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Amazon Health

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Re: Amazon Health

#11

Post by esfandia »

nissimk wrote: post #2

Once the infrastructure is in place to automate healthcare delivery they can lobby the government to implement a single payer solution and they will be the only service provider available to deliver the necessary services. It's a virtual gold mine. You heard it here first: death panels as a service. Triage by algorithm would remove one of the most disturbing responsibilities in medicine.

They could then also force people to eat healthy (i.e., at Whole Foods) or else lose their health coverage! ;)

Re: Amazon Health

#12

Post by aaavl2821 »

rezashirazian wrote: post #7
aaavl2821 wrote: post #5

The article makes the point that the companies have complementary business competencies that could help them deliver a better healthcare experience (tech, logistics and customer service at amazon; reinsurance at berkshire; capital at JPM), but there is another advantage to these three companies working together: scale. amazon and berkshire are in the top 10 employers, and JPM is in the top 25. while most of the talk…

If these companies get together and create a not for profit, how can for-profit providers even begin to negotiate with them. Also given the scale of these companies, wouldn't this raise healthcare costs for all others who don't work for one of them?

Many not for profit providers in the US are actually quite profitable, and insurance companies, even for profit ones, have regulations regarding their profit taking (they must pay out like 85% of premiums they receive to cover medical expenses). So while not having a profit mandate can certainly help Amazon / brk/ JPM, scale and negotiating leverage are probably bigger drivers

Interesting point re increasing costs for other companies, seems like it could certainly happen and maybe even lead to an arms race of employer consolidation. This phenomenon has happened in the hospital-insurance area, where a big hospital will buy up smaller providers and negotiate higher rates from insurers. The insurers then either have to consolidate and grow themselves or decrease rates to smaller providers, thus incentivizing smaller providers to join the big ones.

This is a vicious cycle and I believe one of the main reasons for higher cost healthcare in the US. that said, healthcare is very local, so not sure if this new effort will impact local payer provider dynamics as much as it will increase more national scale issues like PBM and purchasing

Re: Amazon Health

#13

Post by swalsh »

thinkingkong wrote: post #4

I read the original announcement and also this analysis. Is it decided that Amazon will “own” the healthcare provider? As far as I can tell this is still a joint effort by several companies with the same philosophy on how to solve the problem. Presumably if other large companies were aligned they could create their own joint partnerships or discuss the possibility of joining this one.

It doesn't sound like Amazon would own providers, or try to become a payer. Instead, it becomes an aggregator of providers and payers, gaining negotiation power, which it can leverage to lower costs for healthcare "demand".

Re: Amazon Health

#14

Post by amsilprotag »

thinkingkong wrote: post #4

I read the original announcement and also this analysis. Is it decided that Amazon will “own” the healthcare provider? As far as I can tell this is still a joint effort by several companies with the same philosophy on how to solve the problem. Presumably if other large companies were aligned they could create their own joint partnerships or discuss the possibility of joining this one.

If we assume investors are omniscient, there is somewhere between a 3% and 11% chance Amazon Health will commoditize the market. Weigh those numbers a bit upward if you think Amazon can't do it instantaneously.

CVS dropped by just over 4 percent by midday, UnitedHealth plunged a whopping 11.5 percent, Express Scripts was off by 3.6 percent, Cigna was down by just under 7 percent and Walgreens fell by 2.6 percent.

https://techcrunch.com/2018/01/30/cvs-other-health-stocks-do...

Re: Amazon Health

#15

Post by tdfx »

aaavl2821 wrote: post #10
gamblor956 wrote: post #9

Earlier quoted context omitted.

Not necessarily. The largest driver of healthcare costs in the US is pharma profits. This venture, combined with the CVS/Aetna merger and the common drug factory venture, should place substantial downward pressure on pharmaceuticals to lower their prices or lose hundreds of millions in business...forever.

The largest driver of cost in the US healthcare system is actually hospital care (30% of spend) while drug costs account for ~10% Not to say that drug prices aren't too high but they are just one piece of the puzzle

Where could one find more sources for this kind of information?

Re: Amazon Health

#16

Post by adrianmonk »

aaavl2821 wrote: post #5

The article makes the point that the companies have complementary business competencies that could help them deliver a better healthcare experience (tech, logistics and customer service at amazon; reinsurance at berkshire; capital at JPM), but there is another advantage to these three companies working together: scale. amazon and berkshire are in the top 10 employers, and JPM is in the top 25. while most of the talk…

The article actually touched on scale when it talked about risk pooling. Its argument was that the three together are not big enough to have the same kinds of economies of scale as big health insurers, but I'm not sure I think it'll be a problem like they suggest.

If the 3 are going to do their own insurance, all that has to happen is that the gains of cutting out a for-profit middleman need to exceed the losses of reduced economies of scale (compared to the insurance giants).

Based on some quick Google searches (queries like "amazon number of employees"), it seems like the 3 together have a total of over 1 million employees. That seems like a large enough risk pool to me.

Re: Amazon Health

#17

Post by Thriptic »

thinkingkong wrote: post #4

I read the original announcement and also this analysis. Is it decided that Amazon will “own” the healthcare provider? As far as I can tell this is still a joint effort by several companies with the same philosophy on how to solve the problem. Presumably if other large companies were aligned they could create their own joint partnerships or discuss the possibility of joining this one.

One avenue this entity could take is to offer itself as a non-profit third party administrator of a self-funded plan for other companies. Large companies typically put up the money for health insurance anyway combined with employee premiums and then pay a TPA company or health insurer to create the benefit plan and administer it for them. They don't actually buy insurance as a product from a health insurer for their employees.

Alternatively, they could pool funds and create an actual insurer.

The trouble with Amazon trying to become THE payer or TPA is that insurance is highly variable across the country. There are many different laws governing insurance in each state, and you need to strike business agreements with literally countless small practices, hospital systems, lab service providers, drug companies, outpatient clinics, etc. It would actually be a massive administrative feat for Amazon to provide solid coverage across the US.

Re: Amazon Health

#18

Post by aaavl2821 »

tdfx wrote: post #15
aaavl2821 wrote: post #10

Earlier quoted context omitted.

The largest driver of cost in the US healthcare system is actually hospital care (30% of spend) while drug costs account for ~10% Not to say that drug prices aren't too high but they are just one piece of the puzzle

Where could one find more sources for this kind of information?

page 33 of this (CDC report) shows breakdown of spend by category: https://www.cdc.gov/nchs/data/hus/hus16.pdf#093

here are the CMS stats for 2016: https://www.cms.gov/research-statistics-data-and-systems/sta...

Re: Amazon Health

#19

Post by AnimalMuppet »

nissimk wrote: post #2

Once the infrastructure is in place to automate healthcare delivery they can lobby the government to implement a single payer solution and they will be the only service provider available to deliver the necessary services. It's a virtual gold mine. You heard it here first: death panels as a service. Triage by algorithm would remove one of the most disturbing responsibilities in medicine.

> Triage by algorithm would remove one of the most disturbing responsibilities in medicine.

It would shift the responsibility - to the algorithm writers. It doesn't remove it.

Re: Amazon Health

#20

Post by mastax »

Thriptic wrote: post #17
thinkingkong wrote: post #4

I read the original announcement and also this analysis. Is it decided that Amazon will “own” the healthcare provider? As far as I can tell this is still a joint effort by several companies with the same philosophy on how to solve the problem. Presumably if other large companies were aligned they could create their own joint partnerships or discuss the possibility of joining this one.

One avenue this entity could take is to offer itself as a non-profit third party administrator of a self-funded plan for other companies. Large companies typically put up the money for health insurance anyway combined with employee premiums and then pay a TPA company or health insurer to create the benefit plan and administer it for them. They don't actually buy insurance as a product from a health insurer for their…

> The trouble with Amazon trying to become THE payer or TPA is that insurance is highly variable across the country. There are many different laws governing insurance in each state, and you need to strike business agreements with literally countless small practices, hospital systems, lab service providers, drug companies, outpatient clinics, etc. It would actually be a massive administrative feat for Amazon to provide solid coverage across the US.

It's possible to start small, no? One metropolitan area at a time, make deals with local orgs, slowly transition local employees over to the new plan. The 75 employees working at the Iowa datacenter may stay on their current insurance for a while, but I don't think that's a terribly difficult obstacle for the idea.

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