Vertical dermatology integration without dermatologists

May 10, 2018

The adoption of business concepts into medical practice creates challenges for physicians who have little business background. It places too much focus on the business of medicine and not enough on the practice of medicine.

The adoption of business concepts into medical practice creates challenges for physicians who have little business background. It places too much focus on the medical business and not enough on the practice of medicine.

"Vertical integration" is not a new concept, just a new word for the consolidation of all aspects of medical care under one corporate entity. One of the most interesting examples of vertical integration is the purchase of national pharmaceutical chains and large physician groups by insurance companies. This allows an insurance company to control pharmaceutical, hospital, and physician costs while eliminating competition and changing traditional medical practices.

Consider the proposed purchase of CVS by Aetna. The plan would be to install medical clinics in all 10,000 CVS pharmacies staffed by nurse practitioners, who may or may not have undergone dermatology training. This might steer patients to nontraditional, more convenient and less expensive places to receive medical care rather than an emergency room.

It is estimated that 48% of all clinic visits would be dermatology related since dermatology care is easy to perform in a store setting due to the few laboratory tests and ancillary procedures required. If the patient did not improve or had a more complicated diagnosis, then referral to a dermatologist would be indicated. This would remove the first line of dermatology care from the dermatologist and likely lower the quality of dermatologic care offered in the United States, since nurse practitioners do not have the years of training required to become a board-certified dermatologist.

Other dramatic changes would also occur.

Only dermatologists who are employees of Aetna would likely receive referrals from the CVS clinics, which would be present on every corner. The other corners would be occupied by Walgreens, which recently merged with Rite Aid, and likely would organize a similar network with another large insurance conglomerate.

This vertical organization removes control of dermatology from the dermatologists and prevents dermatologists from determining what constitutes adequate dermatologic care.

Medicine as whole will be affected, as medical care will be delivered in a non-traditional setting. Patients will receive first line medical care in a pharmacy setting where cigarettes and alcohol are also sold. Further, medical care will occur under the auspices of a pharmacy and a conflict of interest might encourage over-prescribing.

There are many possible conflicts when insurance companies own physicians, hospitals, and pharmacies. In fact, the reverse is prohibited in many states prohibiting medical practices from dispensing and owning pharmacies.

It is quite amazing that insurance companies who are asking to increase consumer premiums by 10%-35% due to record losses have the capital to make such large purchases.

United Healthcare Optum has agreed to pay $4.9 billion dollars in cash to purchase DaVita, a for-profit chain of 300 dialysis centers, to add to its roster of 30,000 employed physicians and pharmacy-benefit manager.

This vertical integration is touted as a way to save money; however, the savings reflected as increased profits might be passed on to stockholders rather than to the patient. The patient might see limited choices for physicians or pharmaceuticals as insurers try to utilize the organizations they control. Past history has indicated that competition is the best way to lower costs for patients, which may be insufficient with vertical integration.

My biggest concern is that vertical dermatology integration will occur without the dermatologist. Dermatologists will become employees of insurance companies and will only see patients that are referred by non-physician extenders in a pharmacy setting who have mis-prescribed, misdiagnosed, or mistreated patients who did not improve.

Only patients who do not get better and insist on seeing a dermatologist will be referred to contain costs. Dermatologists will only be allowed to prescribe medications that are financially beneficial for the insurance company based on their pharmacy-benefit manager relationships.

Vertical integration is a relatively new medical concept that dermatologists should carefully consider when navigating medical practice in an increasingly complicated insurance environment.

download issueDownload Issue : Vol. 39 No. 05