Late last week word came down from a Boston judge that the new, secretive Amazon/Berkshire Hathaway/JPMorgan Chase healthcare venture could go ahead and hire a former Optum executive. By now you know the story, if you need a refresher you can find it here and here.
It was a quote in the second New York Times article linked above that caught our attention:
The three employers combined are spending about $4 billion a year on the roughly one million people they cover. But employees “have a poor experience,” Mr. Stoddard said.
“They’re not getting the care they need, and the costs continue to rise,” he said. “We wouldn’t exist unless there was a need to come up with and find a new solution to the problem.”
The article goes on to quote Stoddard – a high-level exec at the organization – offering an olive leaf to the healthcare industry. He said ABJ, as it’s often referred to, would rather partner than compete with established healthcare organizations to reduce cost and improve care.
Rather than being defensive about new entrants into healthcare, established industry players should be focusing on the implication of Stoddard’s blunt statement: there’s a big problem, the incumbents aren’t solving it, so we have to.
ABJ vs Optum perfectly encapsulates the gap in healthcare today between providers, payers, pharma and employers. Employers are on the hook for a significant portion of private healthcare dollars. They’ve finally reached a breaking point, saying “enough!” to rising costs and mediocre outcomes. Some of the cost is being shifted to employees through high-deductible plans or higher premiums, but that’s just shuffling money around instead of actually saving it. So they’re creating new models instead of waiting for an industry that hasn’t shown much of an inclination or ability to innovate.
The options for established companies are to resist or to innovate. Innovating may mean joining forces with new entrants. We maintain that resisting is no longer a viable option long-term. Changes in the economy, consumer behavior, technology and other areas have opened new avenues for organizations like Walmart and ABJ to step in. They have the patient populations (i.e., employees and customers) and the financial weight to experiment with new models. Established players will be left behind as these new organizations figure out how to deliver better health at lower costs and scale their efforts.The options for established companies are to resist or to innovate. Innovating may mean joining forces with new entrants. We maintain that resisting is no longer a viable option long-term. #ChangingEngagement #RiseOfTheConsumer Click To Tweet
Better to get ahead of that curve and partner with ABJ instead of try to fight them off. Which is, according to Stoddard in that Times article, exactly what ABJ wants.