How JPMorgan, Amazon and Berkshire could transform health care industry

With the recent announcement that JPMorgan, Amazon and Berkshire Hathaway want to form a health delivery program for their employees, there was true elation that finally the smartest minds were going to address the excess cost and inefficiency in the current health delivery system.

What might such a system look like?

Well, it will use video-supported smartphones and computers as diagnostic tools and a cheap way for patients to talk with their doctors, who are assisted in real time by artificial intelligence diagnostic programs.

It will be geographically distributed with many locations – perhaps at company workplaces staffed by nurse practitioners, physician assistants and family doctors to provide basic primary care.

For more involved diagnosis, there may be geographically accessible regional centers providing specialty treatment.

In all cases, the medical professionals will be employees of the company – eliminating the infamous and outrageously expensive CPT code-based billing system that is bankrupting the Medicare system to the tune of $11,842 per enrollee in 2016.

It will form its own pharmacy benefit manager and negotiate volume discounts directly with the drug manufacturers. It may even start making its own generic drugs.

It may enter the medical supply business as Amazon is reported to be contemplating and source these materials directly from the manufacturers.

Lab testing? Same story – they will negotiate this directly with the providers.

All employees will carry with them an electronic medical record that will be accessed at each visit. Employees will be financially incentivized to maintain good health through regular checkups and weight monitoring. Stay healthy – get an annual bonus from your company.

For employees with chronic conditions or recovering from surgery, there will be medical case managers hounding them to stay on their recovery treatment plans and thus avoid expensive re-admission.

Will it succeed? It’s a very small patient base of about 5 million people (employees plus dependents), so there will be a lot of upfront overhead for a relatively small medical population.

In contrast, major insurers such as Aetna, Anthem, Cigna and United Healthcare have member populations ranging from 15 million to 48 million. So they can spread their overhead over a wider patient base and, as a result, enjoy medical delivery costs ranging from $1,810 to $2,680 per insured member.

If this noble joint venture succeeds, it will be because it is bringing in costs at or below the current cost per insured member of the major medical insurance providers who are also attacking their costs on a daily basis in order to stay financially viable.

This story was originally published February 27, 2018 at 2:30 PM with the headline "How JPMorgan, Amazon and Berkshire could transform health care industry."