An Approach to Health Care That Could Work Well

JP Morgan, Berkshire Hathaway and Amazon announced their intention to take on the challenge of improving health care for their employees, using a not-for-profit approach.  The trio’s announcement referred to the unbridled costs that need taming, and the role that technologies could play in delivering better, cheaper health care.  The trio’s mild statement jolted some in the health care industry.  Share prices of UnitedHealth, Humana, Aetna, and Anthem dropped until JP Morgan made public reassurances that the trio would siphon little business from those insurers.

Most observers reacted more positively.  The Economist saw the trio as poised to empower patients, deliver better diagnosis of disease and sharply lower costs.  The Economist noted that Jeff Bezos, Amazon’s founder, revolutionized the book-selling industry, by shedding costs, boosting choice for internet consumers, and launching technologies such as Alexa and Kindle at affordable prices.  Amazon’s experience with books, cloud services, retail grocers, logistics and consumer technologies might help deliver similar improvements in health care.

The New York Times and Huffington Post used the occasion to denigrate Amazon, claiming the trio’s idea was really about increasing their profits and it was unlikely to work.  Those intentional insults are consistent with a “single-payer” advocate’s fear of anything that would suggest the private sector can improve health care.  The Washington Post, normally a fellow traveler, avoided slamming Jeff Bezos’ intentions.

Before the trio’s announcement, Amazon had been expected to move into the health care sector: “Amazon has also been exploring a venture to use its logistical prowess to start selling drugs online.

Pharmaceutical manufacturing and is an unlikely interest for Amazon.  On the other hand, its logistical prowess and top-notch cloud services equip it for a move into the supply chain for pharmaceuticals.  Stages in the drug supply chain such as being a Medicare Part D supplier, pharmacy benefit manager and retail pharmacy outlets are pieces of health care large enough in scale to attract Amazon’s participation and ability to shed costs.  Relying on its Amazon Web Services (the biggest US internet cloud operation), Amazon could integrate the supply chain and save cost.

It is unclear whether Amazon is interested in the health insurance business, but Berkshire Hathaway has more interest in that aspect.

On the consumer side, the next big software update for Apple’s iPhone will include “Health Records, to allow users to view, manage and share their medical records… from participating hospitals and clinics, [and doctor’s offices and pharmacies]… giving millions of Americans direct digital control of their own health information for the first time.”  Neither Amazon nor Apple have confirmed their interest in a consumer health records joint venture, but the huge advantage it could deliver to consumers makes collaboration seem inevitable.

An iPhone with an Apple/Amazon health record app would deliver a massive advantage to consumers as they take control of important elements in their health care.  The same iPhone health tool would nudge existing electronic health record systems toward integration.  Currently doctors use electronic records systems in their offices, clinics and hospitals but each health record system is often incompatible with others.  A patient health care information tool would begin forcing electronic records systems into compatibility – if not with each other, at least with the consumer’s health care tool.

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