Amazon, JPMorgan Chase & Co. and Berkshire Hathaway unveiled plans to launch a new healthcare company aimed at cutting costs for their U.S. employees Tuesday.
Reactions varied. Healthcare stocks took a $69 billion hit as investors responded to a long-anticipated Amazon entrance, Reuters reports. At the same time, STAT reports several healthcare experts raised doubts about the announcement's effects, citing a lack of detail in the companies' 394-word press release.
Stephen K. Klasko, MD, president and CEO of Philadelphia-based Thomas Jefferson University and Jefferson Health, thinks the announcement is a watershed moment in healthcare. Since taking the helm at Jefferson Health in 2013, the system has grown from three hospitals to 13 and achieved the No. 16 spot on U.S. News & World Report's Best Hospitals list for 2017-18.
Dr. Klasko spoke with Becker's Hospital Review about his reactions to the new Amazon/JPMorgan/Berkshire Hathaway venture and what it means for healthcare executives.
Question: As the CEO of a 13-hospital system, you bring a unique perspective to the question: "What does an Amazon, JPMorgan and Berkshire Hathaway collaboration mean for healthcare?" Can you share your perspective and initial reactions to the announcement?
Dr. Stephen Klasko: It's an amazingly interesting development. In some ways, I wasn't surprised. It's obvious our industry is going through one of those once-in-a-lifetime changes, from hospital companies that are run by doctors and administrators to consumer healthcare where the patient is the boss.
Employers have tolerated incremental changes in healthcare while every other part of our lives has been transformed by technology, innovation and creativity. If you're Amazon, you're looking and saying, "Gosh, I can get this product to someone's house by same-day delivery, or do an automated grocery store, but I can't get a believable, understandable bill?"
I think [the Amazon/JPMorgan/Berkshire Hathaway collaboration] is a landmark event. It's finally gotten to the point where these employers say, "We don't think you guys see the burning platform."
Q: What are you hearing from other industry leaders on the issue?
SK: I'm in a conference with a lot of industry leaders. Even before this announcement, over the last two or three weeks, probably since the CVS Health/Aetna announcement, we're [Jefferson Health] getting calls from unlikely sources — from national insurers, from other health systems, from alternative delivery companies — about really innovative partners.
As far as other academic medical centers' leaders, I think they fall into three categories. One is folks saying, "I knew I needed to change. But now CVS/Aetna, Providence/Ascension and Amazon/JPMorgan/Berkshire Hathaway, it's clear. I'm going to go all in and take some risk." Some are in denial, or at the point in their career when they don't want to change. I hear a lot of folks still say, even after yesterday's announcement, it's not going to change, that this kind of thing happens all the time. There is a third group that's saying, "I have to transform. My board is looking over me and is still looking for the least risky way to transform the organization."
Q: What does this venture mean for healthcare executives? What, if any, response is needed from them?
SK: I'm going to expand it beyond healthcare leaders to health policymakers. What we need is almost a 9/11 approach to the crisis in healthcare. That crisis is why healthcare escaped the consumer revolution. We feel comfortable. If you think about the 9/11 commission, after everyone got done blaming each other, they said, "We failed to keep the country safe." And they brought smart people from inside and outside the industry to say, "We have to change this."
We also have to accelerate physician leadership so the immense changes we need to make in cost, access, patient experience and quality … that that burning platform can be shared. We're not prepared for that as physicians. We don't spend nearly enough to get the entire workforce into the future.
Q: In your opinion, what comes next? Do we see similar partnerships crop up? Is this really a "watershed" moment in healthcare, as I've heard some describe it?
SK: I think it is a watershed moment. I think what is going to happen now is the most innovative employers are going to recognize their employees are not getting the cost, access and quality they need. With retail, Macy's, Sears and JCPenney didn't move. Target and Walmart, those able to adopt some of the things that Amazon has done, have done well. They're tired of a million explanations around transparency. I think what will happen is other employers will join on the bandwagon — look for places that embrace that mentality and are ready to join with Jeff, Jamie and Warren in the revolution.
The other thing that this will force is a discussion around the concept of your zip code being more important than your genetic code when it comes to health — the whole issue of social determinants of health. We don't deal with that because hospitals are competing with each other and are just concerned about what happens if somebody comes into their office or hospital. I think these CEOs [Jeff Bezos, Jamie Dimon and Warren Buffett] are keen on and going to ask us to look more closely at that.