Technology Giants Could Look to Disrupt Healthcare Market
Three corporate behemoths - Amazon, Berkshire Hathaway and JPMorgan Chase & Co – announced on Tuesday that they have teamed up to create an independent healthcare company for their employees in the United States, causing the share value of major US health and insurance firms to plummet.
The new not-for-profit company aims to harness the power of technology in order to provide employees with simplified, high-quality and transparent healthcare at a reasonable cost. This has fuelled speculation that Amazon could also attempt to enter foreign markets, capitalising on its vast resources, consumer data, and reputation for excellent customer service.
Berkshire Hathaway is the third-largest public company globally, as well as an insurance provider, while JP Morgan is the biggest bank in the US, and Amazon the largest internet retailer in the world. In a joint statement, the three companies said they would bring their scale and complementary expertise to the healthcare initiative in order to tackle one of the “greatest issues facing society today”.
“Amazon may also look overseas,” GlobalData insurance analyst, Danielle Cripps, said. “In late 2017, Amazon was recruiting insurance professionals in London to join a new team looking to disrupt the insurance market in the UK, Germany, France, Italy, and Spain. This highlights the global outlook of the online retailer.”
The three firms provided few details; however, they did state that "technology solutions" would be the initial focus of the new company. Some of these solutions could potentially include:
Telemedicine services to increase access to affordable care.
Telemedicine offerings not only improve access to care by letting patients connect remotely with physicians, but the technology does so at a lower cost – in a HealthMine survey, 93% of patients who have used telemedicine services reported cost savings.
Machine learning technology to drive value-based care.
By leveraging machine learning technologies, and healthcare data, such as electronic health records (EHRs) and claims information, patients could get care recommendations on which drugs, procedures, and doctors will best fit their needs. This could lower readmissions and unnecessary testing, thus improving the patient experience and lowering costs.
Self-insured companies still outsource much of the decision making to private insurers and pharmacy benefit managers even though they have more of a say when designing health plans. For instance, JPMorgan contracts with Cigna and UnitedHealth, while Amazon uses Premera Blue Cross, a non-profit insurance company. “Amazon, JPMorgan and Berkshire are clearly frustrated by the general inability of employers to do something about healthcare costs. They’ve had enough, they’re saying ‘we need to do something’, and they clearly think they can do something,” says Paul Fronstin of the Employee Benefit Research Institution, an independent research organisation focused on healthcare and other benefits.