’s thesis that providers are ready to unbundle again is accurate—although I think there are signs that there’s an early trend in that direction. In 40 years, we could look back and see that the rise of virtual care as a result of COVID was the beginning of an unbundling phase…or maybe Optum will own us all.
This information shouldn’t be taken as investment advice (obviously), and the opinions expressed are entirely my own, not representative of my employer or anyone else.