BUSINESS/ECONOMY/HEALTHCARE: “Three corporate behemoths are promising to shake up the health care industry — a notoriously inefficient sector that represents nearly a fifth of the U.S. economy.
Though the surprise Tuesday [1-30-18] morning announcement from Amazon, JPMorgan Chase and Berkshire Hathaway was grand in ambition, it was scarce in details, leaving plenty of questions about just how the companies could tackle an unsustainable $3.3 trillion health care system when so many others have tried and failed…
Their partnership, at least at the outset, may be limited. The three companies said they will band together to provide cheaper coverage to their employees, relying on technology in some unspecified way. But the scope of their aims suggests something much grander, said Robert Wachter, chairman of the medicine department at the University of California, San Francisco…
Skepticism appears warranted, however, about the prospects for Amazon and its new partners achieving significant changes in a sector that’s proven largely impervious to major reform efforts over decades… The announcement comes as traditional players in the health care industry are striking new alliances to withstand soaring health care costs. Most notably, CVS Health’s pending blockbuster $69 billion purchase of Aetna would shake up the industry by merging major players from the insurance and pharmaceutical industries.
Expectations had been building for months that Amazon would make a major play in the health care sector somehow. Analysts predicted they were eyeing prescription drug distribution amid growing public angst over drug costs.
The Tuesday morning announcement sent tremors through the health care industry. Express Scripts, one of the country’s largest prescription benefit management companies, saw its stock price initially plummet by 10 percent on the news. The stocks of insurance giants UnitedHealth Group and Anthem fell by more than 5 percent before recovering slightly.
Scant details provided by the company indicate it will focus on rising costs of employer health insurance. Employers in recent years have tested a suite of different strategies to control costs, such as narrowing provider networks, tying contracts to quality of care, wellness incentives, and more. But health care spending is still expected to eat up a growing share of the economy.”
-Paul Demko, “Amazon’s new health care business could shake up industry after others have failed,” Politico, Jan. 30, 2018 01:07pm