The
healthcare industry has never experienced anything like Amazon’s combination of
powerhouse logistics, voice AI expertise and robust data analytics. And the
impact could be huge.
September
24, 2019 Updated: September 25, 2019 Written by Stephen
Gossett
What are they building in
there?
Ever since the
announcement last year that three of America’s biggest companies — Amazon,
Berkshire Hathaway and JPMorgan Chase — had united, Voltron-style, to fight for
lower healthcare costs and forge “a better patient experience” for their
combined 1.2 million employees, industry watchers have waited patiently for
more details about what the healthcare hydra has planned.
For the most part, we’re
still waiting.
Dubbed Haven,
the alliance has since laid out some of its still-blurry vision. If you consider its leadership
team (led by surgeon and best-selling writer Atul Gawande) and Amazon’s yearslong gesturing toward
healthcare and previous comments by Berkshire Hathaway founder Warren Buffett,
some clues come into focus.
“The health care problem
is the No. 1 problem of America and of American business,” Buffett said in
2012. “It’s the tapeworm, essentially, of the American economy.”
Bezos posed an idea for a
cure in 2016, saying that health care would be “one of those industries that is
elevated and made better by machine learning and artificial intelligence.”
THE LONG LEAD-UP
Before we address the
impact Haven will almost certainly have on the health sector at large, let’s
examine how we got to this point.
Amazon’s healthcare
dabbling stretches back to at least 2016. Teaming with Boston Children’s
Hospital, it developed a then-groundbreaking Alexa feature that allowed the
company’s AI-driven voice service to provide parents with basic health advice
in response to questions about a child’s fever-like symptoms. Having recently
become HIPPA-compliant, Alexa can now also be used to transmit private patient
data for the purposes of monitoring prescriptions, booking appointments at
nearby urgent care centers and other health-related tasks.
Additionally, in 2018
Amazon made major inroads into pharmacy services with its billion-dollar
acquisition of PillPack. It also experimented with at-work
clinics, piloting a health center at its Seattle headquarters, and dove deeper
into patient data analysis via sophisticated natural language processing. And as part of its
efforts to target the aging infirm, the company began offering Prime discounts
to Medicare recipients.
Healthcare experts think
it’s likely that all of those moves are prologue to Haven’s potential next
steps.
COST CONTROL
Haven immediately made
waves with its stated desire to tamp down healthcare costs for its employees
and to eventually share its insights. Disruption seemed inevitable, at least to
investors, and the stock prices of health insurance companies reflected that
reality.
“Everybody, except
providers who are still on the fee-for-service wagon, wants to reduce the cost
of care and improve quality and outcomes,” said Allen Miller, CEO of Cope Health
Solutions.
How exactly Haven
will negotiate with payers remains unknown. (Haven couldn’t be reached for
comment.) But experts say the goal is likely to direct patients toward doctors
in a way that upends the common quantity-over-quality structure of healthcare
that incentivizes doctors to see as many patients as possible.
The worst-case scenario
for insurance companies would be if Haven successfully negotiates directly with
health providers on behalf of its employer group — a tough task for any
venture, even one of Haven’s stature.
“That would be pretty
difficult, but not impossible,” said Will Hinde, head of West Monroe Partners’
healthcare and life sciences division. “They can certainly start in their HQ
localities and begin that contracting process, set up a way to make that
efficient, so it's not burdensome, which would take some of the administration
out of it. That way you're eliminating claims, and you're eliminating a lot of
the incentive for providers to have a fee-for-service approach.”
Veteran healthcare
analyst Ana Gupte sees the direct-to-provider angle as an option, too — though
a difficult one.
“Just the three large
companies on their own, I'm not sure how much muscle they have around
negotiating better rates,” Gupte said. “But just because it’s such a high
profile venture, they may be able to get better unit pricing from providers or
even swoop to value-based care.”
Indeed, it takes more
than numbers to build networks; concentration is important, too. The more
dispersed plan members are, the harder it is to create networks. Boeing, for
instance, became one of the most successful examples of a large company going
the direct-to-employer route, in part by leveraging its high population
concentrations in Charleston, Seattle and other cities.
Many watchers have also
wondered if Haven’s negotiating efforts would portend doom for pharmacy
benefits managers (the profit-raking middlemen between insurers, pharmacies and
drugmakers) from whom they broker discounts.
That fear is compounded
by the fact that PBMs have increasingly been gobbled up by the insurance
world.
“There's not too many
independent big PBMs out there left,” Hinde said. “The insurance world in aggregate
should be considered threatened by anything that comes along those lines. And
certainly, yes, the PBMs.”
It’s an interpretation
that clearly seems to jibe with Haven’s stated goal of making health costs more
transparent.
The Amazon-owned PillPack
could effectively sidestep PBMs by contracting directly with insurance
companies. Analysts like Gupte, however, have cautioned against such readings.
She suggests that Haven might build relationships with PBMs to take advantage
of PBMs’ own relationships with providers and drug manufacturers. Haven
could then explore ways to secure lower costs for generics and, potentially,
some branded drugs.
“Building those
relationships could reduce copays and deductibles and maybe wrap around some
customized benefits-designed products,” she said. “That's one big pain point
for employer-sponsored workers.”
CARE CLINICS
Another way to drive down
costs is by building more lower-cost care facilities like urgent care clinics
and retail clinics. In that context, Amazon’s worksite care centers appear to
be a pilot program of sorts.
“[It would be] somewhat
competing with the CVS vision of the world, but not attached to a retail front
store,” Gupte said.
JPMorgan Chase has also
invested in on-site healthcare. The company has 54 “extensively visited”
on-site health centers, “which are staffed with doctors, nurses, nurse
practitioners and other health professionals,” CEO Jamie Dimon wrote in his
most recent annual letter to shareholders.
The centers see more than 600,000 visits per year, more than 100 of which
involve potentially life-threatening issues, he wrote.
Such sites are gaining
popularity among large employers, in part because they’re considered effective
bulwarks against so-called presenteeism — the scourge of sick employees showing
up for work. And they provide elevated care while tamping down costs.
Ashraf Shehata was senior
director of healthcare practice at Cisco when the company opened a
then-groundbreaking large-scale health center at its San Jose headquarters that
includes clinics as well as recreational and wellness centers.
“They're fantastic,”
Shehata said. “The one in San Jose prided itself on [the fact that] you would
wait no longer than five minutes to be seen. And when you were seen, it was in
a very elaborate place with electronic health records and data analytics. Very
comfortable.”
The increased
productivity justifies the investment.
“It’s been measured that
it does reduce costs because you're keeping your members at places where
quality measurements are high,” he said. “You're contracting with providers that
are known to you in the organization. It’s a win-win.”
In a 2018 Mercer survey of
employers with worksite medical clinics, 61 percent of respondents said they
believed on-site clinics had successfully reduced costs, and 71 percent said
they had improved employee health and wellness objectives. And if Haven can
glean insights about how to best use worksite clinics, those findings will
likely be valuable even for smaller companies that are joining the trend. A
full third of the Mercer respondents with fewer than 5,000 employees run more
than one on- or near-site clinic.
Gupte said Haven might
also explore having patients travel to lower priced markets for expensive
elective procedures as one option.
“Then you see whether
that drives down healthcare costs while still delivering quality in an
effective way that then maybe can be marketed beyond the three companies [that
make up Haven],” she said.
Then there’s the
long-rumored possibility of Haven opening pharmacies at stores in the Whole
Foods chain, which Amazon bought in 2017. For what it’s worth, though, none of
the experts Built In spoke with offered that as a likelihood.
DATA ANALYSIS AND
LOGISTICS
It’s not groundbreaking
for a large company — or even a group of large companies — to self-insure and
focus on reducing care costs. Indeed, most companies with more than 5,000
employees opt to self-insure, in part because it allows them to avoid
individual state-based mandates.
But none has Amazon’s
logistical strengths. The company notably parted ways with FedEx in August and
continues to ramp up its complex delivery network: those ubiquitous delivery
vans, plus cargo aircraft (which will eventually number 70, according to
operations executive Dave Clark) and plans for drone delivery.
“Amazon is building its
own delivery networks now across the country, and it’s just generally really
good at delivering to people fast and cheap,” Miller said. “So are they going
to use that as a way to differentiate themselves to members and networks?”
With its acquisition of
PillPack, Amazon effectively became licensed to ship prescriptions in all 50
states. And as home medical services like dialysis continue to improve,
Amazon’s logistics pipeline could better serve a growing medical device
shipping industry, he added.
In a related though much
darker twist, the company is facing political heat over how its
shipping objectives have reportedly contributed
to dangerous driving conditions and other abusive circumstances for contracted
workers, among other issues.
For all the speculation
about what Haven could and might be, there’s no question that one thing in
particular will further set it apart: data. Haven has said data analysis will
figure into the organization’s strategy, but it’s unclear how. Amazon’s Comprehend
Medical division might provide some insight. The company’s natural language
processing tool, it can comb through reams of health records and clinical trial
results to pinpoint trends and outliers. (NLP has, for instance, helped
researchers spot adverse drug reactions.) There’s
also Textract. Another of the company’s machine
learning text-extraction tools, it was extended to all Amazon Web Services
users earlier this year. Companies like Healthfirst use both services to scan
medical charts for missed diagnoses, measure reimbursement totals for patients
and more.
Data analysis will of
course drive how Haven steers patients toward lower-cost-better-outcome health
professionals. Think: the ability “to choose providers in a community based on
data and information,” said Shehata. In other words, “being able to direct and
guide the transactions of healthcare to the best outcomes of cost and quality
for the consumer.”
From there, you could
potentially make a patient’s relevant personal health information available to
that individual — “a portfolio of data,” Shehata calls it.
“It might be taking a
history of their transactions,” he said. “It might be giving them the ability
to store [their] information. It could be future data, like genomics data. It
could be even information around health and wellness through wearables.”
Haven’s data projects
will be run by Dana Gelb Safran, formerly of Blue Cross Blue Shield, where she
analyzed a massive amount of statewide data to help design a notable
value-based model called the Alternative Quality Contract.
“My suspicion is that
they’re turning that [analysis] on their internal data right now and trying to
prioritize where they could intervene and make an impact,” said Greg Maddrey, a
Chartis Group director.
Of course, whenever talk
turns to data and centralization, security and privacy concerns typically
follow. Perhaps the most infamous recent data attacks — the Capital One breach
— was allegedly staged by a former AWS employee against an AWS user.
“I think you should have
concerns wherever your data is, and it’s unfortunate that as a consumer, you
don't really have an understanding or bearing on that,” Hinde said.
An Amazon-affiliated
company might inspire more confidence than the oft-breached legacy
systems on which much of the healthcare system operates. Even so, Hinde said,
“no matter where your data is, it’s vulnerable.”
KPMG’s Shehata views
Haven’s leadership hirings as proof that it’s taking data concerns seriously.
(The venture’s chief technology officer, Serkan Kutan, is the former CTO of
appointment booking platform Zocdoc.) And the fact that cloud-based platforms
like AWS are used by the most sensitive entities speaks to their
trustworthiness, he said.
“AWS already is working
very closely with the FedRAMP side, so they're building
environments that are approved for federal use. That's encouraging.”
The outdated and
propriety core healthcare systems that have yet to embrace cloud technology are
the biggest challenge, he said.
“The organizations have
to move with the technology. Haven is positioning itself with the latest cloud
technology that is easily scalable, while having analytic tools to figure where
to drive cost and quality,” Shehata said.
“Other health
organizations may have to swallow some stranded costs tied to prior generation
technologies by moving to cloud,” he added. “The opportunity to lower IT costs
while improving analytics capabilities may make it worthwhile to move to a
cloud platform to compete with Haven and other technologically sophisticated
healthcare networks.”
ALEXA, DO I SOUND STUFFY?
Along with logistics,
data and on-site clinics, conversational AI is another avenue by which Haven
could make a serious impact on healthcare, experts say — no surprise given
Amazon’s pioneering work in the field.
In some applications,
voice still has a lot to learn. For example, what happens when you tell Siri or
Google Assistant you can’t breathe? Nothing particularly reassuring, it turns
out — at least according to this funny-scary Reddit thread that
documents various virtual-assistant faceplant responses. Replies range from
“Have a glass of water?” to a link to purchase Matt Taibbi’s book I
Can’t Breathe.
The other end of the
spectrum is more encouraging. Researchers at the University of Washington
taught Alexa to listen for abnormal breathing patterns that often occur before
or during heart attacks — and her ears were sharp, correctly spotting the
warning sign 97 percent of the time. When capably harnessed, it seems, voice
technology can have immense health implications.
Amazon, too, has been
working on similar Alexa-based projects in-house. In 2018, the company was
granted a patent for voice technology that allows Alexa to analyze vocal
patterns for signs of colds, coughs, depression and other conditions. It can
then potentially provide medicine recommendations or directions for symptom
relief.
While other details are
murky, most industry watchers Built In spoke with agreed that voice/AI will
likely figure heavily into Haven’s efforts. That’s the main way it will
differentiate itself from the Boeings and Intels — companies that have
successfully driven down costs and improved outcomes for their employees by
effectively sidestepping insurers, but haven’t disrupted healthcare in any
significant way.
“I’m sure there are plans
underway there that we don't know about,” Miller said. “But you can see the
technology today doing some really cool home monitoring, ingesting that data and
using it for risk scoring.”
And Alexa’s
telemedicine-like applications continue to expand. The UK’s National Health
Service made headlines even in America when it announced this summer that Alexa
would give advice from the NHS website, rather than, say, parroting WebMD. But
even as Alexa advances medically, Miller said, it won’t obviate the need for a
network of health providers.
“You could theoretically
give all your employees Alexa and connect it to a bunch of doctors and nurses
on a warm line/information line, and that would cut down on some need to go to
the doctor's office or the ER,” he said, “but not enough that you won’t still
need a physical presence of providers who are either contracted with you are
employed by you.”
Assuming Haven broadens
Amazon’s provider relationships, there’s tremendous potential for expanding
voice applications in hospitals and doctors’ offices. One day, perhaps, voice
AI will essentially auto-populate electronic health records.
“In hospitals, on the
inpatient side, there are keyboards, laptops and desktops that are moving
around hallways with cords hanging out,” Shehata said. “The system is still
very keyboard-centric, person-centric. And a lot of times you hire additional
healthcare resources to type in what the doctors are saying. Imagine if we
could move to voice analytics and dictation to essentially take the voice, turn
into digital and then put it in the appropriate section of the chart. That
could be a tremendous saver, and it could really improve quality.”
Amazon’s tech muscle will
allow Haven to explore providing a streamlined host for the various digital
health functions that populate our lives, a “digital front door for
healthcare,” as Gupte calls it. She points to the plethora of Livongo-like
apps, numerous but essentially siloed from one another. The market appears ripe
for an interface that allows patients to bring together their medical data,
their digital healthcare tools, doctor booking capabilities — as much as
possible under one umbrella.
“Digitally, they could
develop an easy-to-navigate front door across all the multiple
technology-enabled point solutions that are picking up,” she said.
OTHER TEAM-UP
SPIRIT
Haven isn’t the only Big
Tech-affiliated entity to explore the healthcare sector. So far, though, tech’s
track record ranges from false starts to flameouts, especially when it comes to
consumer-facing efforts. Google Health was shuttered in 2011 after only about
three years of operation, and Microsoft nixed its own personal health tracking
system, HealthVault, earlier this year. That said, Apple — which made a big
health splash in 2018 with Apple Health Records and Apple Watch ECG — appears
well-positioned to succeed, according to some analysis.
But a better comparison
might be the Healthcare Transformation Alliance. A cooperative that dwarfs even
Haven in size, it includes more than 50 large companies representing more than
7 million employees. And the alliance has already secured significant healthcare
savings for its employees: at least $400 million over the last four
years, Yahoo reported.
Not surprisingly, data is
also key to Healthcare Transformation Alliance’s approach. Through its
affiliate IBM, the company uses IBM’s Watson supercomputer to analyze data from
its massive collective employee pool and gauge the quality and cost of
providers. The venture also partners with AI-centric startup Welltok, which
helps guide employers toward options that make the most sense. Another
Healthcare Transformation Alliance member is Haven’s own JP Morgan Chase —
more evidence that CEO Dimon has been pondering this healthcare angle for some
time.
Even so, the alliance has
only a fraction of Haven’s by-land-or-by-air logistical brawn. Along with so
much warehousing and shipping might, Amazon also provides Haven access to
trailblazing conversational AI, plus insights as an on-site-health early
adopter, plus a window into the prescription drug market. And, yes, it gets
some strength-in-numbers leverage to help wrangle costs. But it’s the nexus of
tech, data and delivery that could shift the healthcare axis most.
“The differentiator,”
Miller said, “is the Amazon capability.”
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