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Engage Consumers July 25, 2019

2020 Predictions for Amazon, Haven, Google, Apple

Partner, Health & Life Sciences, Oliver Wyman
Key Takeaway
Do you remember the first thing you bought on #Amazon? @Helen_Leis #OWHealth

Editor's Note: Since we first published this article, Amazon launched an employee health clinic called Amazon Care, a virtual clinic for Seattle-based employees and their families that lets people video chat and text with healthcare professionals. We look forward to seeing how the below predictions hold up over time as more company announcements come to light.

When you consider big healthcare companies – their roots, their capabilities, and what they’re known for – they’re ultimately successful because they make things that were once hard, very easy. On that note, allow me to dust off my crystal ball to predict what will happen next in healthcare for Amazon, Haven, Google, and Apple.

Prediction 1: “Amazon will still need care delivery experts – just like they needed book wholesalers 25 years ago.” 

What’s the first thing you bought on Amazon? Maybe a new frying pan, a pair of sneakers, or some items you bought before your first daughter was born. Amazon doesn’t just keep that data – they mine it and use it to make predictions. Since the first Amazon book sale from Jeff Bezos’ garage in 1995, the 600 million products sold on Amazon pinpoint where someone was in their life and what they needed and wanted at different times. The first time I bought things related to being a new mom on Amazon, they knew, “Okay, she’s either a new mom or she’s buying for a new mom in her life.” That tees up a whole other set of choices. From a consumer perspective, Amazon’s single value proposition is customization and personalization – I can get exactly what I want, because Amazon is mining decades of data about the previous choices I’ve made to understand who I am and why I made those choices in the first place.

Amazon’s early hook was, “We have every single title in the world!” – which didn’t play to the average Barnes & Noble consumer, but to the rare book collector or the researcher. And they leveraged some pretty old-fashioned things, like a book club. The original Amazon Recommends was like, “Hey, I read this book. I loved it. Let’s talk about it together.” Look at wholesalers and what Amazon did to the economics of the bookselling industry. Instead of a chain where book publishers distribute to book retailers and you only get certain titles in certain places, it’s all on one platform. In short, Amazon edged out booksellers.

Now if you run that play in healthcare, it has significant implications for squeezing costs out of healthcare’s supply chain. (We’re seeing this already with hospital supplies and generics drugs.) Regarding, say, Amazon’s PillPack acquisition, maybe they’ll begin doing that with low acuity, standard procedures – like at-home strep throat tests. That lets them play more in care delivery. Once a dad trusts them to figure out if his child has strep throat, you can see them start to extend consumer trust deeper into healthcare through other ways. They’ve got a whole set of assets – like Alexa – that can do some care delivery in the home, or at least care management. They can set up an ecosystem for a cardiac patient, a diabetic, the hypertensive – you name it – with all the regular nudges, prompts, and reminders they need. They will curate based on cost, because we still don’t understand quality signals. For big procedures and major life events, you’re still going to the main hospital in your market. But they will start taking apart the value chain by focusing on, say, patients who need regular supplies and guidance, and take that revenue (and profit) from incumbents in healthcare. 

Amazon and PillPack’s capability could then enable them to mine data around adherence and compliance and feed it to the care management function I mentioned above, to help patients stay on track with their care plan. 

To the extent Amazon gets PillPack customers on their generic drug delivery, consider how they can either market and sell, or tap into Alexa’s care management side. They’ll still need care delivery experts – just like they needed book wholesalers 25 years ago.  But if you consider them as the Valkyrie-judging winners and losers, they may not be judging based on what you or I would want to judge the winner on.

Amazon has developed a robust dataset of insights about all of us, like what recommendations you respond to versus ignore. It’s a continuous loop for them about how you make choices as a consumer. Incumbents need to build that or buy it.

Predictions 2: “Expect some interesting Haven products that aren’t necessarily a threat to insurers.”

Haven, announced over two years ago, brings assets from Amazon, Berkshire Hathaway, and JP Morgan Chase. Amazon has warehouse fulfillment workers and software coding technologists. Berkshire Hathaway has entities like Geico, which taught an entire consumer generation how to think about things like car insurance. Chase has bank tellers and investment bankers, and since it’s already working in healthcare payments, it really understands the economic and financial realities of many US consumers who view healthcare as a luxury item they can’t always purchase (or sometimes refuse to purchase at all).

Haven’s employees run the spectrum of the US economy. Once you’ve figured out how to offer prevention and treatment across this diverse employee population, you’ve basically cracked it for much of the US population. Because they’re in the employer seat, they may try to link together data sets that are disparate today to produce better insight. For example, they can tell things like career trajectory. Is this person a go-getter or do they have a laid-back career approach? And, they can tell how people respond to stimuli. When an employee gets a security and compliance email to complete a training module, do they do it that day? Or on the third reminder? I assume they can even enhance employees’ psychographic profiles, like how quickly they complete required tasks. (HIPAA training, anyone?) Or even what foods their employees buy from the company cafeteria. Although not everyone goes to the cafeteria for lunch, when they do, do they get sushi or salad, and how often? Culling this data to create a rich, textured profile of people’s habits and their claims data can tell us what drives healthier behaviors and reveal why people choose not to get healthcare.

Expect some interesting Haven products that aren’t necessarily a threat to insurers today. Like a credit card to finance healthcare expenses. Unlike an insurance company, Chase hypothetically could ask consumers a lot of health status questions to predict how their debt level may relate to their health, what kind of a credit rating they have and, therefore, what kind of a credit limit they want to offer them.

Consider an Amazon Prime membership for healthcare. Say I know in a given year if my family and I are sick, we’re going to pay $5,800 or $11,000 for healthcare (this is because we chose the high deductible health plan). But what if Amazon Prime Health was another $200 a year and you’d get all your preventative care there? Now link that with Haven – upload data you’re willing to share, and they’ll offer a custom services suite based on what they think you’ll need. Not bad, considering Amazon Prime is $199 a year.

Prediction 3: “Google will empower people to compare different offers in a care delivery setting.”

Here’s something you can’t really Google: What was the first thing you ever…Googled? In the late 90’s, John Hennessy, co-inventor of Google, demonstrated the search engine’s success when typing in “Gerhard Casper” resulted in webpage hits for the German professor (not the friendly ghost). Two decades later, Google is carving out a value proposition for people around transparency, pricing, and procedures by comparing apples to apples. But I don’t think they’re going to create new content to do that. They’ll just constantly pull together and provide access to different parts of information not so easily accessible before.

Case in point, I recently heard someone needed hand surgery and compared different providers in his market. He ended up going to the highest quality provider. Since the deductible was expensive, he negotiated for how much he’d pay out-of-pocket and avoided going through insurance. But more consumers are either choosing, or being forced into, high-deductible health plans. They’re getting savvy about how it matters less what insurance covers (catastrophes aside). They’re saying more often, “Well, in an average year, I’m paying for all my stuff anyway. What does it matter?” I don’t see the masses doing that yet, but this behavior will start permeating. Google will empower people to compare offers in a care delivery setting.

Prediction 4: “Apple’s next move will be device oriented, likely around “remote biometric monitoring.”

Apple is skilled at data convergence with lots of disparate data streams on one device. Apple’s next move will be device oriented, likely around “remote biometric monitoring.”

Another prediction relates to how retailers are pivoting to do more healthcare delivery in their stores. Consider how Apple, with stores across nearly every US state, has Genius Bars with highly trained experts. Could an Apple health model mirror that, but with healthcare experts, not software technology experts?

Apple hopes to build the first open access healthcare platform centered around a personal health record. While intriguing from a consumer empowerment and choice point of view, the problem is, I can put my data on there, but I don’t have most of the data that really matters, like my C-section records or that I was just hospitalized for pneumonia. This clinical footprint doesn’t become mine  – it just lives in the cloud.

When it comes to the cloud and privacy, the standard for healthcare information privacy is quite high, as people historically have been private about their health. But that doesn’t square with today’s Millennials and Generation Z’ers who live out loud. A celebrity shares her kidney operation on Instagram, or discusses checking into rehab for the third time, perhaps without regarding privacy risks. It will be interesting to see which way the privacy pendulum swings, as more (highly sensitive health) data gets into more hands over time.

Closing Thoughts

When it comes to the Amazons, the Googles, the Havens, and the Apples of the world, the value proposition is going to swing dramatically. If I’m willing to give companies like these my data, I hope I’ll have a more personalized, customized, curated, fair plan for myself or my family in return.

It will take time for the innovators outside of healthcare to create what consumers need and want. They’ll slowly change consumer behavior patterns to revolve more around prevention services and low acuity care management. Then they’ll build on that.

On the other end of the spectrum – the electronic health record vendors, the Epics, and Cerners – have most of my data already, and I see less incentive for them to give me access. (And even less of an incentive for them to give companies like Amazon or Haven access.) They’ll need a value proposition that’s compelling to a consumer, and that can be monetized and commercialized. For example, take my family. We live in New York where there’s clinical data about us at Columbia, New York Presbyterian, Mount Sinai, and New York University Langone, just for our emergency room visits and hospital stays, but there’s also data with a variety of specialists, primary care providers, and urgent care clinics in every neighborhood we’ve lived in. If they can figure out how to knit that together so I have a longitudinal lens into my family’s health and medical records (and all those non-clinical touch points in between, of course) I think that’s pretty valuable.

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