Major tech companies like Microsoft have not been very successful in "disrupting" healthcare in the past (see: What Are the Consequences of Big Tech Entering the Healthcare Market?; Microsoft's Amalga/HealthVault Strategy Becomes Obvious). However, a recent announcement by Amazon, Berkshire Hathaway, and JPMorgan Chase that they were forming a new health care company is garnering a lot of attention in the news (see: Amazon, Berkshire Hathaway and JPMorgan Team Up to Disrupt Health Care). Below is an excerpt from the article:
Amazon, Berkshire Hathaway and JPMorgan Chase announced...that they would form an independent health care company to serve their employees in the United States. The three companies provided few details about the new entity, other than saying it would initially focus on technology to provide simplified, high-quality health care for their employees and their families, and at a reasonable cost. They said the initiative, which is in the early planning stages, would be a long-term effort “free from profit-making incentives and constraints. The partnership brings together three of the country’s most influential companies to try to improve a system that other companies have tried and failed to change....CVS Health’s deal last month to buy the health insurer Aetna for about $69 billion is just one example of the shifts underway (Merged CVS and Aetna Will Move Toward a Community-Based Healthcare Model).....Total employees [to be covered by the new company]: 1.2 million....The announcement... highlighted investor worry about Amazon disrupting the health care industry. Shares of UnitedHealth were down 5 percent in premarket trading, while Anthem’s were down 3.5 percent, erasing many of the gains such companies have made over the past 12 months.
I have no inside knowledge about where these companies are headed in healthcare but I, like others, don't mind speculating about their possible goals. The first thought that comes to my mind is perhaps this new entity may consider distributing some sort of wearable device to their 1.2 million employees (see: Microsoft Publishes Guidelines for "Health Wearables"). Another idea that come to my mind is that the companies might develop an incentive system to encourage their employees to pursue a healthy lifestyle. This approach, although effective, might cause some eyeball rolling as being insufficiently innovative (see: Paying Patients to Stay Healthy; Discrimination Against the Poor?).
I do want to emphasize the one major advantage that these companies hold over the giant healthcare systems like LifePoint Health, Trinity Health, or NewYork-Presbyterian Healthcare System with multi-billion dollar revenues (see: 10 largest US health systems: Which had the biggest revenue increase in 2016?). These health systems generate income by treating diseases. They are compensated meagerly, or not at all, for promoting wellness. Conversely, Amazon, JPMorgan and Berkshire will reap large financial benefits by emphasizing wellness among their employees. I have previously blogged about how the Cleveland Clinic launched a wellness program among its employees and reaped the following benefits (see: Cleveland Clinic Lowers Health Insurance Costs with Preventive Medicine):
- Our organization’s body-mass index (BMI) has steadily decreased.....
- Prior to 2010, our health insurance costs were going up at 7.5 percent annually; it is now just under 3 percent, which saves us money and allows us to drive down the cost of care to our patients.
- We’ve seen a 20 percent reduction in hospitalization among of those in disease management programs, compared to those not in disease management program....
I am sure that this newly formed healthcare company will draw the most attention by deploying impressive new technical innovations. However, simply promoting weight reduction, exercise programs, and smoking cessation programs among their employees would significantly improve their bottom line.