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What the Amazon-Berkshire Hathaway-JPMorgan Deal Could Mean for Incumbents


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Actionable Insight

"Amazon-Berkshire-JPMorgan may work to change your behaviors by anticipating your needs and activating interventions when you need them most."

It is hard to predict what will become of the new company announced last week from Amazon, Berkshire Hathaway, and JPMorgan Chase. But it is clear these companies bring together the exact capabilities you’d want if you were building a healthcare company from the ground up: consumer engagement and access, world-class technology, payments and data expertise, and risk management prowess. It is also clear this could be great for consumers.

What’s striking about this venture is they’ve explicitly stated they “will pursue this objective through an independent company that is free from profit-making incentives and constraints.” It’s a luxury many incumbents wish they had. While the rest of the industry is shackled by the need to show in-year returns, their focus is on aligning incentives and creating value first. Their focus is explicitly on the long term. Therefore, they can focus on what’s always been true north for successful runaway businesses: delight the consumer, offer something unique, and solve the consumer’s problems.

This venture is likely to play the game that Amazon in particular has always played – delighting you with what is important to you – even if it doesn’t make money in the beginning. This could allow Amazon, Berkshire, and JPMorgan to tackle the hard stuff, as 70 percent of the healthcare cost dollar is attributable to lifestyle factors that are hard to address within a single year.

Few players focus on managing people’s healthcare over multiple years, not because they don’t want to, but because the incentives and profit model do not support this. The system in healthcare today is a “break-fix” model: if you fall sick or are injured, you go to the doctor or hospital for a procedure or a drug.

Amazon, Berkshire, and JPMorgan could move healthcare to an “anticipate-prevent” model. How? Because they know much more about you than your doctor knows about you (and you may even trust them more). JPMorgan has your payments transaction data and credit data. Amazon has decades of your personal purchase history, your Alexa requests, and what recommendations you used or ignored. Geico has figured out how to take an unemotional product – car insurance – and make it consumer-friendly and accessible to the layman, changing your affinity for, and interaction with, a product. Geico also has data on your driving history which may correlate to impulse control, and perhaps even lifestyle.

App designers are rewiring our brains today with smartphones, and some companies know more about what motivates us than our loved ones do.

All three companies have an array of assets targeted at changing your behaviors by anticipating your needs and activating interventions when you need them most. And this is just what they have as of now. They will purpose-build whatever they need for the future, and become a personalized platform to deliver a range of services, including whatever services they opt not to build themselves.

Based on Today, Here’s a Look at Tomorrow

Let’s compare healthcare today to what this venture could do for consumers in the future. 

Today’s employee, for example, is largely all alone when navigating healthcare. Let’s take a relatively healthy individual who suffers from episodic back pain as an example. He is unsure of when to see a doctor. He goes to the doctor or to the emergency room when feeling very ill, but there is not much support around prevention, or from ensuring an incident does not escalate to a crisis (to say nothing of the anxiety around paying for his visit).

Today’s doctor doesn’t have much support either – there are limited data points to work with between a patient’s self-reported reporting symptoms (which may not be fully recalled, represented or easily calibrated), and selected tests and lab values. 

But in the new model, Amazon may notice an uptick in this employee’s requests for over-the-counter pain relievers. A wearable may detect sleep disturbance and lower activity levels. And Alexa may record multiple queries over a two-week span for how to best manage his episodic back pain. In the background, algorithms are recognizing patterns, anticipating what’s next, and figuring out how to help him at the right time. We could see him signing up for an annual Prime Health subscription – paid for with a JPMorgan credit card. And then when something does happen, his subscription has it covered – such as a virtual primary care physician and physical therapy visits on his phone, medications, stress management, nutrition, and exercise offerings. His payment wallet advises him on when to use pre-tax funds.

Tomorrow’s world makes it easy for the consumer to make better health choices. This world could ultimately mimic ancient Chinese practices, where villagers paid their doctor for every day they weren’t sick.

But what about the people who are already sick? Navigating today’s opaque, high-cost system is a frustrating experience – even for healthcare professionals.

How could Amazon, Berkshire, and JPMorgan deliver any differently for them? Let’s take an employee with multiple chronic conditions. The new venture can help with one of her biggest pain points today around drugs – approvals, refills, and deliveries. But it doesn’t stop there. Alexa can help her manage her conditions. And doctors can monitor her vitals remotely before anything gets worse. Even in-home care may not be outside the realm of the possible. Easy online scheduling – an experience that several banks provide today – combined with Amazon Key to provide access to patients’ homes – could enable new levels and types of home-care services. And all of this can be offered in a customized way that shows her the price for these services, and meets her exact needs.

The infrastructure required to facilitate the movement of information and payments that underlies this experience is quite an endeavor, but JPMorgan brings significant experience doing that, given it processes more than 20 percent of all US consumer payments, totaling almost $1 trillion, according to research from Nilson.

 If you are an incumbent, consider the resources at your disposal — more healthcare knowledge, more data, critical relationships and ecosystem partners — they have great potential, if harnessed fully.
Rich Data and Trust Can Revolutionize Consumer Behavior

This rich use of data allows personalized insights (à la Amazon Recommends) that can shape an individualized care path for consumers, on their terms. This in turn creates trust, and earns the venture the right to do even more. Ultimately the pivot from “break-fix” to “anticipate-prevent” is about shifting behaviors that steer consumers to better-value options, or even allows them to avoid care altogether with better interventions.

Is it Pollyanna-ish to claim a better experience design can change behaviors? Does it require a 30-year pitched battle like we saw with smoking in the US? Not necessarily. App designers are rewiring our brains today with smartphones, and some companies know more about what motivates us than our loved ones do. Adding to this momentum, these titans have proven they are skilled at starting with a narrow offering or segment, and fine-tuning before they expand.  We wouldn’t be surprised to see them run a similar play in healthcare.

But this doesn’t mean it’s “game over” for incumbents – all hope is not lost. What can you do to succeed and create value for employers and consumers in a different way? If you are an incumbent, consider the resources at your disposal — more healthcare knowledge, more data, critical relationships and ecosystem partners — they have great potential, if harnessed fully. But also take a hard look at your actual impact to date.

While there’s no guarantee that Amazon, Berkshire, and JPMorgan will succeed, they did just put more chips on the table. Many incumbents are breathing a sigh of relief that Oscar Health did not topple the industry. Amazon-Berkshire-JPMorgan may or may not be the deal that disrupts healthcare. But the relentless test-and-learn mindset at Amazon and the stated promise of all three to not let profit get in the way of advancement means the rules are changing.

If you can say, “We’ve done consumer segmentation, we’ve mapped the customer experience journey, we are working on enhancing our experience, and we are starting to do new products and simplify healthcare,” that is necessary, but not sufficient. Ask yourself: Has your net promoter score moved enough? Are you still stuck with 1-2 payer provider partnerships that are caught in the weeds of negotiation? Have any of your deals delivered break-out customer gains, significant increases in market share, or really lowered costs to customers?

If Amazon-Berkshire-JPMorgan is your future competition, you need to go further and move faster, because their next move may change what it takes to win. These competitors are humble enough to know they do not know healthcare, but that is why they hire or partner with top healthcare veterans and executives. They are not encumbered with protecting today’s model.

Most healthcare incumbents have deep expertise and strategic assets that should advantage them over disruptors, but they are still unknowingly relying on the structural industry barriers which protect them. Healthcare incumbents can avoid being the next Polaroid, Sears, or Blockbuster. The choice is yours.


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