June 20, 2018; Boston Globe, National Public Radio, and New York Times
As we noted earlier this year, Amazon, Berkshire Hathaway, and JPMorgan Chase aim to launch a joint healthcare venture that is expected to be “free from profit-making incentives and constraints.”
The mission, notes NPR’s “Shots,” involves identifying “ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.” Of course, the owners of the three companies—Amazon’s Jeff Bezos, Berkshire Hathaway’s Warren Buffett and JPMorgan Chase’s Jaime Dimon—are among the biggest names in US business.
On Wednesday, it was announced that the joint venture, which has yet to have gained a name or be incorporated, will be based in Boston and led by surgeon Dr. Atul Gawande. Gawande will start his new position on July 9th. Gawande, who was named a MacArthur “genius” fellow in 2006, is well known both for his writing on healthcare, as well as for his work promoting surgical safety at the Center for Surgery and Public Health at Brigham and Women’s Hospital, based in Boston.
As NPQ noted earlier, there are certainly parallels between the current effort that Amazon and its counterparts are promoting and the establishment of Kaiser Permanente at the end of World War II by auto and steel company owner Henry J. Kaiser. Of course, how the current effort evolves remains to be seen. It is worth noting that Kaiser didn’t originally intend to start a new nonprofit. As Kaiser Permanente’s website explains, “Kaiser Permanente evolved from industrial health care programs for construction, shipyard, and steel mill workers for the Kaiser industrial companies during the late 1930s and 1940s. It was opened to public enrollment in July 1945.” Likewise, it could be a few years yet before we know what shape this new entity might take.
To get a better understanding of the startup effort’s current direction, Christina Prignano, Michael Levenson, and Martin Finucane in the Boston Globe spoke with Donald M. Berwick, who served a stint as administrator to the Centers for Medicare & Medicaid Services under President Obama. Berwick has helped aides to Buffett, Bezos, and Dimon connect over the last six months with experts in health care, who have advised them regarding the company.
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“Health care is going to have trouble changing itself,” says Berwick, president emeritus of the Cambridge-based Institute for Healthcare Improvement. Berwick add that he believes that the entity being developed will not be a think tank, but rather “a do-tank. It’s an activist move by organizations that really do want to make a change, and they have picked a leader in Atul Gawande who is almost uniquely capable of crafting the changes that are going to be needed.”
Dimon, in his annual letter to shareholders, has indicated that the venture will focus on a number of key areas, such as how to reduce expenses due to waste, administration, and fraud; how to better align incentives; how to help employees make better health care choices; how to develop better wellness programs; and how to reduce costs in high-cost areas such as specialty care.
In a 2015 article in the New Yorker, Gawande wrote:
Virtually every family in the country, the research indicates, has been subject to overtesting and overtreatment in one form or another. The costs appear to take thousands of dollars out of the paychecks of every household each year. Millions of people are receiving drugs that aren’t helping them, operations that aren’t going to make them better, and scans and tests that do nothing beneficial for them, and often cause harm.
It will be interesting to see whether Gawande, in his new role directing a nascent nonprofit health insurance collaborative, will be able to move the needle on some of these key issues.—Steve Dubb