The announcement of the healthcare partnership between Amazon, Berkshire Hathaway and JPMorgan Chase is either the major disruptor everyone in the industry has been awaiting or means little except to the three companies involved.
Since the firms have given no indication of what they're planning, everyone is reading into the collaboration.
Reaction has been like a Rorschach test, Kaiser Health News Chief Washington correspondent Julie Rovner said during an America's Health Insurance Plans forum Tuesday morning.
People in the industry are either excited or scared.
"They're focused on managing cost, also on that patient or employee experience," said Tracy Watts, a senior partner with Mercer, during Tuesday's AHIP panel discussion on employer insurance coverage. "Think about how the experience on Amazon is different than how we access healthcare delivery. I look forward to what they come up with. I don't know if it will be dramatically different."
The Advis Group CEO Lyndean Brick said the whole thing is a mixed bag.
"Some are excited and others think it doesn't mean anything. I think it's reasonable to think that payers have to pay attention to this," Brick added. "There's the theoretical possibility that this could take insurers out of the system."
Payers welcome this as an opportunity, according to Miki Kapoor, president and former CEO of the Tea Leaves Health division, which was recently acquired by Welltok.
"Payers are saying 'it's a jolt that was needed.' I believe payers know there is always going to be a role for them. They want to evolve so they remain at the center of care."
Many in the industry believe Amazon, Berkshire Hathaway and JPMorgan Chase will cut out the insurance middleman for coverage for their combined 1 million-plus employees.
Shares of Anthem, Cigna, UnitedHealth Group, Humana, Aetna and Aetna's potential buyer, CVS Health, along with pharmacy benefit manager Express Scripts, tumbled after the Jan. 30 announcement, before the stock market took a general steep drop on Monday.
Analysts have viewed the $69 billion merger between Aetna and CVS Health as a preemptive strike against what many believed would be an announcement by Amazon that it would enter the pharmacy services business.
Toby Cosgrove, former CEO of the Cleveland Clinic who now serves as an executive advisor, said during a precision medicine conference this fall that the industry was concerned about major forces in the supply chain, notably "Amazon coming at us in purchasing."
HIMSS CEO Hal Wolf said that, even short of details at this point, the fact that Amazon, Berkshire Hathaway and JPMorgan have come together to address employer-related healthcare is intriguing.
"Depending on how this new idea gets positioned and where they go with it, the company could have an impact on a lot of health systems that have their revenue driven by payments in this same space," Wolf said. "That's why they have to hurry up and get faster with digital health."
Wolf also said that he anticipates more companies outside healthcare moving to disrupt the industry in interesting ways.
"I don't expect it to slow down," Wolf said. "I think we'll see more and more combinations in the future."
JPMorgan Chief Executive James Dimon publicly tried to calm fears, saying the deal would only serve the employees of the three firms, according to The Wall Street Journal.
But JPMorgan also confirmed that it welcomes others to get involved after JPMorgan spokesman Brian Marchiony said in the same WSJ report that the bank has "had hundreds of phone calls and emails from client CEOs, doctors and healthcare administrators looking to see how they can get involved."
On a Thursday earnings call, Cigna CEO David Cordani said the deal is "presenting more opportunities than not."
Cordani talked about the importance of its U.S. commercial employer business as a "very attractive growth opportunity."
Should the Amazon partnership go in the direction of taking a million-plus lives out of the commercial insurance market, and should it welcome others to get involved, insurers could find they're covering more higher risk beneficiaries.
Cordani indicated that Cigna has been thinking for some time about the future direction of the health insurance industry, and it's not the same old model.
"Clearly the announcement was not lost on us," Cordani said during the call in response to an analyst question on the Amazon call. "So stepping back I think one way we look at the announcement is, it reinforces something we've been talking about for quite some time, which is – it's a pretty dynamic industry and the older orientation around focusing only on insurance or a fee-for-service healthcare delivery model is just fundamentally not sustainable as employers and customers demand more."
That reinforces the imperative of focusing on transparency, alignment and a demonstrable way to drive healthy productive present employees and making the employer's business better and more effective, he said.
The main threat, or opportunity, presented by the Amazon deal is the ability of the online giant, backed by data and funding, to fundamentally lower the cost of healthcare, and to target insured employees in a personalized, digital way, better and more effectively than traditional providers and insurers.
"If I bought books on Amazon two years ago, they still know what I like and need. I think Amazon is around changing the dynamic," Pfizer CMO Freda Lewis-Hall, MD, said at the same precision medicine summit attended by Cosgrove.
She likened the industry's efforts to delivering Star Wars advancement in a Flintstones' system.
Amazon, JPMorgan and Berkshire Hathaway, however, will have the ability to manage employees as patients outside of the four walls of the healthcare system, Kapoor said. They will be able to influence behavior and measure those choices.
But the bottom line is that they chose to do this because they became frustrated with the cost of healthcare, he said.
"Healthcare is breaking our economy," Kapoor said. "I think these titans of industry have said, 'we're going to do something about it.'"
Brick said, "They've acknowledged they'd have to bend the cost curve. The way to bend it is to take out the middleman. They have the infrastructure. They can have their own little ecosystem, have Amazon deliver drugs to a person's doorstep. They can buy providers."
The present system is regulated and fragmented to the point that it can't really innovate, she said.
"If we can innovate in an ecosystem like this, I think there may be some good examples that come out of this that are able to be adopted by the rest of healthcare," Brick said. "I'm excited about this. It's a public acknowledgment that employers are going to take charge and try and fix the system."