Day: June 11, 2018

Episode 43: The Amazon Healthcare Venture with Chase & Berkshire Hathaway: What it Means for DPC

Resources

  1. Harvard Business Review Editorial on Amazon Healthcare Venture
  2. New York Times Article Announcing Amazon Berkshire JP Morgan Joint Effort
  3. Amazon Healthcare Venture Upset Healthcare Executives

Summary
In January of 2016, Amazon, Berkshire Hathaway and Chase announced the formation of a new  ‘Amazon healthcare’ company aimed at lowering the cost of healthcare and increasing value to their employees. Conceived as a joint idea between CEOs Jeff Bezos (Amazon), Warren Buffett (Berkshire Hathaway) and Jamie Diamond (Chase), the venture is aimed at bringing healthcare spending under control internally after the failure of the US government to find a meaningful solution to unsustainable healthcare inflation. In this episode, Dr Roussel provides his reflections on the potential disruption of such a venture for healthcare delivery in the US, including its potential to separate primary care from fee for service healthcare, to disrupt the current healthcare networks that dominate the market with a reference-based payment system and to push down prices for prescription drugs that have been inflated by multiple layers of intermediaries. Furthermore, Dr Roussel provides some reflections on the importance an ‘Amazon healthcare’ venture could have on the DPC community.

ShowNotes
Last January Amazon, Berkshire and Chase announce the formation of a new ‘Amazon healthcare’ company to provide healthcare to its employees. I learned about this project from talking with Dr Garrison Bliss, and while at first the venture’s importance wasn’t quite clear to me, the more I’ve learned about it, the more that the venture has the potential to affect healthcare in a transformative way. The project is an effort by CEO’s Jeff Bezos, Warren Buffet and Jamie Diamond to approach healthcare the ‘Amazon healthcare’ way, lowering cost and improving value, in the wake of our government’s failure to accomplish any meaningful healthcare reform. Certainly many details are TBD, however the combined efforts of three talented companies—Amazon, who specializes in logistics; Berkshire Hathaway, who specializes in insurance; and Chase, who specializes in finance—along with the capital they have access to has potential to foster disruption on a large scale with a customer orientation not heretofore seen in healthcare.

While the project is early on, there are several likely outcomes of the project so far.

  1. To start, the ‘Amazon healthcare’ venture is likely to have a heavy up-front investment in primary care. This is evidenced by the fact that they hired a doctor from Iora Healthcare to head the project. Also, these companies are likely well aware that heavy investment in primary care leads to better outcomes. Finally, in Bezos’ own words, they want the venture to be free from “profit-making incentives” that currently is the status quo of the present-day healthcare market.
  2. The venture also has the potential to dramatically alter the way that claims are paid for healthcare services. Whether or not they will construct healthcare facilities is unknown, but they will have to handle paying for services outside of their system. It is not inconceivable that they could create a reference based payment scheme that forces a degree of transparency not currently witnessed in our healthcare system.
  3. Finally, the venture has within it the potential to dramatically reduce the price of prescription drugs available to employees. Bezos has indicated his interest in selling pharmaceuticals independent of the venture, and certainly Amazon’s expertise in creating transparency in the retail market is likely to be exercised in cutting out much of the waste in prescription drug prices.

What this means for DPC is in some ways TBD but there are several potential outcomes.

  1. A major ‘Amazon healthcare’ plan that pays for primary care separate from the fee-for-service based payment could create a more favorable environment for primary care payment totally independent from the rest of healthcare services.
  2. This project has the potential to create a network-free means of payment for healthcare services. With a large company that pays for healthcare services independent of a network this could force other suppliers of services (eg mainly hospitals) to be far more transparent about their price for services as opposed to their current inflationary and protectionist modus operandi.
  3. There is much potential to cut out waste when it comes to prescription drug pricing. This can help lower premium cost and make payment for prescription drugs outside of premiums far more reasonable. PBMs and Retail pharmacies have much to fear in this venture.

I certainly recognize that these projections are quite speculative, but I do think the companies are onto something and their joint venture has the potential to have a substantive impact on DPC.

 

JP Morgan Chase
Berkshire Hathaway
Amazon

Related Episodes

Episode 33

Episode 42: The DPC Summit Pre-Conference (2018)–with Bethany Burk and Larry Bauer

Resources

  1. DPC Summit Pre-conference
  2. FMEC
  3. HealthTeamWorks

Summary

Key among issues facing the Direct Primary Care movement is the ability for employers to find meaningful insurance options that pair up with DPC services.  The 2018 DPC Summit pre-conference deals with just that, making it not only a healthcare conference but in many ways a HR conference. This conference brings together employers interested in reforming their benefits offering to lower cost and improve value and DPC doctors interested in providing high-quality, relationship-based primary care to patients outside of the fee for service environment. By bringing together both stakeholders involved, the conference hopes to catalyze these relationships as part of the transformation that needs to take place to grow DPC. The more that employers can learn about how their healthcare dollars are spent and the more that doctors can learn about the needs of employers, the more they can work together to improve value and lower costs. In the Episode Mr Larry Bauer, Chair of the FMEC, and Ms Bethany Burk, Summit coordinator, talk about the details of the Summit pre-conference and its importance to the conference as a whole and to the DPC movement.

Time Stamped
[02:35] Larry can you tell us about the pre-conference? Where is it? When is it? What does it deal with?
[04:40] Is the format going to be talks, breakout sessions or both?
[06:18] FMEC’s previous experience facilitating HR conference with DPC doctors
[07:11] How will the pre-conference tie into the official DPC Summit?

Larry Bauer, FMEC
Bethany Burk, AAFP

Guests

Larry Bauer is the Chair of the Family Medicine Education Consortium. A staunch supporter of Direct Primary Care, he has played an integral role in organizing previous DPC Conferences.

 

Bethany Burk is a quality specialist with the AAFP and is the current 2018 DPC Summit coordinator, a role in which she has served for the past 5 years.

Related Episodes

Episode 7 (link on its way)

Episode 33

Episode 41

Episode 41: The DPC Summit Healthcare Conference 2018–with Bethany Burk and Dr Kylie Vanaman

Resources

  1. The DPC Summit
  2. AAFP

Summary

Every year Direct Primary Care doctors from around the country come together at the annual DPC Summit to support DPC doctors—present and future—as well as to grow the DPC movement. It is now in its fifth year of operation and is now likely the fastest growing healthcare conference 2018 has to offer. The 2018 DPC Summit will take place in Indianapolis, IA on Jul 13-15. In this episode, Dr Roussel interviews Bethany Burk, DPC Summit coordinator, and Dr Kylie Vanaman, DPC doctor and DPC Summit steering committee member, about the 2018 summit. In particular they not only discuss the summit logistics but also new focuses on this year’s summit including an increased focus on collaboration with employers and employee benefits consultants. Finally, they also discuss the importance of the summit to the state of the DPC movement, which continues to gain traction.

Key Questions for Discussion

[02:22] To begin, Bethany can you give us a run down of the DPC summit healthcare conference 2018 agenda? Where is it, when is it and who’s invited?

[3:37]  Can you tell us some of the highlights of the healthcare conference?

[04:55] Dr Vannaman, as a steering committee member, what are you trying to focus on in the DPC healthcare conference 2018 that distinguishes it say from 2017 or 2016?

[06:46] I noted in this year’s agenda a focus on DPC as an employee benefit. Can you tell us about some of these talks that deal with the HR side of DPC?

[09:41] Do you see attention to DPC as an employee benefit as a sign of DPC’s growth?

The DPC Summit Healthcare Conference 2018

Guests

Bethany Burk is a quality specialist at the American Academy of Family Practice and is the coordinator for the DPC Summit.

Dr Kylie Vanaman is a DPC doctor who has a practice in Kansas City, Missouri and sits on the steering committee of the DPC Summit Healthcare Conference 2018.

 

Related Episodes

Episode 7 (link on its way)

Episode 33

Episode 42 (link on its way)

 

Episode 40: The Surgery Center of Oklahoma–with Dr Keith Smith

Episode 40: Bundled payment & The Surgery Center of Oklahoma–with Dr Keith Smith

Resources

  1. The Surgery Center of Oklahoma
  2. Time Article on The Surgery Center of OK
  3. Business Insider Article on The Surgery Center of OK
  4. Dr Keith Smith on Fox Business
  5. Dr Keith Smith on CNBC
  6. Dr Keith Smith on ReasonTV
  7. Dr Keith Smith on Capital Account

Summary

For most healthcare procedures, the markets have been marked by obscurity and dramatic overpricing. Separate bills from the anesthesiologist, surgeon and hospital combined with extreme price exaggeration often leads to sticker prices for procedures far above fair market value. This leads to increased premium prices and unaffordable procedures for the uninsured. The Surgery Center of Oklahoma is changing all of this by bundling payment to the surgeon, anesthesiologist and facility and kicking out insurance companies. In this episode Dr Keith Smith, co-founder of the Surgery Center of Oklahoma explains how bundling payment and not taking third party reimbursement has allowed them to lower prices for surgeries sometimes by a factor fo 10. As a consequence they’re now forcing other hospital systems to follow suit and be more transparent and fair about their prices. As well, Dr Roussel and Dr Smith also discuss how DPC and the Surgery Center of Oklahoma can collaborate to lower cost and improve value by focusing on transparency and relationships and minimizing third-party involvement in healthcare.

Time Stamped

[02:52] What was your inspiration to start the Surgery Center of Oklahoma?

[05:05] So the Surgery Center of Oklahoma has really been a trend setter in terms of cutting costs. Can you give us some examples of how you’ve been able to save people money on surgical services?

[07:45] How are you able to cut costs for these services?

[10:57] How do patients pay if no insurance is accepted?

[14:50] So this podcast is about DPC, which is somewhat distinct from ambulatory surgery, but I find your work very relevant to DPC. DPC lowers costs by breaking down the barrier of 3rd parties and restores the doctor patient relationship. How can DPC and Surgery Center of OK, or other surgery centers who are interested in adopting a similar model, work together to lower costs and improve quality?

Dr Keith Smith

Guest

Dr Keith Smith is an anesthesiologist who co-founded the Surgery Center of Oklahoma after seven years in private practice. He has been featured on Fox Business, ReasonTV, CNBC and many other major media outlets.

Related Episodes

Episode 15