REPOST: Here’s How Amazon Could Disrupt Health Care

Can an Internet empire successfully transform a completely different industry? In the case of Amazon and the healthcare sector, the idea is not impossible at all. Here’s interesting article from Forbes:

 

“The ballooning cost of health care acts as a hungry tapeworm on the American economy.” That’s how Warren Buffett framed the context as he, Jeff Bezos and Jamie Dimon announced the alliance of their firms, Berkshire Hathaway, Amazon and JPMorgan Chase, to address health care.

 

The problem is serious. Health care costs in the U.S. have been growing faster than inflation for more than three decades. There is little relief in sight. A Willis Towers Watson study found that U.S. employers expect their health care costs to increase by 5.5% in 2018, up from a 4.6% increase in 2017. The study projects an average national cost per employee of $12,850. The three companies have a combined workforce of 1.2 million. Based on the Willis Towers Watson estimate, they could spend more than $15 billion on employee health care this year.

 

But, what can the alliance do about it? On that, Buffett was less clear: “Our group does not come to this problem with answers. But, we also do not accept it is inevitable,” he said.

 

The challenge is formidable. As the New York Times noted, employers have banded together before to address health care costs and failed to make much of a dent in health care spending. How will this effort be different?

 

If this alliance as simply another employer purchasing cooperative, it will probably have little effect. Neither 1.2 million employees nor $15 billion in spending is all that significant in a 300M person, $3.2 trillion US health care market. It might nudge the health care industry towards incrementally faster, better and cheaper health care innovations—but not much more.

 

If, however, the alliance thinks big and structures itself as a testbed for potentially transformative ideas, innovations and businesses, it could have a disruptive effect.

 

Amazon is the critical ingredient in this latter approach. While all three companies bring employees and resources (both critical), only Amazon brings particularly relevant technological prowess and disruptive innovation experience.

 

Amazon could think big by simply applying the standard operating principles and capabilities that is has perfected for retail—comprehensive data, personalization, price and quality transparency, operational excellence, consumer focus and high satisfaction—to health care. It also has differentiated technologies like Alexa, mobile devices, cloud (AWS) and AI expertise. It could leverage its recent years of health-care-specific exploration, such as those in cardiovascular health, diabetes management, pharmacies, pharmacy benefit management, digital health and other health care research. It could use Whole Foods as a physical point of presence.

 

Read full article HERE.

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