Umm, wow.
That’s the obvious takeaway from the Amazon/Berkshire Hathaway/JP Morgan Chase employee healthcare announcement yesterday.
It certainly has the makings of being a Very Big Deal. Many people expected a healthcare announcement from Amazon eventually, but most speculation has centered around comparatively smaller moves like entering into drug distribution or providing large-scale health IT infrastructure. Needless to say, this is something much bigger and came seemingly out of nowhere. (My blog entry from last week “speculated wildly” about what Amazon could do in healthcare and could turn out to be surprisingly prescient, but may be an example of being more lucky than good.)
Some other quick thoughts:
1. Credit to the three companies for keeping this a secret for as long as they did. Though the timing -- Amazon’s job listings and hires have been big news the last couple weeks -- and complete lack of detail in the press release (the new organization doesn’t even have name!), one gets the feeling that this was a preemptive strike against the news leaking out.
2. Although the program is designed for each company’s employees, I have to believe there will be long-term plans to make either a publicly available consumer offering or to allow other companies to buy in. Should the new program come in at lower cost than traditional employer-sponsored plans, there will be money to be made selling it. Bezos, Buffett, and Dimon did not get where they are by leaving money on the table.
3. I assume that an Important Person at almost every Fortune 50 company just got a new project this morning when a Very Important Person showed them the press release and told them to “find out if we can do this.”
4. The one detail (if you can call it that) from the press release says they intend to use technology to lower costs. Telemedicine is obvious (remember Amazon’s Mayday?), along with supply chain and logistics improvements. Amazon’s population health initiatives make a lot of sense now, as does the partnership with Cerner.
5. There are no details about little things like who will be the providers, where site of service for in-person visits will be, how routine and non-emergent care will be addressed, etc., but the three companies have a strong nation-wide footprint they need to cover and simply re-creating an HMO-type organization seemingly runs counter to the group’s stated mission of lowering costs. Healthcare continues to move away from hospitals and physician offices and into home and retail environments. Add this announcement to the list of forces accelerating the trend.
6. We don’t know who will be in the new group’s crosshairs, but if cost control is the objective, then the middlemen, bureaucracies, and rent-seekers are the logical places to start. Organizations like pharmacy benefit managers, third-party administrators, and insurance companies probably have the most to worry about if this approach (whatever it is) works and shows results.
7. I’m kind of stunned by the tone and positioning of the announcement: each of the three CEOs provided quotes for the release and none of them (especially Buffett) were hiding their disappointment with and hostility towards the healthcare industry at large. It’s telling that the approach -- as much as we know -- seems to be less about working within the confines of the industry, and more about just getting something done. Their combined resources give them that option. Public sentiment appears to be in their favor: I've seen a number of comments expressing the hope that this announcement is just the opening salvo in a large-scale overhaul of the US healthcare system. We'll see.
