When Warren Buffett, Jeff Bezos, and Jamie Dimon get together, they have interesting conversations. When they make a public announcement about what they’ve discussed, the world takes notice. Their recent announcement of an intent to tackle the high cost of healthcare in this country, “free from profit-making incentives and constraints,” certainly got the attention of everyone from Wall Street to health system boardrooms. But cutting through the hype, what did they actually say?
Turns out, not much.
For now, the Amazon, Berkshire Hathaway, JPMorgan Chase group, let’s call it BB&D, will be using their combined employee base as the testing ground for possible solutions. With more than one million employees, they certainly have the financial incentive to do this, and like any employer, they know that if their employees are healthier, they will pay out less in healthcare costs. One thing for certain about this new initiative is that they will learn a lot from it, such as how to incentivize employee behavior change and how to negotiate with providers of care. But at the end of the day, they will initially be partnering with existing healthcare organizations.
It’s hard to disrupt an industry if you’re working with the incumbents. So they will have real challenges in asking large healthcare systems to do things differently, just because of the incumbent’s nature of being in that space. If they are just collaborating with incumbents to be better self-insured employers, that probably won’t lead to real disruption. But this is where this gets interesting.
Everyone knows that Bezos has a target painted on every industry. It started with books and has gone on to almost everything. Now he says he is targeting healthcare.
When Bezos through Amazon tackled books, he knew he was going to do it online. But building a new healthcare paradigm is nowhere near as simple.
Amazon are masters of vertical (and horizontal) integration. They look at each piece of a vertical and ask if they can do it better and more closely aligned with their bottom line. This could very well happen with healthcare. BB&D will start with paying for services and then think about what they are getting for their money. Where is healthcare actually happening? How can we optimize the process?
Because they are also masters of technology, it is inevitable that at some point they are going to move into that space to make it as simple and transparent as possible. They could easily adopt a model similar to Wal-Mart’s partnership with Cleveland Clinic for employee heart healthcare. As BB&D moves into negotiating with and sending their people to best in the industry specialists, in a form of domestic medical tourism, that would spur the need for technology to manage patient care at every point in the continuum of care.
This is where BB&D will decide whether to build, buy, or partner for technology solutions. And that could be a very good thing.
Too many in our industry try to solve problems without thinking about how what they are doing fits in with the larger picture. BB&D would have the opportunity to set an example of how to do technology from a holistic point of view.
It takes a competitor
If BB&D actually starts to compete with established healthcare organizations, the incumbents will have no choice but to step up their game. Amazon broke into online retail ahead of most brick and mortar stores. But until they started to compete directly with them, brick and mortar stores were not truly committed to an online presence. Many online retailers would not have happened if Amazon had not started to compete. Amazon simply proved consumers were looking for an online experience. It will take consumers wanting the same in the healthcare space for a true digital experience to take hold.
While BB&D may find disrupting healthcare on a large scale impossible, the possibilities are intriguing. It would be great to see these three work together to drive change in their employee base by figuring out better ways to pay for care, incentivizing behavioral change, using technology for all it’s worth, and then offering the new model to the public.
If we see BB&D open up their offering outside of their employees and actually start stealing customers away from the incumbents, exciting things could happen. Because the only thing that will light a fire in the status quo is a competitor worth competing with. BB&D could be that competitor.