Amazon 'Pouring Gasoline on the Fire': Health Plans Must Respond

Gregory A. Freeman, February 14, 2018

The Amazon health plan promises to accelerate the disintegration of traditional healthcare silos. Health plans may be facing the same upheaval that Amazon brought to retailers.

Health plans are no longer competing just with each other for subscribers and healthcare provider participants.

They're competing with any business entity that decides to get in the game, led by the bold health plan announced recently by three financial giants—Amazon, JPMorgan Chase, and Berkshire Hathaway.

The announcement of that new plan shook up the healthcare community, with the business giants promising to improve employee healthcare options while lowering costs.

The new plan could change health plans the same way Amazon CEO Jeff Bezos changed how Americans shop, says David Friend, MD, MBA, managing director and chief transformation officer of the Center for Healthcare Excellence & Innovation with the consulting firm BDO. Friend also sits on the board of FallonHealth, a health plan in Massachusetts.

"Healthcare is about to be disrupted by three companies that are not in the healthcare industry. If you are a healthcare company and you thought your competition was the healthcare company across the street, that's no longer true," he says. "This will affect more than just health plans, touching hospitals and health systems as well. This potentially changes the whole field."

Remember Amazon's effect in retail

Health plan CEOs should remember what Amazon did to some of the most established, successful retail operations, he says.

"What was going on in the boardrooms of retail five or six years ago? In a lot of them, nothing, and those guys aren't around anymore. A lot of folks in healthcare are going to have to rethink their business models and how they're going to survive," Friend says "If you look at the carnage in retail, this is a preview of what's coming in healthcare. The smart ones will adapt and the others won't be around in five years because they'll get merged, acquired, or they'll fail."

Gregory A. Freeman

Gregory A. Freeman is a contributing writer.

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