Enter the Giants: Amazon, Berkshire Hathaway and J.P. Morgan Take on Healthcare
Recent months have seen a series of corporate actions aimed at reconfiguring healthcare in the United States, beginning with drug store giant CVS’s bid in December 2017 to purchase Aetna, one of the country’s biggest insurers, for about $69 billion. This was followed on January 24 by Apple’s push into electronic healthcare records through an initiative that will allow patients to aggregate and control access to all of their electronic health records on their iPhones. Apple’s pilot effort will start with the patients of Geisinger Health Systems, Johns Hopkins Medicine, Rush University Medical Center, and UC San Diego Health.
Now, corporate giants Amazon, Berkshire Hathaway, and J.P. Morgan have announced their intent to form their own healthcare collaboration. While concrete details of their plans are still in short supply, the three companies said they were forming an independent firm aimed at reducing healthcare costs and providing high quality services for their combined 1.1 million employees. Their action was seen by many as confirming that the U.S. healthcare industry needs fixing, and that Congress is unwilling or unable to achieve consensus on how to improve the situation. The move by these corporate giants could represent an acknowledgement that, since a large part of rising costs is borne by companies, U.S. employers own much of the healthcare problem and ought to take a leading role in addressing it.
The trio of corporate giants says the new company will focus on “technology solutions” aimed at providing their employees and their families with “simplified, high quality, and transparent healthcare at reasonable costs.” While they also declare that the new firm will be free from profit-making imperatives and constraints, Fortune writer Clifton Leaf observed that it does not necessarily mean it will be a non-profit company. He points out that Amazon tends to take the long view over short-term profits and that the statement may simply mean that the companies are set and eager to experiment with new ideas for delivering and managing care, no matter the financial cost.
Some industry observers have expressed skepticism that the effort will really change anything – especially given past failed attempts by corporate America to make a real impact in healthcare delivery and costs. However, others think that Amazon’s focus on the customer experience, broad data networks, and technological expertise could be leveraged to improve healthcare accessibility and gain a better understanding of real healthcare costs and how they could be streamlined to reduce the financial burden on both employers and patients. Whether or not this alliance is ultimately successful, the announcement certainly put downward pressure on the stock prices of many larger U.S. insurers, distributors, pharmacy benefit managers and pharmacies alike, whose profits could be affected.
What might the new company seek to do? Eventually, some healthcare experts say the new company and its founders could use their vast databases to get a comprehensive understanding of the actual costs of services, as well as “best practices” for improved outcomes, and employ this information to streamline healthcare delivery and negotiate more favorable pricing.
The new company might also undertake a real test of patient-centered healthcare, empowering patients with relevant information on treatment alternatives and costs. They might further provide reward incentives to patients for positive actions and health changes, and even the sharing of anonymized health and genomic data that furthers medical research and provides insight into effective healthcare practices.
Is this the start of a real change in the U.S. healthcare industry? Will other companies join with this effort, or will it be another stalled start?