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Can Amazon Fix Healthcare? Maybe

February 15, 2018

amazon-healthcare.jpgMy friends and colleagues know that I’m a bit of a healthcare policy geek.  I was a healthcare attorney who worked with various healthcare regulatory issues and followed legislative actions closely. Then I taught a graduate school class on the U.S. Healthcare system for a number of years.  I often get dragged into deep discussions about our healthcare system’s challenges and potential solutions.

Related: Reforming Healthcare Means Reforming the Healthcare Workforce

Not surprisingly, I received a bunch of texts and emails when it was announced that Warren Buffet, Jamie Dimon of J.P. Morgan, and Jeff Bezos of Amazon recently announced a health alliance to “disrupt the healthcare industry.”  Given the industry’s challenges, people are naturally excited about the idea of the great minds of business applying their genius and resources to the problem. 

The excitement is well-founded.  They say they are approaching the problem without a profit motive.  They’ll just look for solutions that improve the quality and efficiency of care delivery while reducing cost.  These are titans of industry.  This is their area of expertise, right?

My first reaction was a mix of excitement and skepticism.  As powerful, wealthy, and innovative as they are, their initial impact is probably going to be limited to their own companies.  The U.S. healthcare system is so big that if it were a country, it would be the be the 5th largest economy in the world!  These guys can turn around big companies, but what if you asked them to re-build the 5th largest economy in the world?  It’s a big ask even for this impressive group.

Even with the innovation and technology they would bring, I immediately went to what it takes to deliver care in the U.S.

Core challenges that they may not be able to influence: 

  • Exponentially rising drug costs – pharma companies are powerful and spend a lot of lobbying dollars to protect their profit margin.

  • Similarly, the vast for-profit industries that have evolved to provide medical devices and supplies.

  • The labor-intensive components of providing care. No matter what they do, they need top physicians, nurses, and other providers – this is an expense that cannot be avoided.

  • The payment structure. In the U.S., we spend more time talking about the cost of health insurance than the actual cost of care.  As long as we have private, for-profit health insurance companies controlling HOW we pay for care, it’s hard to make changes.

  • The demand for services is outpacing our ability to meet the need.

  • An existing business model that is more complex than they probably realize – and they won’t be able to shut it down and re-build it. They’ll need to change the tires while the truck keeps rolling, so to speak.

Most commentators agree that they likely will start by building a better health system for their own companies.  You could see how this might happen. They can largely self-insure.  They could build their own network of providers with an emphasis on technology, data, efficient service delivery, and quality.  But what about when their employees need a hospital or other advanced care?  They’d still be going into the existing care delivery system with its outrageously expensive costs.

Don’t get me wrong, this type of experiment has the potential to yield lessons and innovations that could carry over to the entire system – but they won’t change the complex payment structure or make much of a dent in the real cost drivers.

Another potential problem with this approach: Have we decided that keeping some version of employer-sponsored health insurance is really the long-term solution?  We are the only country to build the majority of our health insurance/care system into the employer-employee relationship.  Should we, perhaps, be looking for ways to take employers OUT of the equation?  Imagine the savings in time and resources if companies weren’t in the business of managing their employees’ healthcare?

This alliance has not provided any detail on their plans.  I’m sure that step one is to gain a deep understanding of the problem and that’s going to take a while.

I’m optimistic that bringing our best minds and a willingness to disrupt the industry, to the problem is a great idea. 

A few ways they can make a difference:

  • They are large enough and influential enough to change our cultural approach to the problem and the way we think about the industry.

  • They’re in the business of finding real, long term solutions. Hospitals are in the business of trying to provide care today, and planning for an uncertain future is tough.  Insurance companies are looking at quarterly profits.  Government payer sources are just trying to stay solvent.  These guys can define the problem and have no short-term pressures that will hinder the long-term plan.

  • They have a sincere incentive to improve the health and productivity of their employees. If they take a more active role, they almost certainly can demonstrate how to reduce costs – at least for themselves.

  • If it is just another employer cooperative working to control health INSURANCE costs, it will have little broad impact. If, however, they structure this as a testbed for potentially transformative ideas and innovations – it really could be disruptive.

  • While there is extensive work being done to transform care delivery, they could bring energy and ideas to more comprehensive use of data, operational excellence, consumer focus, personalization of data, and technologies like artificial intelligence and mobile devices.

  • They could pick a disease state like Diabetes and develop a better long-term approach for their employees – an approach that could be adopted by payors and health systems.

  • Finally, they could demonstrate to healthcare how to be more sophisticated and progressive in managing their workforce. This is more important than people realize because in healthcare, even more so than at Amazon, the workforce is to a large degree the service being provided.  Maybe they can find a way to get us back to house calls with providers delivered by drone?  (Sorry, I couldn’t help myself.) 

As I’ve told all of my friends and colleagues – this is exciting, but this is a long-term project – one we’ll have to watch for several years to see how it evolves.  For those frustrated that healthcare needs to function more like a business, it’s a glimmer of hope.

Want to learn more about how these new technologies require a focus on workforce adaptability, see: Is Emotional Intelligence or Adaptability More Important for Physicians?

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Bryan Warren Bryan Warren was the former Director of Healthcare Solutions at PSI. He was responsible for developing and promoting tools and services designed specifically for the unique challenges faced by healthcare organizations.