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Amazon, Berkshire and J.P. Morgan Chase…and Healthcare Consortiums

By: | Tags: | Comments: 0 | February 13th, 2018

In our last blog, we discussed the news of Amazon, Berkshire, J.P. Morgan Chase (JPM) and their collaboration in healthcare that was announced last week.

Once the news broke, it created a great deal of follow-up discussions.  At one point, the Wall Street Journal (WSJ), reported that the news seemed to have caused some stress at JPM.

The WSJ headline read:

J.P. Morgan to Banking Clients: Joint Health-Care Venture Is No Threat

J.P. Morgan reassured banking clients by likening its venture with and Berkshire Hathaway to a group purchasing organization for employees.”

It appears that the news caused some excitement, and maybe a little bit of anxiety with clients of JPM.  As we noted in our last blog, healthcare is not only large and complex, it is also very local.  I can imagine that JPM, a major player in healthcare investment banking, and who recently held their iconic 36th Annual JP Morgan Healthcare Conference in San Francisco, January 8-11, 2018, received calls from corporate clients.

It has now become clear that the partnership was not to create “a new type of healthcare delivery model.”  Additionally, the partnership was not created to capitalize on the Amazon customer and cost experience, Berkshire’s history in insurance, JPM’s experience in payments and financing, or even in their effective use of banking technology.

Furthermore, it apparently wasn’t driven by Amazon’s Web Service (AWS), the real profit generator today at Amazon, and a role they could play in making more patient/employee personal wellness information available to providers in the AWS cloud.  We know AWS very well, as we have had one of our platforms on AWS for over three years (  That does not seem to be the goal either.

What we gathered from the WSJ article seems that these powerful companies are just going to create “another” purchasing group.  I say “another,” as this idea of consortiums has been around for over 70 years.

We have had large, even larger employers getting together since maybe Henry J. Kaiser (Kaiser Shipyards) created the modern managed care and integrated “non-profit” managed care consortium in 1945; what became known as the Kaiser Permanente.

Other consortiums created in 2016 included dozens of companies with millions more members, some estimates ranging over five million employees.  This alliance included companies like IBM, Verizon, American Express and HCA.

We also have another alliance dating back to 1989 that was larger than the group in 2016.  Our research also noted that in 1974, there was a group of 400 companies with over 50 million covered lives.  That group had AT&T, Walmart and Blue Cross Blue Shield of Michigan.

Some of these may have had an impact, however I have not heard of it.  Yes, large employers can and do pool together.  Sometimes I have seen major employers provide more coverage or better coverage to employees.  A great idea without question.  To reduce cost, you must limit networks and steer patients to specialized providers such as patient-centered medical home type models.

One of the challenges a company like Amazon will have in healthcare savings is that they effectively have a young workforce; likely to be very different from Berkshire, a more industrial type company, and JPM who have a more career-oriented banking type workforce.  The average tenure at Amazon has been reported as ranging from 1.1 to 1.8 years, and the average age worker is around 29.  That is a lot of turnover, and a very young workforce to have much care management.  They should actually be very healthy.

We still believe, more strongly than ever that healthcare in the U.S. is undergoing a transformation.  That transformation is going to be led by the trailing cohort of Baby Boomers, and driven by more collective technologies, the intersection of consumer-driven EHRs, IoT and Telemedicine.

-Noel J. Guillama, President


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