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What Does the Amazon/Berkshire Hathaway/JP Morgan Chase Agreement Mean for Providers? One Industry Expert Has an Idea

January 31, 2018
by Mark Hagland
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Hal Wolf shares his perspectives on the implications of the Amazon/Berkshire Hathaway/JP Morgan Chase deal, for healthcare providers

As Healthcare Informatics reported on Jan. 30, early on Tuesday morning, three corporate giants in the United States—Amazon, Berkshire Hathaway, and JP Morgan Chase & Co.—announced that they were launching an initiative to improve satisfaction and reduce costs for their companies’ employees.

The three companies announced today that they are “partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs. The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints,” the announcement said. “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.”

The announcement went on to say that “Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today. By bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.” And it quoted the highly prominent CEOs of all three corporations—Jeff Bezos, Warren Buffett, and Jamie Dimon, all of whom expressed their determination to do something about healthcare costs and issues. For example, Berkshire Hathaway’s Buffett stated that “The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers,” Buffett conceded. “But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”

So what does all of this mean for healthcare IT leaders? One industry leader eager to wade into the debate is Harold “Hal” Wolf III, the president and CEO of the Chicago-based HIMSS (Healthcare Information & Management Systems Society). Wolf, who joined HIMSS in mid-September 2017 after years in healthcare executive management (including as vice president and COO of the Permanente Federation) and consulting, spoke Tuesday afternoon with Healthcare Informatics Editor-in-Chief Mark Hagland regarding the announcement, and its potential implications for the U.S. healthcare industry. Below are excerpts from that interview.

Starting at the 40,000-feet-up level, what was your initial reaction to this morning’s announcement by the senior executives of Amazon, Berkshire Hathaway, and JP Morgan Chase?

My first reaction is that this announcement was the latest in a line of a few big announcements recently, including the CVS/Aetna deal and the Apple announcement [around that company’s development of a solution to provide consumers with access to their medical records on their iPhones] . People are starting to till new soil, and starting to look at how they can pick unique segments, including within healthcare, to go after. It’s interesting in this instance, because that segment involves the workplace, employers, and employees, and the care model [around how employees access healthcare delivery]. It’s a more controlled cohort; but it’s very large—well over 100 million people, potentially. I agree when you note that this morning’s announcement lacks a lot of detail. But when you look at the players involved, and the timing involved, and the fact that Amazon has been looking to partner with a company with an information technology background, it’s very intriguing.


Hal Wolf

Historically, the executives at hospitals and health systems have been most focused on the competition they face from their neighboring hospital down the road. Now, they’re looking at new types of competition coming from entities completely unlike themselves. Do you see hospital, medical group, and health system leaders having to think about what market competition means, as a result?

Totally. In the digital health space, we’ve been watching in the past few years, that this is not about their hospital versus the hospital next door. It’s about operating inside a much broader ecosystem; it’s about the connectivity model, and playing in the same space as other entities. Until recently, they haven’t had the precise competition to sense that the puck was a lot further away than they realized. This potentially could be one of the largest shots across the bow of late. And I love that it strikes at the heart of the challenges we’re facing; that we need to shift towards a more digital-health-connectivity consumer-centric paradigm; and that we may be seeing a much faster change in the industry. It definitely is a game-changer.

What should CIOs, CMIOs, and other healthcare IT leaders, be thinking, right now, as they look at these new, emerging types of market competition, and the implications for their IT infrastructures and other foundations, and their overall IT strategies, going forward?

I was trying to put myself in that position this morning, thinking about that. It’s nebulous, but let’s think about this: we have the traditional medical model, and we have a consumer-driven health model. This could be a consumer-driven health model being pushed down from employers. But the salient point is that no matter what gets created, whether virtual or consumer-oriented, at some point, it has to connect back up to physical structure, including hospitals and clinics. And no one is going to create an entirely new physical structure—no one’s going to build a completely new system of hospital facilities to mimic the hospital facilities already in existence; that’s not what this is about. So if I’m a CIO, I’ve got a big thing right now—I’ve got to understand my connectivity model of my network, beyond the bounds of my walls. How am I going to connect out in the market, and receiving new sources of data and information?

And if you’re not focused on interoperability right now, and thinking about those standards that will allow you to do that, and you have to do point-to-point integration every time, you won’t be able to do it. So you’ve got to be aware of that connectivity back into the consumer space. We’ve always had an industry positioning of bringing the interoperability to the industry. And if I’m a CIO, I’m thinking about this all the way down to the device today, and wondering how this new model might impact me. And the runway is five years, which is a very short time. So they’ve got to figure out how to clear their decks and consider this mindset, because no matter who it is, it will force a redesign of platforms; so it will be really interesting to see it play out.

What might be the conceptual runway towards this, for healthcare IT leaders?

I come from operations, and I’m looking at this significant shift in paradigm on the horizon. And even before this announcement, I was already concluding that the next five to ten years will be such a critical time in healthcare, just because of the numbers and economics—the number of people retiring, the increase in chronic disease, retirements of physicians and nurses, and potential shortages, and lack fo bed space. So when I think about this, there are basics that have to take place, because technology solves nothing without people and process behind it. So, workforce development: how am I training my people and getting them ready for that next phase? How am I going to think about taking care of people, via segments? There are other segmentations—the young and healthys, moms with kids. And segmentation will rapidly evolve, just as it has in other industries. But this is a segment; this is a segment with money. That’s why healthcare stocks took a hit today, because that’s where the money is coming from.

We have to prepare for a huge set of disruptions in healthcare; that seems clear. Last year, at the World Health Care Congress, I covered a session in which panelists were discussing employers’ direct contracting with provider organizations for specialty care. For example, the Lowe’s home improvement chain is sending its employees, from around the country, directly to Cleveland Clinic, for total joint procedures.

Yes, it takes me back to an interesting moment, back in 2005. I was in South Africa. And at that time, we were working with the South African government, looking at the AIDS epidemic, and we were at Johannesburg General Hospital, and looking at the upcoming tuberculosis clinic. And one of the mining companies had just financed a wing of the hospital dedicated to their mining employees. I bring that up because this type of model has been done in other places in different ways; but we’re certainly not alone on a global basis.

Is there anything that you’d like to add, at the moment?

The one piece that I would add back into it is that, as all these pieces are coming together, people are creating vertical stacks—hospitals, clinics, etc.—the one caution we have to monitor and be sharp on, is understanding that vertical integration does not ensure clinical integration—actually following the patient all the way through the system.

 


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