What to make of Amazon-Berkshire-JPMorgan care

What to make of Amazon, Berkshire Hathaway, and JP Morgan Chase & Co. entering the health care sector with a big vague splash – and just a week after the investment colossus concluded its own health care investment conference?

Calm down, they say. The week following their news release[1], two of the three players soothed nervous investors that they were not, in fact, in it to change health care or to disrupt the marketplace. Rather, three companies with $1.6 trillion in market capitalization and 1.1 million employees were establishing a kind of group health purchasing organization.

Nothing to see here in ABJ care. Said the scorpion to the turtle.[2] The industry is too ripe for innovation and improvement to let a fresh, possibly well-funded opportunity pass untested.

What they do bring are types of expertise important in today’s marketplace. Health care is famously inconvenient with byzantine pricing, waste and low-value expensive care. Amazon is the titan of logistics – and of customer service. (What has kept it from directly acquiring elements of the pharmacy benefit industry, only Jeff Bezos knows.) Berkshire’s Warren Buffett is famously the finder and nurturer of growing value and quality talent. He acquires good businesses and keeps them a long time. JP Morgan has facilitated trillions of dollars of private health care investment into every aspect of the health care supply chain.

Notably, few of their employees are nurses, therapists or doctors. None are health care companies per se, though Berkshire holds big reinsurers.[3] (Plus International Dairy Queen. Big fan.)

But to get a sense of their initial impact, their pool of employee and dependent health care expenditures can be calculated on the back of a napkin as a fraction of the $3 trillion U.S. health sector. ABJ employees are probably not like the U.S. population at large; it is reasonable to assume they are younger, healthier, more likely to be male, and more likely to reside in New York or Seattle. Assume each employee carries an additional 1.5 dependents on their benefits, approximating U.S. average household size. With U.S. per capita health care spending about $10,000 per person, this ABJ pool of up to 2.25 million covered lives encompasses some $17 - 22.5 billion in annual health care spending,[4] a sizeable portion of which is out-of-pocket. That’s a tenth of the net revenues of UnitedHealth, and half that of Cigna. So while its initial scale amounts to less than 1% of the health sector, ABJ care will have more impact where its employees are more prevalent.

With this pool and that expenditure, what can these three companies do together that they would not or could not do alone? They can reasonably be expected to do what they do with the rest of their business: drive value to lead market segments and attack costs.

·       They can change care delivery to improve outcomes while reducing costs. For example, on-site nurses and advanced practice nursing services improve health outcomes. They promote personal wellness (one of the more popular employer health benefits), and medication and vaccines adherence that reduces hospitalizations and costs. And they promote employee retention and job satisfaction. Practicing to their full professional scope and skills, nurses, APRNs, physician assistants, advanced therapists and other highly educated health care professionals could play a significant role in the ABJ delivery model.

·       They can negotiate harder with hospitals and health systems. Remember that these employees are concentrated in New York and Seattle. The employee population is sufficiently large that ABJ care can estimate its annual volumes of common important but expensive tests and interventions including colonoscopies, hip and knee replacements, imaging and cardiovascular procedures. ABJ care can buy ‘em by the bunch, establish shared risks and rewards with health systems, guide employees toward preferred systems through reference pricing, and weed out low-value and high cost services such as unnecessary cesarean sections – all improving quality while reducing costs.

·       The power of data in beneficiaries’ hands could improve medication adherence and health. Amazon represents an unprecedented demand-creating and fulfillment engine. Poor medication adherence is a significant challenge to health and a significant contributor to health care cost escalation and reduced quality of life. Whether employees get their medications by mail, the local pharmacy counter or an Amazon lockbox, suppliers, prescribers and consumers of pharmaceuticals can expect something new from ABJ care.

·       If the new venture is successful, it can expect the marketplace to copy it or want a piece of it.  Not every business combination thrives much less survives. But at the scale of a modestly sized national health plan, or of a rather large health system, more and more large employers will watch carefully how ABJ care fares.

·       They can summon unicorns and rainbows but they won’t work for ABJ care the same way they haven’t worked for anyone else. In improving care for people with the highest health care costs (and often the worst care), only the work works. In combating disparities in health care delivery and outcomes, only the work works. And the work matters on the way to the results.

Where others have set lofty expectations, CEOs Jeff Bezos, Warren Buffett and Jamie Dimon have begun by under-promising so they can have a shot at overdelivering. Perhaps you too will play a part.


Frank Talk is a product of Cardinal Waypoint LLC, a new consultancy for health policy and leadership. Contact me here.



[1] News release. Amazon, Berkshire Hathaway and JPMorgan Chase & Co., to partner on U.S. employee healthcare. Seattle, Omaha and New York, Jan. 30, 2018. https://www.businesswire.com/news/home/20180130005676/en/Amazon-Berkshire-Hathaway-JPMorgan-Chase-partner-U.S. Retrieved 1/30/2018.

[2] Attributed to Jami. The scorpion and the turtle. Public domain. http://changelog.ca/topic/The%20Scorpion%20and%20the%20Turtle. Retrieved 2/6/2018.

[3] See web links to companies Berkshire Hathaway holds here, http://www.berkshirehathaway.com/subs/sublinks.html.

[4] For a useful survey of employer health benefits, see Altman D et al. Premiums for Employer-Sponsored Family Health Coverage Rise Slowly for Sixth Straight Year, Up 3% but Averaging $18,764 in 2017. Kaiser Family Foundation, Health Research Educational Trust, and Health Affairs. Sept. 19, 2017.  https://www.kff.org/private-insurance/press-release/premiums-for-employer-sponsored-family-health-coverage-rise-slowly-for-sixth-straight-year-up-3-but-averaging-18764-in-2017/. Retrieved 2/6/2018.

Frank PurcellComment