/ Print /

  • linkedin
  • Increase Font
  • Sharebar

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

    source_MHE_81.jpg
     

    The partnership will certainly help lower annual increased healthcare costs, Hobson says. 

    HobsonHobson

    “The new entity would cover about 900,000 employees worldwide. The volume alone will help cut costs. With a lesser incentive for profits, the new company can cut out middle entities, such as pharmacy benefit managers,” Hobson says. “Hospitals could contract directly with the new company. Initially, the company could buy drugs at a greater volume and demand lower prices. Later, it could manufacture generic drugs as a means for reducing costs. The announcement has already impacted the healthcare provider community. Insurer stock prices dropped immediately. Other market consolidations, such as the CVS-Aetna merger, can be expected.”

    A fresh approach is exactly what the healthcare industry needs, says Mike Hough. executive vice president and North America branch founder of Advance Medical, a medical advocacy and expert medical opinion company.

    “The major carriers—medical and pharmacy benefit managers—have a disincentive to disrupt the status quo,” Hough says. “Who do they serve? Beyond the shareholders, their major constituencies are their providers or the drug manufacturers."

    How everyone will be affected

    HoughHough

    Amazon’s CEO Jeff Bezos, JP Morgan Chase chairman and CEO Jamie Dimon, and Berkshire Hathaway chairman and CEO Warren Buffett want to take on healthcare, and “have effectively unearthed the value of major industries by looking at things differently,” Hough says. 

    “Our hope is that they find that efficiency first and foremost comes from delivering the right treatment for the right diagnosis,” Hough says. “Everything else—site of care, risk shifting, etc.—is a sideshow. If our caregivers had more time with patients, the overall quality improvement will drive down the cost. They also know how measurement is done, which is a perennial issue in healthcare. Not having a readmission or not having an infection is not how you measure a good outcome.” 

    Hough believes that this is a strong win for employees. “The due diligence that has made Berkshire Hathaway and JPMorgan so successful in their fields demonstrates that whatever is delivered to employees will have been fully vetted,” he says. “[JP Morgan Chase’s] Jamie Dimon is a tenacious advocate for lower compensated employees as recently demonstrated by the announcement to use the federal tax overhaul to provide 10% increases to 22,000 workers and $750 cash bonus to be awarded to employees earning less than $60,000.”  

    How will other healthcare companies be affected? Initially, Hough says they should be concerned since once a system is created “free from profit-making incentives and constraints” there is a huge risk to their business model. “Over time, this new company may provide the sentinel effect to other healthcare companies, making them stronger and perhaps providing healthy competition, maybe creating a gold standard of healthcare that has been so elusive in this country,” he says.

    “This shake-up in the healthcare world underscores the need to embrace and develop voluntary benefits that can enhance the employee experience and provide additional flexibility and safety nets in the overall healthcare delivery system,” Hough says.

    TileniusTilenius

    For starters, insurers need to be more aggressive about improving the consumer experience, their NPS (Net Promoter Score), and coming up with new health plan options that drive consumer engagement and lower costs, according to Stephanie Tilenius, former senior executive of PayPal, eBay, and Google, and current CEO of Vida, which provides digital therapeutics for patients with chronic ailments. “They can no longer sit back and wait to see what happens—they have to be more proactive and innovative than they've ever been.  Everybody needs skin in the game—consumers, employers, and payers. Incentives must be aligned for real change to take place.” 

    “Payers have an opportunity to embrace partnerships with technology-forward health and wellness companies that would help them evolve their consumer experience and offer more continuous care at lower cost,” she adds. “They don't have to start from scratch or build in-house—technologies like telemedicine, real-time remote monitoring, and digital therapeutics have matured dramatically in the last couple of years. It's just a matter of being willing to adapt.” 

     

    0 Comments

    You must be signed in to leave a comment. Registering is fast and free!

    All comments must follow the ModernMedicine Network community rules and terms of use, and will be moderated. ModernMedicine reserves the right to use the comments we receive, in whole or in part,in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

    • No comments available

    Follow Us On Twitter

    Find us on Facebook

    Latest Tweets Follow