Thursday, February 8, 2018

Amazon, Berkshire Hathaway, and JP Morgan Chase Unite to Purchase Better Healthcare Value

Last week, the news headlines included a story that got my attention! The CEOs of Amazon, Berkshire Hathaway, and JP Morgan Chase decided they would no longer tolerate the high cost of healthcare in the U.S. These corporate leaders know that we spend 40 percent more per capita on healthcare than any other country in the world and that despite higher spending, health outcomes are often the same or worse than in other countries. They also know that the U.S. has the best trained and most hardworking doctors, nurses, and clinicians in the world. The CEOs know people aren’t the problem.

The cost of healthcare varies dramatically from place to place — frequently from hospital to hospital. These CEOs are aware that sometimes there are differences in clinical outcomes between providers, but it doesn’t make sense to pay higher prices when the clinical outcomes and care experience are the same. They want to buy higher value.

Value= clinical outcome + care experience

It seems these corporate leaders believe they can use their clout as the purchasers of healthcare for more than one million employees to find the highest value. They want the best health outcomes with the best care experience at the lowest cost. They want to send their employees to the providers that can deliver the highest value. After all, if they know that hospitals X and Y will both do a great job at removing your gallbladder, but it will cost 50 percent more at hospital Y, shouldn’t they be sending everyone to hospital X? If, on the other hand, hospital Y’s outcomes and care experience are better, paying more makes sense.

I think they have a great shot at reducing their expenses while giving their people better healthcare. I have argued that the individual patient cannot drive value and actually has a hard time figuring out who has the best outcomes and who has the lowest prices. But moderate and large size employers know what they are paying and can demand data from hospitals and physician groups and use it to buy healthcare in much the same way they buy everything else. Of course, there is a fear that healthcare providers will just lower prices for those with clout and make the prices even higher for everyone else. (But in Maryland, since we are a rate-regulated state, this “cost-shifting” won’t be possible for hospital care.)

I applaud this initiative and I hope to see more business leaders demanding this in our market. We will all be better off. What do you think? Will it work?

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