Amazon, Berkshire, and JPMorgan have teamed up to lower their healthcare costs, but will they succeed where other companies have struggled?
What do you get when you combine one part online mega-retailer, one part banking giant, and a good dose of business magnate Warren Buffet?
The solution to all of America’s healthcare woes.
Well, that’s the answer you might get if you listen to some of the spin coming out of an announcement last week that Amazon, JPMorgan Chase & Co., and Berkshire Hathaway have teamed up to find a way to provide high-quality healthcare to their employees at a lower cost.
The three formed a new company that will initially focus on “technology solutions” to provide “simplified, high-quality and transparent healthcare at a reasonable cost,” according to a joint statement.
At this point, there are few details on what this means because the companies are just getting started.
Ken Thorpe, PhD, the chairman of the Partnership to Fight Chronic Disease, thinks that in order for the project to succeed, the companies need to tackle the things that are really driving up healthcare costs in the United States.
“If they start off in the wrong place trying to solve the wrong problem,” Thorpe told Healthline, “then I think they’re going to face some of the challenges that a lot of other employers and payers have faced.”
Researchers found that between 1996 and 2013, the main factor behind rising healthcare costs was increased use and cost of medical services. A growing and aging population was also a factor.
Spending for certain health conditions increased more than others. Diabetes led the pack, with a $64 billion rise in spending. This was followed by high blood pressure, high cholesterol, depression, and falls.
In particular, chronic health conditions cost companies big bucks.
“One of the reasons that spending continues to go up is because the prevalence of chronic disease and obesity continues to rise very substantially,” said Thorpe.
According to the
About half of adults in the United States have a chronic health condition. One in four has two or more.
In addition, more than
Not only do employees with chronic health conditions have higher medical costs, they also cost companies due to missed workdays and lower productivity while at work.
Last year, JPMorgan Chase alone spent $1.25 billion on medical benefits for its employees and their family members.
This gives Amazon and its partners a major reason to focus their efforts on helping their workers reduce their risk of developing chronic health conditions.
“I would hope they could come up with some innovative technology-based approaches that do a better job of preventing the growth of chronic disease,” said Thorpe.
Evidence-based programs to prevent and reduce chronic diseases already exist.
One example is the Diabetes Prevention Program (DPP), which will be covered by Medicare starting in April.
This program is a lifestyle intervention that focuses on helping people eat healthier and exercise more. Studies have found that people enrolled in this program lose a modest amount of weight and reduce their risk of developing type 2 diabetes.
While the DPP was designed as a face-to-face intervention, companies such as San Francisco-based Omada Health have shown that it works equally well online.
Omada’s online program is based on the DPP, but it offers additional flexibility and personalization. The goal of the program is to reduce the risk of preventable chronic conditions such as type 2 diabetes, heart disease, high blood pressure, and high cholesterol.
It includes weekly lessons, food and physical activity tracking tools, personal health coaches, and peer support groups — all available online.
“Our advanced technology and flexibility, both on our desktop and mobile, give optimal accessibility to even the busiest participants, including those living in rural areas where no in-person DPP may be available,” said Adam Brickman, Omada’s senior director of strategic communications and public policy.
Brickman told Healthline that after 12 months, people who participated in the program lowered their risk of type 2 diabetes by 30 percent, stroke by 16 percent, and heart disease by 13 percent.
People continued to have a lower diabetes risk even three years after they started the program.
Companies can implement this kind of online program even if their employees are spread across several states or working the late shift.
Online tools, though, are not just about convenient and on-demand health apps.
“We also notice how some participants are more open and free behind a screen,” said Brickman. “They often don’t have the same reservations, anxieties, and insecurities as they might experience doing the same type of program in person.”
Companies can use technology in other ways to help employees with chronic health conditions.
“The real key here is coordinating care,” said Thorpe.
People with diabetes, mental health problems, and high blood pressure often visit many doctors or other health professionals. They may also have to take several medications or monitor their blood pressure or glucose levels regularly.
On top of that, they may be trying to exercise more or improve their diet.
If these things don’t happen, their health suffers — and their medical costs can increase dramatically over the long run.
Thorpe said that technology could provide a “patient-centered approach for monitoring people with chronic conditions to make sure they are being compliant.”
If they get off track, the app would alert the patient — and their doctors.
Thorpe added that technology could also lower health costs by allowing patients to check in with their health team remotely, including sharing their latest blood pressure or glucose readings automatically online.
So what would this mean for employees?
If companies become more health-focused, workers might see more benefits like the DPP program, healthier options in the cafeteria, free gym memberships, or massage chairs in the break room.
But this depends on whether Amazon and its partners are more concerned about healthy, happy employees or containing their healthcare costs, which are not always the same.
“If the sole goal is just to cut costs, then in too many cases we see that being accomplished through reducing access to care. And we know that’s just a bad solution,” said Dr. Russell Kohl, a family physician in Kansas and a member of the American Academy of Family Physicians’ board of directors.
Companies focused solely on costs may limit the doctors that employees can see or the medications that are covered — much the same way that insurers have been doing for years.
And are still doing.
The nation’s largest health insurer, Anthem, recently expanded its policy of denying claims for “non-emergency” visits to the emergency room.
Rather than working with providers to find a way to handle these kinds of urgent — but not emergency — medical problems, the insurer has chosen to reign in its customers’ use of the healthcare system.
Kohl thinks Amazon and its partners should instead focus on “smarter spending, as opposed to reduced costs.” That could include making healthcare more efficient but also helping employees stay healthy.
Robert Laszewski, president of Health Policy and Strategy Associates, LLC, wrote in a blog post that one reason companies continue to fail is because they focus too much on utilization — how many services or medications their employees are using.
“If we compare the U.S. [health] system’s costs to the more affordable costs in other industrialized nations, the glaring difference is price, not utilization,” said Laszewski.
The United States spends more on healthcare than any other country, reported NPR.
But the average life expectancy of Americans is lower than that of people in many countries that spend less, including Japan, Greece, and Costa Rica.
Overall healthcare spending in the United States continues to rise — from 5 percent of the gross domestic product (GDP) in 1960 to almost 18 percent in 2016, according to the Centers for Medicare and Medicaid Services.
That’s not to say that industry can’t find a way forward.
“The potential solutions can come from industry,” said Kohl. “I think the type of resources that these groups have said they’re going to put toward this means they may actually get there.”
The Amazon partnership is not the first time that businesses have tried to lower their healthcare costs.
“The health insurance industry came from industry,” said Kohl. “If you look back to the 1930s and ’40s, a lot of what we accept as normal now didn’t exist at all, and it came from that mobilization during the war.”
Healthcare provider Kaiser Permanente evolved from healthcare programs provided by the Kaiser industrial company to its construction, shipyard, and steel mill workers before and during World War II.
More recently, construction equipment manufacturer Caterpillar saved tens of millions of dollars a year by setting its own rules for employee prescription drug coverage.
But so far, none have solved the nation’s healthcare woes.
Still, with three big-name companies involved, many experts are looking to them for innovative ways to transform the American healthcare system.
Which is no small thing.
Just look at the years of debates in Congress on passing — and repealing — the Affordable Care Act.
But anyone looking for a one-size-fits-all solution to come out of the Amazon partnership may be sorely disappointed.
Combined, the three companies have approximately 1.2 million employees.
This is a small fraction of the roughly 152 million people covered by employer-sponsored health insurance — about 56 percent of all non-elderly Americans in 2016, according to the Kaiser Family Foundation.
One-fifth of non-elderly Americans were covered by Medicaid. About 10 percent were uninsured. The rest had other private or public health insurance.
So what works for Amazon employees in Seattle may not fit the needs of someone living in downtown Boston or rural Oklahoma.
That’s why any accomplishments that come out of the Amazon partnership will need to be modified to fit the needs of the people, not the other way around.
“There are things that we can take from any different project wherever it is,” said Kohl. “We just have to recognize that you’re not picking up and moving things wholesale. You take the best parts of it and you customize it to those community needs.”