While public policy regarding health care remains mired in partisan politics, the recent announcement by Amazon, Berkshire Hathaway, and JPMorgan Chase that the three companies have joined to create a new, nonprofit company for dealing with the health care costs of their more than one million employees has rattled the health care industry. The move was widely termed “disruptive” (as a compliment) and health care stocks slumped in reaction. Skeptics pointed to a sector in which practices have been notoriously difficult to change, even if for the better, and Amazon’s lack of history in the field.
But what, exactly, would the group’s innovative solution look like? Their brief announcement was short on details, other than claiming that a major factor will be “developing technology to make health care simpler and cheaper to access.” In a new article, The Harvard Business Review takes that technology mention as a clue to propose precisely how Amazon’s demonstrated technological capabilities could be adapted to deliver revolutionary change.
Author Robert S. Huckman, HBS Professor of Business Administration and faculty chair of the HBS Health Care Initiative, starts out by describing Amazon’s service-oriented strategy versus traditional assumptions. “At its root, health care is a service that needs to be delivered to a customer. For existing health care companies, the operative words in that mandate have been health care’; for Amazon, the operative words likely are ‘service that needs to be delivered to a customer.”
Huckman then proceeds to lay out four distinct areas where Amazon’s experience and expertise could develop an innovative health care model. First, by making routine transactions seamless and reliable. From its Prime delivery service to its retail footprint via its Whole Foods acquisition, Amazon’s history of easily and quickly delivering basic goods and services at discount prices could give it an advantage over existing overlapping and complex health care networks. Second, there’s Amazon’s vast archive of data about the buying habits of its customers. And its new, automated Amazon Go stores offer even more opportunities for easy capture of consumer preferences and a possible model for tracking the many, complicated aspects of delivering health care services.
Third, Amazon’s data analytics practices make it easy to envision it as “a single point of integration” for the many sources of medical records and history required for effective treatment today. Lastly, the company has a DNA advantage in its willingness in “turning itself inside out” to innovate. ”Amazon has a knack for translating its efforts to solve its own operational and organization challenges into future commercial products and services.”
While acknowledging the learning curve for a company with no history and little knowledge of the health care industry, Huckman bets that Amazon will find significant business for itself and its corporate partners in the $18 billion a year health care industry. “If the key to success lies in greater attention to operational execution, data analysis, and customer service, Amazon may find a significant opportunity.”
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