The announcement by Amazon, Berkshire Hathaway and JPMorgan Chase that they are forming an independent company to offer high quality and transparent healthcare at a reasonable cost to their combined 1.2 million U.S. employees is a long-overdue kick in the pants for the industry, observers say.

Plagued by high costs and inefficiency, healthcare has become a “hungry tapeworm” eating away at the American economy, according to Berkshire Hathaway CEO Warren Buffett. However, the new partnership is an attempt to optimize the patient experience and health outcomes while remaining “free from profit-making incentives and constraints.”

Although Tuesday’s announcement was light on specifics, the new company will focus first on technology solutions. As the world’s largest online retailer and a cloud computing behemoth, Amazon will bring its technology and scale to bear—first with U.S. employees and their families at the three participating companies and then the healthcare market in general, ultimately acting as an industry disruptor to benefit all Americans.

Also See: Why Amazon, Berkshire and JPMorgan will continue the push for value

Central to this disruption of healthcare will be Amazon’s core digital competencies and well-earned success in driving customer experiences. Kate McCarthy, senior analyst at Forrester, says Amazon has a history of innovating and disrupting other industries, and that the company has been eyeing the healthcare sector for some time.

“They are a customer-obsessed organization,” contends McCarthy. “They take the time to get to know who their customers are. They understand their customers, and they continually work to build engaging digital experiences.”

This focus on customers is something that healthcare sorely lacks, she says. While providers tout the benefits of a patient-centric approach to medicine based a partnership between practitioners, patients and their families to align decisions with patients' wants, needs and preferences, the reality is that they often fail to put it into practice.

And when it comes to physician-patient communication, providers do not do a good job of engaging patients electronically. It has been a struggle to get patients to use electronic portals, which do not include all the information patients need—and what’s there can be inaccurate or incomplete.

“A fully well-functioning patient portal is a rare commodity in the healthcare space today—it would be hard not to see Amazon turning that completely on its head,” says Brad Ptasienski, director at West Monroe Partners, a business and technology consulting firm specializing in mergers and acquisitions, customer experience and advanced analytics. “Amazon’s ability to deliver amazing digital content could really transform the experience they have.”

Alexa, an intelligent personal assistant developed by Amazon, is another technology that Ptasienski sees potential value for in improving the patient experience. “As far as patient experience goes, there is nothing more annoying than being placed on hold by a doctor’s office. What if Alexa could make an appointment for a knee replacement in network without you having to pick up the phone?” he asks. “How much call volume for the healthcare system would be reduced if you had an automated conversation interface handle these tasks?”

Bloomberg News
Bloomberg News

In addition, patients continue to face significant challenges in accessing their own health information because of confusing medical record request processes and lack of electronic access. Further, health data often can’t be shared electronically or transferred to other healthcare providers.

Eric Topol, MD, director of the Scripps Translational Science Institute, blames electronic health record vendors for many of these shortfalls and sees a time in the not-too-distant future when these companies no longer exist—thanks to efforts by Amazon and others to enter the healthcare market.

“EHR vendors are business oriented and have virtually no connection with patients, no less their unpopularity with clinicians,” says Topol. “Unless they change their model—which seems unlikely—to one that is consumer-centric, they set the stage for the tech titans like Amazon and new entries to take control.”

McCarthy agrees that Amazon would be much better able to build a user experience that works, not just for patients but physicians as well. Besides having the potential to provide a cloud-based EHR, Amazon brings capability sets to healthcare such as advanced data analytics and customer insights that could help drive medical decision-making, such as recommending where a patient goes for care as well as the right clinical protocol for treatment—all driving towards better outcomes and cost reductions.

Ptasienski believes that the partnership between the three companies is a data “gold mine” just waiting to be exploited. “What if Amazon jumps into the pharmacy and medical equipment markets and starts to drive new revenue streams and lower network costs?” he asks. “We would finally get clarity on where costs are coming from in healthcare—provider, pharma and payer—and, of course, increased competition.”

“If I was a healthcare leader, I’d be scared,” concludes McCarthy. “This is a pivotal moment for healthcare leaders to pause and reflect on the fact that they, frankly, waited too long to consider advancing their customer engagement and customer experience strategies to be competitive with other digital industries.”

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