A New Doctor in the House?
For some, it is already a miracle cure. A titanic alliance, announced between Amazon.com, JPMorgan Chase and Berkshire Hathaway, aimed at improving healthcare for its employees. So surprised was Wall Street that the stocks of established insurers and healthcare providers that might compete against the trio's new initiative got pummeled. Stories immediately appeared about how the trio of firms can “reshape the healthcare industry."
But let the scrutiny begin, experts say, and keep an eye out for it the usual suspects of alignment, leadership, and culture to emerge. In summary, all the three firms have done so far was issue a sparse four-paragraph press release on how they were creating a new company to improving healthcare—both costs and quality—for their more than 1 million employees. And while it’s true that in an era filled with disruptions a healthcare revolution led by three of the world’s most admired non-healthcare companies would rank as one of the biggest, but it has a long way to get there.
Other companies have banded together to try the same thing and failed. “It’s really interesting, but will they have the ability to actually impact the industry?” says Harry Greenspun, M.D., Korn Ferry’s chief medical officer.
The industry certainly offers plenty of opportunities for reinvention, of course. Healthcare in the United States is expensive, and its quality varies wildly, says Christopher Rowe, managing director at Korn Ferry. There are plenty of efforts already underway, including changing the healthcare business model to a value-based care system and using software to better anticipate and contain outbreaks of diseases. And even experts admit there’s something appealing to three corporate cowboys riding into town to upend the industry. After all, the last two decades have seen Amazon become the dominant force in retailing, JPMorgan thrive after the financial crisis, and Berkshire’s CEO, Warren Buffett, build on his already-well established legacy as a great investor.
But if it were just a matter of innovation then the nation’s nagging healthcare problems probably would have been cured by now. Non-healthcare firms looking to upend healthcare aren’t new either. A few years ago, Intel, Walmart, BP and other giants pooled data resources to try improving the health of their employees. Other firms have tried work directly with healthcare providers, cutting out insurers. “We haven’t seen any of these initiatives really have the impact that their founders thought they had or anyone expected them to,” Greenspun says.
Healthcare poses some unique leadership obstacles. It’s one of the most regulated industries in the country (so much of healthcare doesn’t work like their businesses, Greenspun says). Healthcare leaders themselves struggle with aligning the incentives of doctors with the needs of insurers, patients, or anyone else. At the same time, employees are often distrustful of their employers when it comes to healthcare.
Then there’s the basic leadership problems that happen when three organizations, each wildly successful in their own unique way, try to work together. Each has a culture, talent strategy, and leadership structure that works for them, but will any of that work for a new entity? All the trio’s health care initiative has right now is a statement of purpose. A CEO, headquarters, and operational details are still some ways off.
Yet the potential for innovation the announcement provides some optimism. Improving employee engagement with their healthcare would be a great step, Rowe says. And if the trio really can transfer their innovative, price-reducing, quality-increasing ways into healthcare, it could indeed be revolutionary.