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    Amazon, JPMorgan, Berkshire Hathaway collaboration puts insurers ‘on notice’


    Healthcare executives may need to hold on to their hats and prepare for a new trio of players making their entrance into the healthcare market.


    Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. are joining forces to address healthcare for their employees.

    The initial focus of the new company, according to a news release, will be on technology solutions that will provide their U.S. employees and their families, and potentially all Americans, with simplified, high-quality and transparent healthcare at a reasonable cost.

    While the companies have yet to release further details, industry analysts are already speculating about what the new company could entail and how it could affect the industry.

    “Traditional health insurers are officially put on notice,” says David Friend, MD, MBA, chief transformation officer and managing director of The BDO Center for Healthcare Excellence & Innovation. “This move is three major players applying a start-up mindset to the entire healthcare ecosystem.”


    John Driscoll, CEO of CareCentrix, agrees “Anyone with a high-cost, high-margin business has to be worried about this partnership,” Driscoll says. “There’s no question that these outsiders have a deep interest in providing higher quality care at lower costs to patients.

    "From my perspective, the path to success is to partner with incumbents who have experience with the challenges of the industry and have the same goal of bending the cost curve, improving outcomes, with patient satisfaction as the focus," Driscoll says.

    John Sarich, vice president of strategy at VUE Software, a firm that specializes in innovating and automating business processes for the insurance industry, says: “This could be the breakthrough in the impasse towards improving the system.


    "First, it’s always good to start with the understanding that we do enjoy the best healthcare on the planet. And, being the best, it is also likely the most expensive healthcare on the planet. The challenge is to keep the high quality and at the same time cut the costs,” Sarich says.


    What the company could look like

    These three companies are looking at improving group plans (employer sponsored), according to Sarich. “With the end of Obamacare, the real opportunity to effect disruptive change is in these employer plans. And, movement is under way.”


    Amazon has been headed for the prescription drug market for some time now, according to Peter Marcia, CEO of YouDecide, a voluntary benefits outsourcing firm that partners with Fortune 1000 companies to provide customized benefits for their employees. “With the acquisition of Whole Foods as a retail hub and its vast delivery expertise, this could be the flashpoint that could make this a reality,” Marcia says.

    According to Friend, all three players bring something unique to the table that combine quite nicely with tackling healthcare problems.

    “Amazon provides the technology along with access to more than 500,000 employees and their families, and 90 million Amazon Prime customers as potential members,” Friend says. “JPMorgan provides its massive dataset on its customers to Amazon, along with access to more than 200,000 employees and their families as potential customers. JPMorgan could also then market its insurance products to its millions of customers. Berkshire provides the balance sheet and access to nearly 400,000 employees and their families as potential members. The result could be an overnight insurance company with easily more than 1 million members with the potential to scale rapidly to others.”

    The structure of this initiative could surface in one of many ways, according to Marcia. “It could initially ‘lease’ a delivery system that one of the existing healthcare plans already has and be branded with new, simpler plan features,” he says. “One would not be surprised if phase 2 of this new entity involves direct contracting with providers. It could also leverage existing programs such as the federal and state exchanges, breathing a new life into them and incorporating a ‘401(k)-itization’ approach of providing employees a set dollar amount to purchase coverage.”

    This new program will probably have a strong focus on technology support tools to help the employee choose the best care by providing successful outcome data and transparent pricing, he adds. “With the lens on technology, access to medical providers via chat and internet may be a feature.  Amazon would have a strong influence on the direction of prescription drug pricing and delivery.”


    An aspect of the release that caught the eye of Matthew Fisher, partner at Mirick O'Connell, and chair of the firm's Health Law Group, is that it noted that the joint venture will allegedly not be formed for purposes of making money. More specifically, the release states that the companies will form an “independent company that is free from profit-making incentives and constraints.”

    “That is not the same as creating a nonprofit,” he says. “Additionally, I would be very skeptical that a nonprofit is even a possibility because a nonprofit likely cannot be created to support and aid three for-profit companies.”

    Julius W. Hobson, Jr., senior policy advisor at the law firm Polsinelli, is not surprised that this partnership materialized. “Healthcare costs have annually exceeded inflation for years. In 2015, healthcare was 18% of GDP. It should be no surprise, then, that large business corporations are combining to lower healthcare costs. The question is, why did it take so long?”

    Next: Lower costs?



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