Announced in late January, three international mega-companies are joining forces to enhance their United States employees’ satisfaction and reduce overall healthcare costs. Amazon, the world’s third-largest retailer; Berkshire Hathaway, a conglomerate holding company chaired by billionaire Warren Buffett and the world’s third-largest public company; and JP Morgan Chase & Co, the world’s third-largest bank are partnering to create an independent company—free from profit-making incentives and constraints—that leverages technology to provide their more than one million employees easy-to-access, high quality, and transparent healthcare at a reduced cost.
“The ballooning cost of healthcare acts as a hungry tapeworm on the American economy … We share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes,” said Buffett in a joint statement. Buffett’s words coincide with data from CMS showing 2016 healthcare spending averaging $10,348 per person and projections for national health expenditures expected to grow from $3.3 trillion in 2016 to $5.7 trillion in 2026.
Although this joint operation is still in the very early phases of development and it’s unknown exactly just how this new company will proceed to tackle surging costs, the announcement alone was enough to cause healthcare stocks to plummet, with major market insurers Anthem and UnitedHealth falling by more than 5%. This illustrates just how impactful Amazon and its partners can be in the healthcare field.
One interesting way that Amazon could deliver healthcare is by drawing upon its customer-obsessed culture. This includes “working vigorously to earn and keep customer trust” and “offering customers something they simply could not get any other way,” as outlined in Amazon’s leadership principles and in founder and CEO Jeff Bezos’ 2016 letter to Amazon shareholders.
Could this new company borrow principles from Amazon Prime, which simplifies ordering online products and offers quick shipping for a yearly fee, and create an easier way for patients to complete preappointment paperwork, schedule appointments, and receive routine care much like they receive everyday retail items? Could Amazon utilize its Echo, the popular personal household assistant, to get patients to ask “Alexa, please schedule my follow-up appointment” or “Alexa, is my prescription ready?”
While this new company’s first plan is to provide healthcare for its U.S. employees, it’s not impossible to think that coverage could expand to additional U.S. citizens outside of the businesses’ walls if it exhibits sustained success. If a low-priced Amazon healthcare coverage plan became an option for Americans, could this force other insurers to reduce their prices to stay competitive? Could Amazon possibly leverage its recent $13.4 billion purchase of the grocery store chain Whole Foods by placing healthcare clinics and pharmacies inside, initiating competition with convenience chains like Walgreens and even traditional clinical locations?
While this new venture certainly poses a lot of questions that have yet to be answered, it is nonetheless an intriguing development. Be sure to keep an eye on the Cost & Quality blog to stay informed about newsworthy industry topics like this and other related areas!
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