It’s been a few weeks since Amazon, Berkshire Hathaway, and JP Morgan Chase shook the healthcare market to the core by announcing they were coming together to create a new healthcare company. In 2016, US healthcare spending exceeded $3.4 trillion, and now these three companies are coming into the healthcare sector with a combined market capitalization of over $1.3 trillion just by themselves. That’s a new player with the power of approximately 40% of the US healthcare spend.
While Amazon, Berkshire Hathaway, and JP Morgan Chase are not pushing their entire market capitalization to focus on healthcare, even a partial focus will shake the healthcare market. We now have three disruptive leaders focused on a market where disruption can seem more evolutionary than revolutionary.
How Do We Understand the Coming Change?
As an industry, we must embrace this new entrant and reexamine how we’re engaging in the business of healthcare for our patients, employers, providers, and payors. There are several facets that need to be examined and optimized.
- Technology: Amazon’s technology is ubiquitous. Digital personal assistants (e.g., Alexa, Echo Dot) may eventually pave the way for true telemedicine. Amazon recently launched camera-based technology to help with a need more basic than healthcare: outfit selection. These sorts of developments could progress to advanced personal connections with healthcare providers, allowing physicians to examine basic and chronic conditions without needing patients to make an appointment or travel to a physician office.
- Capacity and Access: We need to continue pushing the envelope and engage with our physician partners from a technology perspective in order to ensure optimal interactions with patients, payors, and employers. Given the physical presence of JP Morgan Chase’s branches, it may now be possible to envision provider offices in banks, when a few weeks ago, this thought and many others were nonexistent. It’s critical to align and partner with physicians to bring new access points to the market.
- Waste: It’s no secret that missed appointments, readmissions, and defensive medicine creates waste in the healthcare system. Understanding the underlying causes of this waste and working together as an industry to eliminate it will be necessary in the shifting healthcare landscape. Whether on the ambulatory or the acute care side, all points in the healthcare delivery chain will need to be scrutinized and any identified waste will need to be eliminated.
- Pricing: Thanks to Berkshire’s GEICO subsidiary, the companies have some knowledge of the insurance market. Furthermore, all three are hyper-focused on pricing and value. The ability of healthcare companies to understand costs and drive total cost to the customer down through bundled payments will be critical. Regarding Amazon’s recent announcement to deliver groceries from Whole Food free to Amazon Prime members in four cities, Lee Peterson, Executive Vice President at WD Partners, stated, “How do you compete with a grocery company that doesn’t care about making money?”
How Do We Compete with a Company That Does Not Care about Making Money?
Cooperation is the only way to compete. Success will rely on understanding the true costs and on bundling pricing, reducing waste, improving capacity and access, and continuing to push the envelope on technology in new and exciting ways that help providers interact with patients.
The potential for success is huge, and it’s imperative for us to seize the opportunity and make it happen!