National primary care provider OneMedical Group Inc., a startup with an annual subscription service and virtual care offerings, on June 7 announced it will purchase senior-focused provider Iora Health, Inc. for $2.1 billion in an all-stock deal. Experts say the deal is a good bet for a firm that is already an appealing employer for talented, young primary care physicians who don’t want to enter private practice — or work for a large hospital group.
The primary care field has changed since the beginning of 2020, as long-term challenges related to fee-for-service reimbursement, regional provider consolidation and virtual care accelerated because of the pandemic. The OneMedical rollup is an indication that some of the changes to primary care wrought by the pandemic are becoming permanent. Executives expect the deal to close in the third or fourth quarter of this year.
Particularly in the second quarter of 2020, primary care providers (PCPs) faced declining fee-for-service (FFS) revenue as many local and state governments mandated patients stay away from health care providers for non-emergent care. Many practices pivoted to virtual visits — a change that was possible due to loosened telehealth regulations and revised carrier reimbursement practices for virtual care — but both the number of visits and per-visit reimbursement rate of telehealth visits were often lower than PCPs were used to experiencing.