On January 30th in a landmark announcement, Amazon, JPMorgan Chase, and Berkshire Hathaway announced their joint strategy to provide healthcare benefits to their employees. From the press conference Warren Buffett stated:
The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.
Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today. By bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.
The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.
Details were slim following the statement, leaving the media scrambling. Investors were also shocked following the announcement, with CNN noting the DOW dropping 300 points. The nation’s largest insurer along with drugstore giants CVS and Walgreens seeing drops between 3% and 7% as speculation of how such a move would shake up the relationship between employers and insurance providers and what that could mean for healthcare as a whole.
While we are still waiting to see how the partnership plans to follow through with this strategy, we know for sure technology will be at the forefront. Whether that meaning adding features to current devices or using technology to provide greater access to healthcare such as telemedicine remains to be seen. We also know transparency will be an important part of the strategy. B. Douglas Hoey, chief executive, National Community Pharmacists Association told the New York Times, as a self-insured company they could, “develop a relationship where you’re significantly reducing costs, while still making the providers whole and cutting out so much of the red tape and bureaucracy that currently stymies and frustrates them”. With the employer being the intermediary does have the remarkable potential to cut out much of the bureaucracy plaguing the system today, but time will tell if adopted on a large scale if this would be trading one bureaucracy for another.
At this point is still too soon to tell, but the prospect of stabilizing and reducing healthcare costs is an enticing one. Larry Levitt, senior vice president at Kaiser Family Foundation told Vox:
Employers have largely sat on the sidelines of health care, talking a big game but not really doing much to push for control of health care costs. We’ll never make much progress in attacking health costs until employers put their purchasing and political weight behind it.
The biggest takeaway is that three industry leader in their own respective industry has announced their shared intention to reduce rising medical costs. While time will tell if this joint venture will affect healthcare for the better, for now, we can see this partnership is already disrupting the status quo. In any case, change is usually a good thing.