Featured in Health Business Daily, Feb. 12, 2018

Will Amazon-led Health Venture Disrupt the Health Care Market?

A longer version of this article was published in the Feb. 5, 2018, issue of HEALTH PLAN WEEKLY. Subscribe today for more strategic business, financial and regulatory analysis of the health insurance industry.

February 12, 2018

Amazon, Berkshire Hathaway and JPMorgan Chase & Co.’s plans to jointly launch an independent health care company worried some stakeholders, while delighting others.

“We welcome anybody pulling on our end of the rope in this tug of war,” CEO Rob Andrews of the Health Transformation Alliance (HTA), a group of more than 40 major employers, tells AIS Health.

The three titans issued a jointed statement Jan. 30, saying they are “partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.” They stressed its initial focus “will be on technology solutions.”

Many analysts saw tremendous potential behind the Amazon-led alliance. “At a minimum [it] gives them more power in holding their existing payer vendors more accountable for health and cost outcomes for their employees….Expand this to the number of captive and loyal customers these firms collectively touch and you suddenly have the possibility of this becoming a huge disrupting development,” says Maulik Bhagat at AArete.

But some doubted its impact. Bob Laszewski, president of Health Policy and Strategy Associates, LLC, said the combined workforce of 1 million for the three titans amounted to a small Blue Cross Blue Shield Plan. He also noted that the data technology focus is nothing new.

Despite the different views on such moves, there is consensus that the pace of innovation in the private health care sector continues to quicken. The time to innovate is tightening from the current three- to five- year timetable down to 18 to 24 months, says Ashraf Shehata, an industry consultant for health plans.

Shehata also describes the move by Amazon and its partners as a potential new model in the health care industry, with “employers coming together with unique assets and driving innovation for employees as a precursor to their own commercial interests.”

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