A ‘Disruption’ in Healthcare

Amazon, Berkshire Hathaway and JP Morgan Chase announced Tuesday they are partnering to create an independent company aimed at reining in healthcare costs for their employees.

According to the Washington Post, the independent company would be jointly led by executives from all three companies and would be focused on technology that could increase transparency and simplify healthcare, according to the joint announcement.

“It will be free from the need to deliver a profit,” the Post noted.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable,” Warren Buffett, Berkshire Hathaway chairman, said in a statement.

The announcement was a welcomebut surprisingone to Brian Marcotte, CEO of the National Business Group on Health in Washington, D.C.

“While there’s been speculation that Amazon would someday move into the healthcare space,” he said, “I don’t think anyone anticipated them teaming up with those two other giants,” Berkshire Hathaway and JP Morgan Chase.

“We applaud their effort and long-term view,” Marcotte added. “New entrants with fresh approaches like these may be just the prescription our ailing healthcare system needs. This industry is ripe for disruption and the collective resources of these three companies, emerging technologies and Amazon’s customer obsession and supply-chain savvy gives me optimism that they will pursue a consumer-focused model that will transcend the fragmented, provider-centric delivery system that we have today. ”

The partnership is also “further evidence that employers are frustrated with the pace of change in healthcare,” he said.

Given its outsize influence on Americans’ daily lives, Marcotte said it will be intriguing to watch how Amazon can overcome the “fragmented and complex” nature of the current healthcare-delivery system.

And while the independent healthcare company proposed in the partnership will only cover employees of the three participating companies, Marcotte said it would not be a surprise if the end result–if successful–is someday made widely available all consumers.

“Amazon has become a daily part of a lot of people’s worlds, but accessing the healthcare system is not typically part of a person’s routine,” he said. “So if Amazon becomes the entry point for healthcare, it becomes more part of a routine and could prompt [users] to be more engaged with their healthcare options and decisions.”

“Obviously, we don’t know where it’s going to go,” Marcotte said, “but Amazon always starts with the customer first, so whatever comes out of this will likely be much more customer-focused.”

And in light of the recent CVS/Aetna merger, Marcotte says that, while it’s way too soon to know what this new partnership may mean for the future of employer-sponsored healthcare, he’s certain of one thing.

“What it does say is that we’ll continue to see more disruption,” he said.

Michael J. O'Brienhttp://
Michael J. O’Brien is former web editor with Human Resource Executive®.