Why Amazon, JP Morgan Chase, Berkshire Hathaway, Uber and Others Are Entering Healthcare
When you undergo medical training, you learn a great deal of arcane facts and quotes. One of the most unusual is “Sutton’s Law”. It pertains to William Francis Sutton, a notorious bank robber of the 1920’s, who when asked why he robbed banks, allegedly replied simply, “Because that’s where the money is”. It is used in medicine to remind us to go straight to the most likely diagnosis.
What does this have to do with companies like Amazon and Uber going into healthcare? Well, the healthcare sector is now the #1 employer in the U.S. Healthcare costs are also projected to consume 30% of the federal budget by 2020, as I have previously noted (http://dredmundfunai.com/a-history-of-american-healthcare-possibilities-for-the-future/). So, for-profit companies are moving into healthcare for exactly the reason Willie Sutton robbed banks – that is where the money is.
For the Amazon/JP Morgan/Warren Buffet-Berkshire collaboration, the initial focus in more about saving money rather than making it. The plan is to initially focus on coming up with solutions to improve the care of their own employees. This is a lot of people – their combined workforce exceeds 1.1 million. If they are successful, their solutions developed could be scaled up and offered to the public at large. While not everyone believes these companies can pull off big change, current healthcare stock prices fell at the announcement, so at least Wall Street is taking the move seriously.
Uber is taking a different approach. It recognized that some of the highest-cost patients often have obstacles to keeping regular physician appointments, resulting in more ER visits and hospitalizations. One of those obstacles is transportation, with 3.6 million Americans missing medical appointments due to a lack of available, reliable transportation. Uber Health will provide a ride-hailing platform available specifically to healthcare providers, letting clinics, hospitals, and others easily find rides for their patients from a central source – without requiring that the rider even have the Uber app, or a smartphone. Uber is betting that insurers, as well as hospitals and doctors who have taken on risk related to the total cost of patient care, will be willing to bear the relatively modest cost of providing convenient transportation in the hopes of reducing far more expensive episodes of healthcare utilization. My guess is that their bet will pay off, and organizations using its services will see an uptick in patient compliance and a decrease in costs sufficient to warrant the modest investment.
While Amazon, JP Morgan Chase, Berkshire Hathaway, Uber are making headlines in 2018, I would predict that we will see more of this trend in the future. Many companies that run a wire into your home, such as cable companies and telephone companies, have long been quietly exploring how that can get a piece of the home care pie, and odds are you already have a wearable device or smartphone app that pertains to your diet or activity. Look for more of these kinds of headlines in the future.