Amazon Leads the Way in New Efforts to Disrupt Healthcare

Self-sustaining employee healthcare may be the latest “hack” for big companies that are fed up with increasing costs and complexities of for-profit health insurance. And as one industry giant has recently suggested, there may be other areas of healthcare that could stand a touch of business innovation.

In January Amazon, Berkshire Hathaway and JP Morgan announced they were looking at ways they could team up to disrupt the U.S. healthcare system and create “an independent company that is free of profit-making constraints.”

The new network, while still sketchy in details, would be designed to serve the medical needs of their workers, and conceivably replace the web of requirements, restraints and ballooning costs that define today’s healthcare insurance system.

The American healthcare system, as President Trump ruefully noted last year when his party failed to pass a replacement to the Affordable Care Act, is “unbelievably complex,” so how could three businesses – admittedly giants in their own fields – come up with a way to rewrite the industry?

The answer to that question could be unveiled by Amazon, which is working with AARP (the American Association of Retired Persons) to come up with a whole new platform of products and services for seniors.

The new Amazon market: senior healthcare

Medicare costs make up about 20 percent of the federal healthcare dollars these days. Yet that $672 billion doesn’t begin to account for the total costs that seniors are expected to face in their retirement years.

According to Fidelity Investments, the average 65-year-old couple can look forward to an average bill of $275,000 during their golden years. The company notes that figure won’t include long-term care expenses, which are often covered by Medicaid, private insurance or out-of-pocket payments.

But the Baby Boomers are also a relatively untapped market, particularly when it comes to the growing role that technology is expected to play in senior healthcare products. According to the 2016 report, Aging in Place Technology, the tech market that caters to an aging population is due explode, growing from it current value of $2 billion to $30 billion in the next few years.

The rising percentage of seniors living at home has given way to a flood of innovative technology designed to help residents, caregivers and medical facilities and staff address new ways to support that trend.

But it isn’t just preference that is driving aging populations to stay in their homes. It’s the cost of healthcare. Seniors, like other sectors of the population are being forced to make difficult, economical choices about how to maintain under the increasing weight of healthcare and living expenses, says Aging in Place Technology Watch.

And that demand is helping to create new opportunities for Amazon and AARP, which have been in secret discussions about new products and services since 2015.

At the same time, it’s afforded new opportunities for company leaders like Amazon CEO Jeff Bezos, to review the way that healthcare is provided for his employees. At more than 1 million employees and counting, Amazon now carries considerable clout in the marketplace, Maulik Bhagat, managing director of healthcare for AArete told Retail Drive. AArete is a global consultancy firm based in Chicago.

“At a minimum [Amazon’s size] gives them more power in holding their existing payer vendors more accountable for health and cost outcomes for their employees,” Bhagat explained.

Of course, healthcare is much more than numbers and exerting influence, as both Congress and healthcare lobbying organizations have found out in recent years. It takes having a network of providers for all sorts of services and products, not just doctors, hospitals and diagnostic providers. And it takes consensus about costs and profits, and how those obligations are going to be met. But most of all, it takes access to a reliable and faithful customer base.

“Expand this to the number of captive and loyal customers these firms collectively touch and you suddenly have the possibility of this becoming a huge disrupting development,” said Bhagat

Eight years have passed since the signing of the Affordable Care Act into law by President Obama; four years since its official launch. Those eight years have taught businesses and the government a thing or two about what it really takes to build a reliable, efficient and affordable care system for Americans.

With Congress still attempting to reach consensus about what a for-profit, insurance-driven healthcare system should look like, it may be well-established businesses that will be able to find that middle ground.

Building a sustainable healthcare system that cuts overhead by ensuring their employees can afford medical care and that is complemented by cutting-edge technology (some of which Amazon is already marketing, like the Alexa voice-recognition software for health practitioners and new medication systems and products) that do make money for the company, may be the new American model for profit-driven companies.

Flickr/James Duncan Davidson