Market disruption, here we come…?

I was preparing to write a piece this week covering the confusion in this country caused by the penchant to use the terms healthcare and health insurance interchangeably. This became even more apparent when news broke about what many are predicting to be a major market disruptor. Even in some of the articles, these terms were mistakenly used for one another. It is going to take a tremendous amount of focus to disrupt a market that the status quo has beaten back every disruption attempt in the last 20 years whether they be start-up companies, changes to distribution and consumption, or legislative.

First, let’s focus on the announcement, the immediate buzz/impact, and what we know. We know that Amazon, Berkshire Hathaway, and JP Morgan announced a non-profit partnership that sent a shock wave through the insurance markets on January 30th. While they shared very few details, they did share that the goal is to provide their employees with high-quality and affordable care. Likely because of the lack of details, stocks of health insurers, drug distributors, and other “payers” were pushed significantly lower upon the news. However, the stocks of some large healthcare providers, Tenet and HCA, both climbed. This alone shows how confused even the investment community is between health insurance and healthcare costs. If the new entity plans to break away from the traditional ways in which employers seek to manage costs, not only will this disrupt the health insurance markets it should also drive the cost of healthcare lower, effecting major hospital corporations like Tenet and HCA.

The market is in need of a disruptor, but it must disrupt both sides of the equation in order to be successful. The cost of health insurance will not and cannot go down unless the claims that the insurers are paying go down. Likewise, unless there is true reform and efficiencies found within the healthcare providers and systems…their costs will not go down.

Importantly, to have these great companies step forward and choose to be a part of the solution is a great first step. Creating a non-profit entity that has a goal “to create solutions that benefit our U.S. employees, their families and, potentially, all Americans” is extremely beneficial for all of us currently involved in the system. After years of fighting to maintain the status quo, in part because so many different constituents (hospitals, insurance companies, drug manufacturers / distributors, and investors) within the current framework make so much money, it will be exciting to see if a disruptor like this can finally find success.

The new joint venture gives Amazon another industry to shake up and it will be exciting to be a part of this going forward. Ironically, one of the first challenges may be the communication and education of the terms “healthcare” and “health insurance”, clearly defining them and helping avoid confusion/misunderstandings. However, in scanning the different headlines across the country, many papers and publications seemed a bit confused about the intent and whether it is to transform the health insurance markets or healthcare markets. Whatever they choose to address, it will need to be holistic and not just one side or the other in order to be successful long-term.

Write a comment:

Your email address will not be published.