Amazon, Berkshire Hathaway, JPMorgan Chase expect to announce CEO for new venture in two months
New CEO needs to know not only health insurance and benefits, but how healthcare is delivered and financed, expert says.
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Amazon, Berkshire Hathaway and JPMorgan Chase are seeking a CEO to head their partnership, but what direction that will take other than to take cost out of the healthcare system remains unclear.
The partners expect to pick the CEO within the next two months, multiple news outlets have reported.
The short list of candidates includes former acting administrator for the Centers for Medicare and Medicaid Services, Andy Slavitt, former Cleveland Clinic CEO Toby Cosgrove and former U.S Chief Technology Officer and Castlight Health cofounder, Todd Park, according to healthcare consultant Paul Keckley.
"They need someone in that role who knows the healthcare system, not just health insurance or benefits - how healthcare is delivered and financed," Keckley said. "This is not a traditional early-stage venture-backed enterprise. It has potentially significant funding."
Analysts and healthcare experts have said Amazon, Berkshire Hathaway and JPMorgan Chase would form a self-funded health plan to combine their million-plus employees, but because large companies are typically already self-insured, the initiative to cut costs is expected to go well beyond having their own third party administrator to process claims.
To take a bigger chunk out of healthcare costs, the partners will use personalized data for better utilization and a push for healthier living.
"Amazon is the guts of this thing," Keckley said. "I think they will integrate direct care and be very aggressive on drug supply costs. I think they think they can dramatically reduce utilization through aggressive technology and a self-care direction."
They could insource medical care, especially for a sizeable portion of the workforce that makes less than $30,000 a year, he said.
"They did the acquisition of Whole Foods, 470 retail sites," Keckley said. "They can do what most self insureds haven't done, shift to high deductibles and narrow networks."
The partnership could even involved Amazon, Berkshire Hathaway and JPMorgan Chase working with their cafeterias to specialize in the food employees receive, said Ben Fenton of the Fenton Law Group in California.
"They create incentives for employees to be healthy," Fenton said.
While employers are already doing this, "the difference is, it's a melding of very large employers with cutting-edge technology" he said. "They can focus on telemedicine."
The venture will also go beyond being a not-for-profit which the partners say was misunderstood when the deal was first announced.
"They've had a slew of interest by large employers intrigued by the potential of the Amazon technology distribution approach to healthcare," Keckley said. "It could be attractive to other employers."
"It's a great example of private enterprise looking to find ways to cut a lot of the fat out of the healthcare system," Fenton said. "The hope is other systems can look at the model and either adopt parts of it, or all of it."
Lately, the early shock of the venture as the industry disrupter has given way to questions of when a plan will be announced.
Part of this is due to the companies themselves tamping down expectations, such as from the much-reported annual shareholder letter from JPMorgan CEO Jamie Dimon.
"I think they're still trying to calibrate what this thing is," Fenton said. "I think it continues to morph and they try to manage expectations. It's difficult to anticipate what's going to disrupt an industry. They're not the first to try to problem solve to try to cut costs."
"If this is only about how it gets paid, it's not earth shattering," said American Benefits Council President James Klein. "If they align what is paid for with quality outcomes, that will be valuable outcome."
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
