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.<\/p>\n
Once the news broke, it created a great deal of follow-up discussions. \u00a0At one point, the Wall Street Journal (WSJ),<\/em> reported that the news seemed to have caused some stress at JPM.<\/p>\n The WSJ headline read:<\/p>\n \u201cJ.P. Morgan to Banking Clients: Joint Health-Care Venture Is No Threat<\/em><\/p>\n J.P. Morgan reassured banking clients by likening its venture with Amazon.com and Berkshire Hathaway to a group purchasing organization for employees.\u201d<\/em><\/p>\n It appears that the news caused some excitement, and maybe a little bit of anxiety with clients of JPM. \u00a0As we noted in our last blog, healthcare is not only large and complex, it is also very local.\u00a0 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.<\/p>\n It has now become clear that the partnership was not to create \u201ca new type of healthcare delivery model.\u201d\u00a0 Additionally, the partnership was not created to capitalize on the Amazon customer and cost experience, Berkshire\u2019s history in insurance, JPM\u2019s experience in payments and financing, or even in their effective use of banking technology.<\/p>\n Furthermore, it apparently wasn\u2019t driven by Amazon\u2019s 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. \u00a0We know AWS very well, as we have had one of our platforms on AWS for over three years (www.PWeR.com<\/a>). \u00a0That does not seem to be the goal either.<\/p>\n What we gathered from the WSJ article seems that these powerful companies are just going to create \u201canother\u201d purchasing group. \u00a0I say \u201canother,\u201d as this idea of consortiums has been around for over 70 years.<\/p>\n We have had large, even larger employers getting together since maybe Henry J. Kaiser (Kaiser Shipyards) created the modern managed care and integrated \u201cnon-profit\u201d managed care consortium in 1945; what became known as the Kaiser Permanente.<\/p>\n Other consortiums created in 2016 included dozens of companies with millions more members, some estimates ranging over five million employees. \u00a0This alliance included companies like IBM, Verizon, American Express and HCA.<\/p>\n We also have another alliance dating back to 1989 that was larger than the group in 2016. \u00a0Our research also noted that in 1974, there was a group of 400 companies with over 50 million covered lives. \u00a0That group had AT&T, Walmart and Blue Cross Blue Shield of Michigan.<\/p>\n Some of these may have had an impact, however I have not heard of it. \u00a0Yes, large employers can and do pool together. \u00a0Sometimes I have seen major employers provide more coverage or better coverage to employees. \u00a0A great idea without question. \u00a0To reduce cost, you must limit networks and steer patients to specialized providers such as patient-centered medical home type models.<\/p>\n 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. \u00a0The average tenure at Amazon has been reported as ranging from 1.1 to 1.8 years, and the average age worker is around 29. \u00a0That is a lot of turnover, and a very young workforce to have much care management. \u00a0They should actually be very healthy.<\/p>\n We still believe, more strongly than ever that healthcare in the U.S. is undergoing a transformation. \u00a0That 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.<\/p>\n -Noel J. Guillama, President<\/p>\n