We are learning more about the proposed Amazon-Berkshire-JPMorgan healthcare initiative from an employment-related lawsuit filed by Optum, the former employer of a senior pharmaceutical hire made by the joint venture. Documents disclosed in connection with the lawsuit indicate that the new venture will seek to simplify and reduce confusion in accessing care – a prospect that has not gone unnoticed by competing insurance companies and pharmacy benefits managers.
Our healthcare system is enormously complex. A recent article in Fortune Magazine highlights yet another pharmacy nuance. The article points to an AllianceBernstein study which found that hospitals are charging up to seven times the price Medicare reimburses for drugs. These costs go under the radar because they are bundled into a hospital bill and not as visible to the consumer as drugs purchased over the counter. Cancer medications, in particular, have a higher markup than purchases at the retail setting. With increased pressure on hospital costs, this is just another way to find profits in a shell game that exists because of reduced transparency. So, even though hospitals are required to be transparent with their prices, there is no way that these hidden costs could be anticipated by a consumer seeking to compare facilities.
But competitors are not sitting on their heels waiting for Amazon to solve the problem. There has been a lot of innovation from all constituents in the healthcare market. A recent example is Walmart dropping the cost of telemedicine visits to $4 to encourage the use of this very efficient care among its employees. It was recently reported that Americans waste $89 billion per year waiting for and traveling to receive healthcare and that average healthcare wait times exceed even those at the DMV.
And the government is also getting better at healthcare delivery. Centers for Medicare & Medicaid Services (CMS) has announced plans to more quickly remove exchange subsidies for those who are new Medicare recipients, eliminating double dipping by these individuals.
While there is no simple or quick fix to this enormous problem, progress is being made.