Amazon’s promise of tech focused health insurer turns traditional health insurance model upside down

Amazon, together with Berkshire Hathaway and JPMorgan Chase & Co., announced the companies are “partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs” and promptly up-ended an entire industry.

For now, the healthcare industry is shocked. Just about every large health insurer took a major hit…a full $30 billion of market value gone in a one day.

Why did it Happen?
Not only because of JPMorgan Chase’s end-of-the-sentence comment that this new enterprise may someday provide services to “potentially, all Americans,” but because these are significant players in technology, service delivery, investments, insurance and more. And because the foundation of this new non-profit company will be technology. “The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost,” according to the announcement. (The three companies employ approximately 1.2 million people.)

By creating a new technology-first health insurance company, these organizations are destroying the traditional health insurance paradigm by coming at the problem of affordable healthcare from a totally different perspective. Rather than having insurance (premiums, deductibles and co-pays) take the lead in building out the offering, the companies will use technology to “check the rise in health costs while concurrently enhancing patient satisfaction and outcomes,” according to Berkshire Hathaway Chairman and CEO Warren Buffett.

For decades, traditional health insurers have attempted to master this elusive healthcare trinity—controlling cost, improving health outcomes and increasing patient satisfaction—but none have come close to making a noteworthy breakthrough in any of the three areas. If anyone has the ability to do so, it may be this group.

Technology First
Amazon is the perfect technology lead for this type of endeavor with its already-in-place cloud infrastructure service, artificial intelligence technologies and consumer-focused website capabilities. The pieces for the group’s patient-centered, technology-based health insurance fall into place effortlessly when you consider Amazon’s:

• distribution network, for things like prescriptions and durable medical equipment;
semi-secret 1492 health technology project;
• customer-focused, easy-to-complete retail interactions; and the
• in-home ubiquity of the artificial intelligence assistant Alexa (an estimated more than 20 million units sold in six months last year) and the device’s ability to receive and provide information.

Traditional health insurers don’t have the technology in place—and certainly not the history of positive customer service—nor the ability to integrate it seamlessly to create a positive patient experience.

In addition, the impact on healthcare providers and payers could be significant. Neither group communicates effectively today due to the continued reliance on fax machines and regular mail to manage patient authorizations, claims, denials and more, even though technologies exist to make the processes more effective and efficient.

Amazon, however, already has many of the pieces in place to construct a patient experience much like its wildly successful technology-based retail experience.

The Future of Healthcare?
While this announcement is exciting and has had a major impact, it is still just announcement. Details of how the group will operationalize their new health plan, and contract with providers and pharmaceutical companies have yet to be announced. Some in the traditional health insurance world, however, may doubt this new type of health plan will ever come to be.

Whether you’re a healthcare consumer, health insurer or healthcare provider, we must wait to see how this plays out. Until then, I’ll leave you with a seemingly prescient 2013 quote from Jeff Bezos, made when he purchased The Washington Post: “We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient.”

Phil Walsh is Chief Marketing Officer for Healthcare and Life Sciences at Cognizant, a Fortune 500 company.

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