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Amazon, JPMorgan, and Berkshire Hathaway say they want to disrupt the health-care industry. If they’re going to deliver, it will be thanks to the technology they bring.
The announcement by the three companies earlier this week that they’re partnering to address the health-care needs of their workers was scarce on detail. The one thing it was clear on: The joint venture is going to capitalize on “technology solutions.”
“To the extent they’ll focus on technology I think it’s great news that the best company in the world in dealing with consumer behavior is going to take on health care,” Rob Andrews, CEO at the Health Transformation Alliance, told Bloomberg Law. The HTA is an alliance of 46 companies, including American Express Co., Coca-Cola Co., Verizon Communications Inc., and International Business Machines Corp., that came together a few years ago in an effort to transform health care.
There are a couple of ways observers think the Amazon-JPMorgan-Berkshire alliance could make waves for employer-provided health coverage: by using technology that offers employee choice in their health care, and through prescription drug coverage options.
Amazon through its technology could try to “bend the cost curve by empowering employees to make better decisions” in health care, Caroline F. Pearson, senior vice president of policy and strategy at Avalere Health LLC in Washington, told Bloomberg Law. Avalere is an advisory company that focuses on health-care business strategy and public policies.
Amazon could lean on its data mining capabilities to encourage employees to choose a better-quality, lower-cost health-care provider, or choose a lower-cost medication that provides the same medical outcome.
Amazon has had success with consumer interface in the retail market, so there is an “expectation they could succeed,” Pearson said. Still, it would be a struggle given that employers have tried to change employee behaviors in this realm for years and not found much success, she said.
That’s because employees aren’t trained to make informed health-care decisions, Pearson said. Combine that with existing relationships people have with their doctors and “brand loyalty” to certain hospitals or providers and Amazon could have some difficulty here, she said.
It remains to be seen whether Amazon will succeed in this area. Its success in retail doesn’t automatically transfer to health care. “Selling someone shoes is different than convincing someone to take a statin to deal with their cholesterol problem,” Andrews said.
Another area where the alliance could have a material impact is prescription drug coverage, Michael Thompson, president and chief executive officer of the National Alliance of Healthcare Purchaser Coalitions in Washington, told Bloomberg Law. The National Alliance represents about 50 regional coalitions of employers providing health coverage.
The joint statement didn’t specifically mention pharmacy benefits, but it’s easier to imagine the companies getting a handle on that area than in the broader health-care system, Thompson said.
Unlike health-care delivery systems, which are local by nature and harder for employers to handle when their workers live throughout the country, pharmacy benefits management is a more centralized function, Thompson said.
Amazon reinvented the way to buy, house, and deliver goods. When it brings that sort of expertise to the table, it could find ways to simplify and take cost out of the drug supply chain, Thompson said.
If Amazon doesn’t launch its own PBM, it still has the option of using its size to negotiate with PBMs for better prices for employees. If it succeeds in getting PBMs to lower their prices, it could put pressure on PBMs to deliver the same prices to other companies, Stephen Buck, co-founder of Courage Health in Fremont, Calif., told Bloomberg Law. Buck co-founded GoodRx, a prescription drug pricing comparison platform.
Amazon, JPMorgan, and Berkshire could follow the model of the HTA.
So far, the HTA has partnered with CVS Health Corp. and UnitedHealth Group Inc.’s OptumRx to provide some cost savings for employers in the PBM space, Andrews said. While the HTA says it has the ability to achieve the cost savings, the deals negotiated with providers aren’t mandatory. Companies using the alliance’s PBM agreement are seeing median prescription drug cost savings of 15 percent, he said.
On their face, coalitions like this look good, but because they don’t require members to use their PBMs or health insurers, “it never really pushed the industry in a direction,” Buck said.
The HTA launched some medical centers this year in Chicago, Dallas, and Phoenix. The centers are open to all those participating in the health plans of the 46 member companies and focus on getting providers to seek the best outcome for patients, Andrews said.
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
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