An editorial by Chris Thurin

According to the Centers for Medicare and Medicaid Services (CMS), U.S. health care spending is projected to reach nearly $5.5 trillion by 2025. Let that sink in.

That’s why, when Amazon, JPMorgan Chase & Co. and Berkshire Hathaway announced they are partnering “to address health care for their U.S. employees” by creating “technology solutions,” it made the industry – and the stock market – collectively pause. Many experts applauded the move overall, but pointed out it was flimsy on details. Then, in a recent interview, Warren Buffet said the purpose of the venture is to grow and become "something that other people can pick up on." And that is exactly why I think this partnership could be successful in disrupting the current health care industry.



The health care industry is notoriously slow to change and this partnership might be a catalyst for other companies and stakeholders, encouraging them to start innovating faster. The venture has an opportunity to be a perfect internal incubator to build, test and deploy a better model of health care to the general public. It can open the door to sharing ideas and data that smaller companies can leverage; smaller companies will also be able to learn from any mistakes this partnership will inevitably make.

Frustration leads to technology disruption
The message this partnership sends is that, arguably, some of the brightest minds in business are frustrated, ready to disrupt the status quo, and have given up on the traditional ways in which employers and the government have tried to reduce health care costs. Amazon, Berkshire Hathaway and JPMorgan have come together to say, "You haven’t gotten it right for decades; there are still a lot of problems. But, we can offer a fresh perspective." The venture has the size, skill and scope to back up this statement, and make a disruption in the health care industry actually possible.

Technology and innovation are what’s needed to help with both the economic and care inefficiencies in the current health care system. This is where Amazon is a perfect player for the partnership, because it has already proven that it understands how to leverage technology to disrupt industries. In this new venture, Amazon’s strong infrastructure and experience with artificial intelligence, machine learning and big data will likely all be leveraged to spur the “new technology innovations” the companies jointly announced, like information-sharing platforms that “can increase the efficiency of health care delivery.”

For example, people often visit a string of doctors and specialists, and are frustrated when the physicians can't compare notes or coordinate care. That's because medical records, despite many electronic health record (EHR) technologies on the market, sometimes aren't shared and integrated between different health systems. Centralizing information about patients would be a big and important step forward in health care, and Amazon has the legacy technology infrastructure to create a more integrated and coordinated care model.

This partnership could also add to the pool of data that can be used by health care providers to make truly meaningful change in how they approach treatment. For instance, the venture could collect pieces of data from their employees with connected devices, tracking patients, treatments and outcomes through established workflows that can be helpful in improving operational execution for the complex services provided in many health care settings. And Amazon’s infrastructure is already compliant with health care privacy regulations.

Catalyst of change for all health care industry stakeholders
The Amazon, JPMorgan and Berkshire deal could be the impetus that scares current industry players enough to make meaningful change. For instance, insurers are part of the problem but they’re uniquely positioned to innovate and improve the current health care system if they perceive an imminent threat. Insurance companies have long said they want to provide transparency, yet consumers often don’t know the true cost of care. Prices are negotiated in secret between insurers, and providers and patients have no idea what will actually be charged.

The new venture also has the potential to take us one step closer to a health care system where we pay providers based on health outcomes versus volume of service – value-based health care. This would lead to a reduction in costly adverse clinical events because these providers and health care systems will be financially incentivized to improve the health of the populations they serve, thereby avoiding costly treatments and admissions. For consumers, in the near-term, it has the potential to deliver more health for the current spend. In the long term, it’s possible the partnership might leverage scale to negotiate lower prices with health care providers in certain regions. Or, even compete with providers by creating in-house clinics for employees in Amazon distribution centers or the lobbies of JPMorgan offices.

Although employers are the main source of insurance for many Americans, it has been difficult for them to galvanize and push for control of health care costs. The initiative of these three large employers puts a new stake in the ground; they’re now attacking health costs by putting their purchasing and political weight behind it. Employers, no matter their size, should start to embrace improved health care models, or it could be harder for them to compete down the road. Not only would employers begin to see healthier employees but they would also start to see a healthier ROI; Warren Buffett himself stated, “We want happier employees, better medical outcomes, and I do think at the end of the day that'll actually be cheaper.”

What’s at stake?
The way our country handles health care is unsustainable, and shake-ups like these are needed to make progress. By combining the strengths of what each company has already succeeded in – Amazon with the technology and distribution they are famous for, Berkshire Hathaway utilizing their risk-management experience and JPMorgan Chase with their knowledge of financing – these companies are equipped to develop a new model of health care that can be extended beyond their own employees.

There’s no doubt that fixing America’s health care system is complex, and certainly won’t happen overnight, but this partnership is a step in the right direction. Although there will likely be missteps along the way, health care companies would be smart to consider what this venture is doing as a catalyst for change, and act fast at making their own changes – or risk being left behind as competitors pass them by.

About the author: Chris Thurin is the regional managing principal for OneDigital