New health care initiative by Amazon, Berkshire and JPM-C

[Gotadimple]

If this initiative takes itself down to the level of practice management - both in hospitals and physicians' offices, then that is a game-changer. There are already other technology companies who are attempting to link claim info to health info to a specific employee/member for a 'seamless' experience. Marketing talk.

This initiative is nothing more than looking for ways to reduce the employer's cost of coverage for the employees of these companies.

These employers are large enough that today they negotiate the rates and sometimes the coverage language on the employee healthcare benefit. This can also include reporting the health outcomes back to the employers (if the insurance company will do it, I know one that refused knowing they would not win the contract for benefits).

So, the market reaction? Just traders taking advantage of news.

 

[W2R]

This is interesting news. Bloomberg reports https://www.bloomberg.com/news/arti...jpmorgan-to-set-up-a-health-company-for-staff
This is an interesting initiative. The three companies employ more than 1M, so they have critical mass. They also consider themselves as premier employers, so they are motivated to look for health care options that are high quality but lower cost. I suspect they will find lots of opportunity to do, and only wonder if what they find or achieve is scalable or transferable.

Hot dog! Hopefully more competition in health care will turn out to be a big advantage to the consumer.

 

[Huston55]

I got a news clip notice this morning & read this; very interesting, and encouraging too. I’m in favor of smart people (with lots of resources) trying to solve problems.

Also, thanks for the Kaiser Wiki link; it’s been a long time since I read that. They’re right across the Bay from us so, they’re kind of omnipresent out here.

Anyway, a few initial thoughts:

1. At the risk of underestimating Bezos, Buffet & Dimon (BB&D), I think they have a long hard road ahead if they plan to make major changes to US healthcare as a whole. Because, they first have to make the model work for just their 1M+/- employees, doable in my view. Then they have to find a way to expand it to millions more people, which I expect to be much more difficult because they will be fighting the US Healthcare Industrial Complex every step of the way.

2. If BB&D are wildly successful with #1 above, they will have addressed only ~50% of US Healthcare spending (the private portion; see the table @ 0:27 in the video below). Although there would likely be knockon effects to Public Healthcare spending (Medicare, Medicaid, VA, ext), it would still have to be addressed directly for meaningful & lasting improvement.

3. On the encouraging side though, it’s all about negotiating a fair and reasonable price for a service (see video below), which BB&D have proven themselves masters at doing. They’ve (mostly Bezos) also proven themselves effective “disrupters” of established business models.

http://www.early-retirement.org/for...ility-for-healthcare-90229-6.html#post1995614

4. Also on the encouraging side, we (the USA) have demonstrated that we can do this - effective health care at a reasonable price; Kaiser being a prime example. So, that’s encouraging.

Excerpt:
Results
The per capita costs of the two systems, adjusted for differences in benefits, special activities, population characteristics, and the cost environment, were similar to within 10%. Some aspects of performance differed. In particular, Kaiser members experience more comprehensive and convenient primary care services and much more rapid access to specialist services and hospital admissions. Age adjusted rates of use of acute hospital services in Kaiser were one third of those in the NHS.

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC64512/

In the end, I’m hopeful.

 

[Hermit]

There are various reasons why, such as medical malpractice insurance costs, US is very aggressive at lawsuit recoveries...

IMHO, this is a large issue in healthcare. It drives all those extra tests and services. I don't see how these companies can control the external lawyers. I know I spend a lot of time signing legal waivers any time I do anything with a health care provider. There is a difference in litigating every nit pic and litigating true malfeasance but I don't know how to separate the two.

 

[Hermit]

Why does a doctor need to spend so much for tuition and education? Why does anyone? With almost $1.5 trillion in student loan debt (average of over $37K per borrower), you've tapped into another underlying issue. Let's lower costs for getting education, that will drive real wage increases (imagine someone not having to pay $700-1000/mo in student loan payments). But that's getting off topic. Until then, perhaps doctors who are members in health care groups can get their debt forgiven based on years of service. Some teachers have this benefit, some companies offer similar reimbursement plans, so maybe now's the time to find ways to lower and cover the cost of doctors becoming doctors.

The wife of a coworker was studying for an advanced degree in medical research. As I recall, she paid about one third the amount of tuition as the prospective doctors taking the same course! Seems everyone is on the "take a little extra from the medical field" bandwagon. How are these companies going to stop this type of attitude that permeates the whole society?

BTW, having the Government control and manage prices has never worked. I don't think it would work in this case either.

 

[brokrken]

I’m in favor of smart people (with lots of resources) trying to solve problems.

This sums it up for me.

 

[easysurfer]

What a noble idea!! I like it! The more competitions there are, the better.

+100.

The plot could get interesting .

 

[flintnational]

IMHO, our ability to provide health care exceeds our ability to pay for it. To use an analogy, we can produce Ferraris, but we can't afford to buy everyone a Ferrari. Accordingly, I think we either have to let market forces (price) allocate care or we have to let the government allocate care. A combination would also work. And, we can afford for everyone to have at least a Chevrolet (safety nets for the poor). But the days of unlimited care for most/all are probably over at some point in the near future.

 

[Mr._Graybeard]

I'm no expert, but IMO malpractice insurance is a red herring as a driver of health care costs. Malpractice claims and awards have been on the decline for the past decade, in part because numerous states have placed caps on non-medical awards.

Here's an article by Dr. David Belk that has an interesting take on the subject: Medical Malpractice: Myths and Realities - True Cost of Heathcare

 

[Senator]

It will be interesting, but the three companies are pint-sized to the Medicare group, or even the Federal employee group. Both of which could be combined. I have to believe those groups may have negotiated something too.

I am guessing they may create a plan that focuses on preventative care. Probably they will create a disincentive to using emergency care, and go with mail-order drugs. In the end, the companies will subsidize the premiums and have a lower cost for the employees.

Maybe they save a small amount in the long run, maybe not. Odds are, no one will notice any changes. Sharp negotiating tactics could hurt salaries of lower paid healthcare providers, especially if they outsource/import labor as they do with their IT departments.

Maybe they will buy an Hospital group, or an insurance or pharmaceutical company?

 

[tmm99]

I’m in favor of smart people (with lots of resources) trying to solve problems.

My thought EXACTLY!

 

[athena53]

I think, If you need a financial incentive to “do the right thing” from a health perspective, it is much less likely to be effective in improving your health. On the other hand, many health conscious people don’t need a financial incentive to get “healthy”. So in the end, I think financial incentives might be dubious. You can usually find ways to game the system. Although that would be pretty short sighted in my view.

I agree to some extent- in my case, I was in the gym every day anyway before I started working there, was at a good weight, ate healthy most of the time, etc. I can't say it changed my behavior that much. I turned down the points to lower my borderline-high cholesterol because I'd had a bad reaction to statins a few years before and that seemed to be the only way to do it.

A wellness program MIGHT be a way to attract more people like me, who see it as a reward for doing something they already do- so a healthier workforce with less absenteeism due to sickness.

And yes, there are ways to game the system. The local municipality had a badly-monitored wellness program and before they caught up with them, employees were getting $200 gift cards because their 4-year olds were completing marathons. I've also read joking remarks about how you can get in your 10,000 steps by putting your FitBit on your dog or on the ceiling fan. Never tried either.

 

[6miths]

'Your margin is my opportunity.' What a gargantuan opportunity. Perhaps not the best solution but who knows where it may lead.

 

[aja8888]

I've also read joking remarks about how you can get in your 10,000 steps by putting your FitBit on your dog or on the ceiling fan. Never tried either.

I stuck mine in the pendulum of our grandfather clock for a day and made up for a few days of being lazy.

 

[ERD50]

... I suspect they will find lots of opportunity to do, and only wonder if what they find or achieve is scalable or transferable.

Very interesting. I think the only way for something like this to work long term is if it is run like a credit union. A true non-profit, run by and for the members.

They are large enough to gain economy of scale and too large to ignore. I sure hope they can bring some sense to the health care market. Fingers crossed.

-ERD50

 

[rodi]

I hope it is disruptive... We need some disruption in our inefficient health care system.

But - unless they follow a model like Kaiser Permanente (or the purchase of urgent care clinics mentioned in a previous post) they will only address one portion of the cost... The insurance/claims side of things. Providers are also part of the high cost.

It will be very interesting to watch what they implement.

 

[Hermit]

I'm no expert, but IMO malpractice insurance is a red herring as a driver of health care costs. Malpractice claims and awards have been on the decline for the past decade, in part because numerous states have placed caps on non-medical awards.

Here's an article by Dr. David Belk that has an interesting take on the subject: Medical Malpractice: Myths and Realities - True Cost of Heathcare

If you have another explanation for 20% excess testing and all the legal waivers that have to be filled out, I am all ears.

BTW, that article seemed extremely biased in the favor of lawyers.

 

[Brat]

The Commonwealth Club podcasts include discussions of many current topics. The one about health care costs is dated 9/27/17 and is available on by Dr. Ezekiel Emanuel and is available on iTunes. One memorable comment, for me, was that a local hospital at which he practiced remodeled to look like a 4-star hotel, it didn't improve the already excellent medical care offered. Someone had to pay for the bling.

 

[Huston55]

If you have another explanation for 20% excess testing and all the legal waivers that have to be filled out, I am all ears.

BTW, that article seemed extremely biased in the favor of lawyers.

Here’s an article by Doctors (JAMA), as opposed to Lawyers. It cites a widely used estimate for the annual cost of waste due to defensive medicine ($46B), which aligns with the estimate in the video of my earlier post, and is very small compared to other causes.

The “Doctors” conclude:

In conclusion, although a large portion of hospital orders had some defensive component, our study found that few orders were completely defensive and that physicians’ attitudes about defensive medicine did not correlate with cost. Our findings suggest that only a small portion of medical costs might be reduced by tort reform.

https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/1904758

 

[easysurfer]

Weren't there already rumblings about Amazon getting into the pharmacy business. This may be a precursor.

 

[Breedlove]

This has been working for a while and Amazon , Warren and Jamie Dimon are not the only ones . The big hospitals have been working on this . This will get rid of health insurance on the day to day problems. My son is in the medical industry and if I understand correctly if you are a doctor and do not become part of one ofthese groups you will be pretty much gone . And as a patient your insurance will go away , also you will become part of a group. Health insurance companies add no value to anything . The hard problem is insurance companies are invested in everything and this could be a disaster in the short economy.

 

[Mr._Graybeard]

If you have another explanation for 20% excess testing and all the legal waivers that have to be filled out, I am all ears.

How about: the hospitals have lots of high-cost toys they have to keep running steadily to justify the investment in them?

 

[Breedlove]

Yes I have heard about the machines that do CT scans in Houston Texas . I have heard we have so many and they do not have the patients to pay them off so they must increase the prices . Instead of having maybe less and running them 24 / 7 similar to Europe or Canada.

 

[MichaelB]

How about: the hospitals have lots of high-cost toys they have to keep running steadily to justify the investment in them?

This is true and also a indication that there is probably significant over-investment in the industry, which is economically wasteful.

Hospitals are in the business of revenue generation. The disassociation of pricing and cost is a worrying sign. Stripping cost out of provider services may not lead to lower prices, just higher net incomes for the hospitals. Cost control by the hospitals won't work, it must be done on them and other providers.

From Census, BLS and KFF data, the average premium for employer paid group coverage is >$15K, and median household income is $55K. Business can no longer afford this, neither can any family below the 70% income percentile. The high cost of health care is one of the biggest challenges to economic growth in the US.

I’m in favor of smart people (with lots of resources) trying to solve problems.

Yes indeed, and these three companies have some very smart people. This has lots of potential.

 

[MRG]

Weren't there already rumblings about Amazon getting into the pharmacy business. This may be a precursor.

+1