Government attempts to fix health care have been less than impressive. Now, Amazon.com Inc. (NASDAQ:AMZND), Berkshire Hathaway Inc. (NYSE:BRK-BC), and JPMorgan Chase & Co. (NYSE:JPMC) are going to give it a try.
Tuesday these corporations announced plans to form a partnership to cut health care costs and improve services for their 1.1 million U.S. employees. Company CEOs said they hoped eventually this would lead to improved health care for all Americans.
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Not surprisingly, given the involvement of Amazon, the first order of business will be to target technology solutions as an umbrella firm "free from profit-making incentives." Beyond that details are sketchy. The companies hope their combined size will help bring both scale and resources together to tackle issues as they are identified.
Simplifying the health care system through technology will be designed to bring down costs while improving quality of care, something every attempt to improve America’s health care system has made a priority.
No Quick Fixes
While goals are being developed expectations are being tempered. Comments from the companies suggest everyone sees this as a complex, challenging and thorny endeavor that will “take time to bear fruit.”
Adam Fein, president of Pembroke Consulting told CNBC, "For better or worse, there are warped incentives baked into every aspect of the U.S. health care system, from medical innovation to care delivery to insurance and benefit management. Rather than merely bashing the current system, I hope this new organization can help patients and their physicians make more informed and more cost-effective decisions. Technology will be necessary but not sufficient to make positive changes."
Amazon, Berkshire and JPMorgan shares changed little in premarket trading after news of the partnership broke. Shares of other industry leaders including CVS Health Corp. (NYSE:CVSC), UnitedHealth Group Inc. (NYSE:UNHC) and Express Scripts Holding Co. (NASDAQ:ESRXA) were off between 3.5% and 7% in early trading Tuesday.
Overall initial reaction suggests that the "Amazon effect" (deep pockets and massive online scale) could impact the health care and insurance industries the same way it has retail, shipping and other consumer markets. In a press release the companies said, “Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”
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What Could Happen – A Future Imagined
This partnership and the concept behind it is both bold and new. At this point nobody knows what may come of it, if anything. Recent attempts to innovate health care, however, seem hungry for the types of resources these companies could bring to the table. The health care industry has entered the digital age. The widespread adoption of electronic health records is but one example. The possibilities that spring from advances in analytic software, mobile technologies, sensors, and genomic sequencing are all part of a future yet to be realized.
The idea of data-driven health care is exciting to many but less-than-comforting to others. Questions about maintaining a close doctor-patient relationship in the face of more computer power in medicine will have to be answered even as the ability to use data from that relationship to improve health care for all expands.