Cam asked a good question yesterday in comments:
I wonder if you have any thoughts on this press release from Amazon/JPMChase/Berkshire Hathaway?
Right now it is mostly a press release. I don’t have enough information to really have a strong opinion. My first professional thoughts though are the following:
- Healthcare is hard
- Big data is already being run hard in healthcare by incumbents (Optum), start-ups (Oscar, Clover) and tech companies (Google/Verily)
- What are they planning to do differently than previous private sector consortiums?
- What are they planning to do differently than CalPers and other large pension pools?
- What are they planning to do differently than large insurers with significant fully insured pools?
- What are the planning to do differently than large integrated delivery networks that also self-insure?
- 1+ million covered lives is a good pool for experimentation and beta testing but not a representative sample for the nation
- Healthcare is hard
We have good ideas on how to reduce costs. They mainly involve a variety of ways of saying “No” or at least saying “No, not at this price” as well as care design. I could see a strong play for reference pricing, centers of excellence and value based insurance design. Bringing that all in-house could make some sense on some level. But I am really scratching my head on the so-what unless they really think that they have a special sauce that can accurately and effectively intervene so far upstream of preventable costs at pennies on the dollars. If that is the case, great but so far no one has found that special sauce.
My unprofessional thoughts:
Have fun storming the castle!
Baud
I for one am looking forward to putting appendectomy on my wish list.
Betty Cracker
To paraphrase a wag on Twitter, we’re apparently going to exhaust every approach except what works in the rest of the industrialized world.
The Thin Black Duke
@Betty Cracker: There’s a reason why Pride is the first deadly sin.
JamesKPolkEsq
Amazon Deal of the Day: Mohs micrographic surgery (biopsy not included)
NotMax
Creating a bramble patch from scratch.
“We’re very sorry your new heart is defective and will be providing a pre-paid return shipping label.”
OzarkHillbilly
Upon hearing this news my first thought was “Go for it.” My 2nd thought was “BWAHAHAHAHAHAHAHAHA… How’s about someone who actually knows a thing or 2 about healthcare.” But hey, they are the Masters of the Universe.
@Betty Cracker: It would make sense, therefor we can’t do it.
Amir Khalid
Another question I brought up in response to Cam’s original comment is about the skill sets at these three companies: a bank, an online retailer and an investment firm. Does any of them have experience in managing the provision of healthcare? Or are they just going to break some paradigms and hope for the best?
AnonPhenom
re: a secret sauce. One of the issues insurers have had with investing in ‘wellcare’ (preventative programs) has always been that there was no guarantee that the lives they were investing in would still be theirs decades down the line, so covering the illnesses of your current population as efficiently as possible (‘sickcare’) was the default position (unless otherwise mandated by regulatory bodies)
‘Wellcare’ ran the risk of putting ‘your’ profit in you competitors’ pocket.
If these employers are creating a self insured pool of employees and retirees, isn’t that ‘risk’ negated?
David Anderson
@AnonPhenom: That risk is negated only if you can tie to an employee to the pool for 10-20 years.
Barbara
1. Most of our seemingly intractable health care problems are attributable to socio-economic conditions that are not optimally amenable to health care intervention as we understand it.
2. Inefficiency within our current environment pales in comparison to the high per unit cost of goods and services as a drag on people’s ability to obtain care or yield benefits from that care.
Tackling either of these in a significant way would help a lot of people. That’s all I have to say.
ETA: One of my favorite health care related articles over the last two years was the New Yorker article about Geisinger Health Plan’s decision to facilitate the purchase of healthy groceries for a subset of its sickest members, typically ESRD patients. They estimated the payback for their investment as being something like 10:1.
JMG
@David Anderson: Chase can do that if it wants, but Amazon sure can’t, and Berkshire Hathaway’s a holding company.
Barbara
@AnonPhenom: Investing in wellcare would reap benefits for everyone (hypothetically) if every insurer were required to do it. There are tremendous free rider problems when only a single insurer is willing to make the investment, or only a small subset of employers are willing to pay for it.
mai naem mobile
Right now, I would trust Bezos and Buffett over whatever the GOPs plan is. Buffett and his partner Charlie Munger have had good stuff to say about single payer and they say it in terms of healthcare affecting the competitiveNess of US companies. It’s a pity that they couldn’t get another 2-3 large companies like UPS/Caterpillar/Boeing to create a pool equivalent to a European countru.
oatler.
Globalized privatization.
P.S. I am not a crackpot
Hoodie
Probably will involve drones. And maybe some blockchain. Or some sort of collectivist superstate supported by online sales, insurance and overdraft fees.
Nicole
I think these are extremely wealthy men suffering from Clever Boy Syndrome. I get that, on some level, they want to do some good with their vast amounts of wealth, but I am curious to see how they will react when they discover that actually, genuinely helping people is not very often financially profitable.
Doug R
With minimum wages going up, this may be a way to keep employees in the pool where aggressive wellness programs would pay off. You think a company like Amazon’s NOT going to do it?
Plus Obamacare’s got a few lessons and they can negotiate drug prices, I’m sure.
CarolDuhart2
I’ve been following Amazon’s moves, and there has been a persistent rumor of Amazon wanting to get into the prescription business. It already has licenses to sell durable medical equipment and supplies (I just purchased pill pouches from them). Of course those things don’t usually need a prescription. But I wouldn’t be surprised if that’s a couple of moves away. You can already buy OTC meds too.,btw, vitamins and such.
Other moves could include self-insurance for Amazon and its employees: becoming a low-cost insurer, or even having a small medical group to provide services. That’s where the other entities could come in as a financial backstop and a guarantee of at least breaking even.
Capri
The article about it I read made a big deal of the fact that what they are cooking up is not for profit. Given who the participants are, health outcomes are probably much less of a consideration than cost.
Just One More Canuck
it would take a miracle
CarolDuhart2
“Alexa, my blood pressure medicine, a gallon of Orange Juice, reorder that set of headphones, and cat food. My delivery window: between 2 and 4 pm,”
Villago Delenda Est
Well, for one thing, and this is of course hard, is to utterly annihilate entities that work very very hard to deliberately create shortages to jack up prices.
Looking at you, vile vermin of the AMA.
laura
It has got to be some sort of investment vehicle, so I agree that it may focus on wellness, and may be intended for Amazon employees in lieu of providing an actual healthcare benefit, but mostly as Nicole said -clever boy syndrome.
Also, the valley fog has ruined my big moon action this morning.
Villago Delenda Est
@Betty Cracker: We cannot give up our sacred, sacred profit, and realize that health care is not selling widgets.
Villago Delenda Est
@laura: Same here, but can’t complain, I saw totality last August.
rp
But a fundamental part of this is creating “an independent company that is free from profit-making incentives and constraints.” That seems like a pretty big deal.
Barbara
I wanted to highlight a different non-profit venture that was recently announced, between many health care systems to sponsor the manufacturing of generic drugs. They are doing this mostly in response to a shortage of drugs, but will likely also begin manufacturing the drugs that have been targeted for price increases and, essentially, either knowing or tacit market allocation that effectively guts competition among generic manufacturers, which is what has kept the price of generic drugs lower in the past.
https://www.nytimes.com/aponline/2018/01/18/health/ap-us-med-hospitals-making-drugs.html
Lots of analysts are poo pooing, and in the short run, I agree, it’s unlikely to have a big impact. But in the long run, a not-for-profit manufacturer of generic drugs is a kind of shot across the bow at the idea that drugs are a purely commercial venture. I have often thought that the government should contract for the licensing and manufacture of generic drugs where there are shortages or price gouging, and recover the price from purchasers, but I am happy that a private actor would do it as well. It would also be possible for a coalition of states to do the same thing, instead of just wringing their hands and suing after the fact.
Major Major Major Major
Oh, that reminds me, I need to reorder cat food.
Gin & Tonic
I posted this yesterday, too. In negotiations with the WaPo union, Bezos has offered (among other things) a 1% 401(k) match. The median for Fortune 500 companies in 2017 was 3.5%.
That’s how you control costs, suckers, by fucking over your employees.
AnonPhenom
@rp:
But a fundamental part of this is creating “an independent company that is free from profit-making incentives and constraints.” That seems like a pretty big deal.
opiejeanne
@Baud: Had one just over a year ago, the day before Thanksgiving. I can’t recommend it highly enough.
@David Anderson: CalPers is our retirement plan, and with ours we have the choice of Kaiser (if we live in California) and Blue Cross/Anthem. We would prefer Kaiser and they are moving into the Seattle area; we have called CalPers during open enrollment for two years but they haven’t yet added the Washington Kaiser Permanente. We’re told they are considering it.
Kaiser was great when we had it: no bills from separate health entities like the hospital, the lab, the special lab, the local clinic. In fact, no bills unless you use the ER or a non-Kaiser hospital but they will waive those fees for an emergency. They got the bill for an ambulance reduced from $600 to $50 in 1984. With Anthem we have to keep sending back the bills in order for them to pay them.
The city of Anaheim had an optional subscription for $6 annually on your property tax bill that covered EMTs and ambulances. I don’t know if any other city offers such a thing but we used it for my dad on Christmas Eve one year. (He was fine, just a little woozy.)
MattF
@CarolDuhart2:
Amazon has had success in developing things in-house and then selling it to the outside world– their whole Web Services business was developed that way. The thing about Amazon is that they are aggressive commercially. If they got into the pharmaceutical business, I’d expect the whole ‘patent an old drug and raise the price’ scam to get crushed, and that would be a good thing.
On the other hand… do you really want Amazon to have all your health data and cross-correlate it with your everyday household purchases? I’m not sure. It’s a puzzle.
rp
@AnonPhenom: But returning to an old model might be an effective approach.
Cam
@David Anderson: Yeah, that’s not going to happen considering our normal turnover. I’m not going to out which of these is my employer, but we tend to lay people off cyclically based on certain segments of the market.
GeoWHayduke
My thoughts? A company (amazon) of which 60% of it’s employees need public assistance to make ends meet has no business dabbling in health care.
Tata
OT: what does anyone think this means?
The Trump Administration Let a Russian Spy Chief Visit the US— Even Though He Was Legally Barred
trollhattan
@Baud:
“We noticed you shopping for appendectomies. Here are some other abdominal surgeries you may be interested in…”
trollhattan
I see Colorado is no longer threatening us all with a potential Governor Tom Tancredo.
trollhattan
@CarolDuhart2:
I live in an Amazon Prime Now city. Can I expect them to warehouse several GPs and specialists for 2-hour home delivery? Winning.
opiejeanne
@Tata: Send that to Anne Laurie or one of the other front pagers so it gets a bit more attention than here. .
trollhattan
@CarolDuhart2:
Somehow this was in moderation, hrrmph!
I live in an Amazon Prime Now city. Can I expect them to warehouse several GPs and specialists for 2-hour home delivery? Winnning.
Chyron HR
@Tata:
“M-O-O-N, that spells neo-McCarthyism.” – Glenn Greenwald, probably
WaterGirl
@Tata: @opiejeanne: I would think Adam would be the best choice for this one. He’s good at responding and the topic is in his wheelhouse.
slavdude
So, a (more or less) good guy, a crook, and Dr. Evil. Sounds like a mixed D&D party. What could possibly go wrong?
WaterGirl
@Tata: I just sent email to Adam asking him about this.
Jay S
I think the buried lede here is the fact that the market reaction was strong enough to be noticed for such an empty announcement. This stock market boom seems very fragile to me.
opiejeanne
@WaterGirl: You’re right. I should have thought of Adam.
Steeplejack
@trollhattan:
Specialists.
mtraven
Here’s some interesting speculation.
Daddio7
Finding novel ways to pay for healthcare will just lead to providers finding novel ways to increase costs. Single payer will just give cheats a bigger pie to steal from. Government must provide all medical training as well as employ all medical professionals. Many qualified people can not afford to go to medical school. Trouble is as it stands now there are not enough class rooms for those who can pay. Half the doctors in my small town are foreign born and trained.