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Amazon, Berkshire Hathaway, and JPMorgan Chase: What Does It Mean for Healthcare Strategy?

By The SHSMD Team posted 02-20-2018 02:13 PM

  
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The news of the Amazon, Berkshire Hathaway, and JPMorgan Chase new joint venture shook markets and minds throughout the health care sector. We contacted several of SHSMD’s thought leaders and collaborators for their ideas on the implications and how they responded or intend to respond.

Several commented that the health care sector has been anticipating some kind of disruption from one or more of the biggest technology companies (especially Amazon, Apple, and/or Google) for some time. Alan Shoebridge, executive director of marketing and communication at Providence St. Joseph Health, and SHSMD board member, noted, “The three CEOs [of the companies] have all commented about health care issues in the past. Also, Amazon has made some personnel moves in recent years that demonstrated a deeper interest in health care.” The health care market is vast and has countless problems to be solved, so no wonder that companies with a history of transforming technology, markets, or both would see it as ripe for a new approach. Dan Miers, chief strategy officer of SPM Marketing & Communications, notes that “All these [similar ventures] either are using or will use data, automation and other tools to influence member daily behavior.”

Aside from its goals, the joint venture has released very few details. Shoebridge advised, “It’s something to keep an eye on as more details become available, which might actually be pretty far off in the future. Overall, I think this simply becomes a more dominant part of the larger conversation around health care disruptors that we are already having.” Miers commented, “Frankly it’s really hard to read these tea leaves too precisely, but there are some reasonable conclusions one can draw based on this move in context of other recent similar moves…all examples of structural changes to the insurance platform to exert greater control over spending (particularly pharmacy and chronic care costs).” He notes that the triad could score some quick wins with pharmacy benefit management via Amazon’s platforms, big data analytics for early disease detection, or prevention and device (e.g., wearables) integration for health promotion.

Rose Glenn, senior vice president and chief communications & experience officer at Henry Ford Health System and a SHSMD board member, and her team responded by immediately sending the information to their Executive Team and reached out to their contacts at the three companies. They intend to discuss the issue further in their Executive Council and track the news. At their upcoming Board Caucus, an annual educational event for 100+ trustees from across the System, the joint venture was part of the agenda and the Board participated in a robust discussion. At the same time, other health care strategists that we contacted said that they haven’t discussed it deeply, not because they think it’s unimportant, but because they want to wait for more details before deliberating.

For the short term implications for health care strategists, especially planners, business developers, and marketers, Shoebridge says, “I believe that forward-thinking organizations will continue to seek partnerships with these disruptors and if they haven’t already started doing that, they will begin to do so in earnest this year. I don’t know that there is a lot that SHSMD members should be doing aside from keeping up with the news and looking to companies like Amazon to help push our organizations to generate better products that make things easy for those we serve (existing patients and potential consumers) by offering a better experience.” He also anticipates “This will drive innovative partnerships between traditional health care organizations and groups like this triad.”

Miers described some of the strengths and weaknesses of the triad as they seek to create change. “Jointly, they have data, capital, and a customer-experience-designed engagement platform that people LOVE and gleefully visit multiple times per week (Amazon Prime). Berkshire owns GEICO so they have a claims processing infrastructure that relieves them from needing even ASO services from a health plan. But now, they can only nibble at the edges of macro-level health care spend. They could be profitable on Day 2 simply on pharmacy expense management and maybe chronic care management via AI and wearables. There’s [also] the complexity. With health care, opening one door leads to a room full of more doors.”

Christine Albert, vice president of marketing and communications at LCMC Health in New Orleans and a SHSMD board member, commented on another strength. “Health care lags behind other industries in making the consumer feel prioritized and at the center of our world. Corporations like Amazon excel at this and will have an advantage from that perspective over traditional health care providers. They are liked, trusted, user-friendly and often a first stop for consumers.”

Glenn noted that in her market, employers have been raising the same issues as Amazon, and are also moving forward with plans to initiate change. She is seeing large, national employer groups talk to health systems about direct contracts based on quality, service and cost targets.

Shoebridge points out that the three companies “really know very little about health care or how to deliver it. That’s a weakness in that they are likely underestimating the complexity, regulations and other barriers. That’s (potentially) a strength in that they might blow right past some of those traditional barriers in ways that health care systems might never try. The triad will ask questions and challenge assumptions in exciting ways.”

As for how health care providers can respond today, Glenn says, “We have to look at the pain points of our customers (including those who pay) and develop partnerships now that can begin to address the most pressing issues. If we aren’t aggressively dong this, the payers will not think we want to be part of the solution and create their own options (as we are seeing with Amazon, et. al.).”

Albert advises that the joint venture could lead to increased focus on consumers. “It will drive hospitals and health systems to create a more consumer-focused experience and to use price as a competitive differentiator.”

Miers also recommends focusing on “true brand distinction, based in a strategy/point of view/angle of competitive differentiation that goes beyond “what we’re capable of doing clinically” really matters…” Miers concludes, “I had an English professor in college who used to say, ‘I refuse to participate in my own diminishment.’ If hospitals and health systems don’t embrace meaningful brand differentiation strategy, product development and strategic marketing, they will be left to be price-, regulation- and scrap-takers by the market and, de facto, complicit in their own diminishment and marginalization.”

Along the same lines, Susan Dubuque, principal, ndp, Marketing and Advertising in Richmond, VA recommends that marketers respond with four strategies:

  • Make population health your own: If a particular health need is listed in your needs assessment and a corresponding priority appears in your strategic marketing plan, this could indicate an opportunity for a win-win situation.

  • Convert your marketing and promotional skills to behavioral change skills: The classic sales funnel and the behavioral “stages of change” have different labels, but the process is basically the same.

  • Tap into technology: As impersonal as data analytics may sound, in reality we have the opportunity to use technology to create engaging and highly personalized experiences for our consumers.

  • Tell your story: Tell your elected officials, payers, major employers, business coalitions, donors, patients, families, your own physicians and staff, and the entire community about your outreach efforts, prevention strategies and charity care.

Action checklist
These are some of the possible actions that you can take as a health care strategist:

  1. Learn more: Look for articles and social media reactions from the publications and thinkers you trust most. Keep up with change by reading Futurescan, which reviews health care trends and their implications.

  2. Seek out other perspectives: Discuss inside and outside your team, including other organizations in your community. Major employers, other community health leaders, and technology or finance experts will all have different reactions and insights. Post to MySHSMD with your thoughts and questions.

  3. Position yourself as a strategist: Share what you’ve learned with your executive team and explore the strategic ramifications. What could this mean for your hospital or health system? Does this change your Strengths, Weaknesses, Opportunities, and Threats? What’s the best way to keep an eye on things as they emerge?

  4. Hone your skills: Holly Sullivan, director of strategic partnerships and business development at Spectrum Health System and SHSMD board member advises, “Whether using foresight to anticipate and analyze potential change, shepherding to help build discussion and strategy or data analysis to develop focused tactics, the approaches we need to use are already part of the required health care strategist skills. Bridging Worlds and SHSMD ADVANCE™ help health care strategists at all levels to understand the emerging landscape for skill development and to assess and improve their own skills.”
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02-21-2018 04:10 PM

If you're looking for more information on this topic, here is some of the best coverage from last month:

ICYMI: Four must-read healthcare stories from January - unicorn edition

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