and CVS are investing billions

into primary care practices,

with deals tapping into the nation's

$4 trillion healthcare market.

And it's part of a shift

in America's costly healthcare system

moving away from the traditional Fee-For-Service,

towards Value-Based care.

That model is about paying providers

for keeping patients healthy,

while a Fee-For-Service model is when medical providers

are paid based on the amount of services performed.

So why are companies spending billions

on primary care practices,

and what could the growing shift to Value-Based care

mean for doctors, patients and health insurers?

The US spends more per capita on healthcare

than any other developed nation,

but still fares worse on most major health measures.

Health experts say the incentives baked

into America's Fee-For-Service system

are part of the problem.

- So critics say that under the Fee-For-Service model,

it basically encourages providers to recommend

as many services as possible, which drives up the cost

of healthcare without necessarily ensuring

patients are at the forefront of care.

- [Narrator] Essentially, doctors are rewarded

for the volume of healthcare services they provide.

Now, companies like Amazon, CVS, and Walgreens

are tapping into the growing Value-Based care movement.

That model provides incentives to improve patient health

outcomes within hospitals and doctor's offices.

- In Value-Based care, the idea is to keep track

of the patient, to have more contact

between primary care doctors and patients,

and reduce the amount of time that people

actually spend in hospitals where the costs are very high.

- [Narrator] Those costs are high for patients

and health insurers.

Some private health plans and government programs

like Medicare have already adopted this model.

They want to move more of the healthcare system

to that approach, which makes providers accountable

for some or all of the cost of their patient's care.

While Value-Based care can be traced back decades,

the 2010 Affordable Care Act

accelerated the government's transition to this model.

- The government essentially said that

it'll start shifting a lot of healthcare

towards Value-Based care

with the idea being to control costs.

- [Narrator] Still, there can be downsides

to a Value-Based model.

- [David] A key concern is that patients might be delayed

in seeing specialists or in undergoing procedures,

and basically insurers and providers could be

doing that to prevent costs from escalating.

- [Narrator] One obstacle behind shifting

to a Value-Based model is a shortage

in primary care physicians or PCPs.

Because the US healthcare system rewards

more expensive procedures, medical students may prefer

to become cardiologists or surgeons.

- [David] The cardiologist makes close to $500,000

on average, whereas a primary care physician

will make around 200,000.

- [Narrator] In other countries,

PCPs compose a much higher proportion

of all practicing physicians.

For example, 45% in France,

compared to 12% in the United States.

Yet PCPs play a central role in keeping people healthy

and preventing problems before they begin.

- [David] What happens is many Americans

don't see a primary care physician.

They can't find one, or they can't get an appointment

for a month.

Many times people don't know they have something,

and they end up in a hospital

where they have to get a much more expensive procedure.

- [Narrator] To help reduce higher health costs downstream,

a host of companies are now spending billions

on primary care practices.

UnitedHealth, a massive conglomerate that includes

60,000 physicians and an insurance business,

is one of the furthest along in PCP investments.

Through its medical provider arm Optum Care,

it has been buying up multi-specialty physician practices

to provide care at home, virtually and on site.

The idea is to keep people out of the hospital,

because that's where the costs are highest.

Meanwhile, Amazon is planning to buy primary care company

One Medical, a practice that operates more than 180

medical offices in 25 US markets.

The $3.9 billion deal could give Amazon

a larger foothold in offering

healthcare services to employers.

The company CVS Health is also stepping into the mix

with a deal to pay $8 billion for Signify Health,

a company focused on in-home evaluations.

- Ultimately, CVS wants to be not only your pharmacist

and your insurer, through its AETNA arm,

but it also wants to be your village clinic.

- [Narrator] Then there's Walgreens.

After buying a controlling stake in startup clinic chain

VillageMD, it struck a roughly $9 billion deal

to combine with Summit Health,

a large owner of urgent care centers.

So how exactly do these companies plan to make money

off of these investments?

In practice, a Value-Based reimbursement model

means providing financial rewards

for better patient outcomes.

It can also be tied to a capitation system,

which pays healthcare providers a fixed amount

for each patient they deliver care to per unit of time.

This prioritizes the patient and cost saving over services,

which can significantly reduce health spending.

Still, some healthcare economists worry

whether this Value-Based approach

will benefit patients or just reduce costs

and improve the bottom line for providers and insurers.

- For example, a primary care physician

might be more reluctant to allow a patient

to go see a specialist

or to perform a more expensive procedure.

- [Narrator] Ultimately, some healthcare economists

say moving away from a Fee-For-Service model

could help temper ballooning healthcare costs in the US.

- [David] As more and more of these bigger companies

get into Value-Based care,

it's just going to accelerate the move

towards Value-Based care and away

from this Fee-For-Service model.

(bright cheerful music)