This is an abridged article – originally printed in Beckers Hospital CFO report here
When Amazon, JPMorgan Chase & Co. and Berkshire Hathaway launched their partnership in the healthcare space, they left more questions than answers about their new venture. The announcement shared few details on how the companies would partner, but ultimately shared the goal of providing high-quality, lower-cost healthcare to employees and their families.
All three companies are disruptors in their industries, but have little experience in healthcare. Here, 35 executives from across the healthcare industry share their reaction to the announcement and predictions for the future.
Question: What does this partnership mean for the healthcare industry?
Chuck Stokes. President and CEO of Memorial Hermann (Houston): “Today’s announcement is precisely why health systems across the country, including Memorial Hermann, have been innovating from within. Our industry has a lot to learn from these three powerhouse institutions that have transformed their consumer experiences. Through their expertise, I firmly believe that our industry will accelerate the journey to become more affordable and convenient for everyone. Here in Houston, we understand the healthcare needs of our community better than anyone else and have launched several groundbreaking solutions to make healthcare more affordable and accessible to our neighbors.”
Damian Becker. Manager of Public Relations at South Nassau Communities Hospital (Oceanside, N.Y.): “Their venture into the healthcare industry means one thing to me: disruption, with a singular focus on growth from the get-go. Accounting for the core strengths, roster of services and market share dominance of each organization and how they will innovate collaboratively, it is imperative as a healthcare organization to conceptualize and anticipate what they will bring to market as not just a national entity, but also a global entity that will either compete directly with or complement the services that your organization provides and/or specializes in. For example, health and medical care services delivered to the patients/customers wherever they are and whenever they need it, whether at the home or on the road or at work, through digital, delivery, informational and direct care services, at a lower cost and simplified payment model.”
John Driscoll. CEO of CareCentrix (Hartford, Conn.): “Anyone with a high-cost, high-margin healthcare business should be scared. But healthcare is complicated, and I believe the most effective path for this dream team of disruptors is to share their goal — to provide better care at a lower cost to patients — with industry incumbents. Bending the cost curve and improving outcomes is going to require a team effort.”
Michael Bittman. Partner at Broad and Cassel (Orlando, Fla.): “All industries are being disrupted to some extent by the new digital economy. It appears as if this will be one of the best-funded efforts to disrupt the traditional employer-sponsored health plan model. That said, it’s important to remember you can’t deliver healthcare without hospitals and physicians. The new model may involve groups of employers contracting directly with healthcare providers to decrease cost and enhance quality.
“What Amazon, JPMorgan and Berkshire Hathaway have presented could be a new national model. With their combined resources, technology and foresight, they could reduce reliance on insurers and avoid some of the related costs. It could show a new way for employers to provide good, affordable coverage, and increase wages with the savings.”
Julia Cohen. Vice President of Commercial for Clarify Health Solutions (San Francisco): “Exciting announcements must become concrete information. Today, these companies say they’ll focus on achieving the triple aim, leveraging technology, prioritizing their employees and their families — and without a profit imperative. Perhaps they’ll create innovative enabling technologies to streamline care delivery and administrative bloat. Or, perhaps they will seek to create a more tech-enabled version of an integrated delivery network like Kaiser. Such business models are inherently challenging to scale in healthcare, and the business of healthcare providers and payers is complex. Plus, healthcare is inherently a risk-management culture that runs counter to tech culture, never mind regulation. Alternatively, perhaps the companies will pursue direct contracting with providers. Then they would be among many employers already bypassing insurers, such as Boeing, Walmart, GE and Lowe’s.
“On the payer and provider side, I see M&A activity as being rationally driven for growth, rather than reactive to the moves of industry outsiders. I expect any transformative landscape changes to be driven by policy before business disruption. However, industry outsiders will increase competition and innovation, which will turn up the heat on industry incumbents. This will benefit everyone, as technology will increasingly infiltrate healthcare and modernize our approach. Partnering with our government, all players must collaborate to legislate and innovate in healthcare together.”
Q: How should hospitals, health systems and other healthcare organizations respond?
Mike Long. Chairman and CEO of Lumeris (St. Louis): “The Amazon/Berkshire Hathaway/JPMorgan announcement is just the most recent, but powerful ‘shot across the bow’ of the healthcare industry. Corporate, government and individual buyers of healthcare want value, and they want it now. The current fee-for-service system has failed to deliver on promises of higher quality, lower costs, better service and easy access. The days of large annual increases in healthcare costs are over, and in a zero-sum-game world, where the market is capping the amount of dollars available for healthcare, only those that can deliver value will survive.”
Gurpreet Singh. U.S. Partner and Health Services Sector Leader of PwC (New York City): “Many companies are trying to figure out whether they should be part of a larger ‘greater good’ organization as a result of this partnership; they’re looking at how large institutions can participate and create better access to care as well as better prices. What this partnership doesn’t do is affect the cost of care; what it does do is focus on providing a better understanding of patient populations and a better way to management risk across that population, and potentially narrow networks within the payer landscape.”
Q: How are you responding to the news? Are you making any changes to your business model?
Rick Halton. Vice President of Marketing and Product at Lumeon (Boston): “We see an opportunity for this collaboration to enter into algorithmic lifestyle coaching, helping detect and prevent illness. This can be done through use of thorough employee health risk assessments, smart algorithms and continuous monitoring using wearables, adapting coaching programs to the preferences and motivations of each employee. By nipping health problems in the bud, it would be possible for this collaboration to significantly reduce the cost of care.
“Furthermore, it is not uncommon for disruptors in one industry to make waves in another (think Elon Musk and automotive to space innovation), and Amazon, Berkshire Hathaway and JPMorgan Chase are certainly influential and innovative in their respective industries. With that comes great excitement and potential.
“Amazon, for example, has taken a global leadership role in technology and applied it to reduce labor costs, introducing everything from thousands of robots in their warehouses, to eliminating checkouts in the Amazon Go stores, while designing end-to-end digital shopping experience. Just imagine if these skills are applied to the labor-intensive patient journey. Today, employees and patients too often find themselves having to piecemeal together their own care and deal with a fragmented, heavy-handed healthcare system. In contrast, with the help of smart technology platforms, Amazon could deliver a unified and fluid patient experience that takes advantage of modern care automation techniques to consistently deliver the best outcomes at lowest possible cost.”