Health industry stock analysts and observers have been wondering for some time about Amazon's potential to enter the marketplace for health care goods and services. It was not until it became widely known last fall that Amazon had obtained wholesale pharmaceutical distribution licenses in twelve states that discussion reached a fever pitch. Pharmacy Benefit Managers ("PBMs"), those giant intermediaries between pharmaceutical producers and health insurers, seemed particularly nervous. This could be big.
It may be that we were all just thinking too small. Now that Amazon, Berkshire Hathaway, and JP Morgan have announced their intention to create a multi-employer not for profit health insurance plan/health care provider, it is not only the pharmaceutical sector that is speculating on what all this could mean. This could be even bigger.
The joint announcement implies health care delivery as well as employer sponsored health insurance is contemplated. This has sparked a New York Times comment feud for the ages where readers debate whether any proposal tied to employer sponsored health insurance, even multi-employer sponsored health insurance, could be seen as genuinely disruptive. Clayton Christensen's vision of disruptive innovation, after all, might not be the right model if true disruptive innovation requires that it be advanced by an industry outsider who is interested in breaking all the rules.
Still, we do have a significant historic example of a business person inexperienced in health care delivery and health insurance taking these industries by storm. That is what Henry Kaiser did, beginning in the Richmond Kaiser shipyards of the 1930's on site and opened for public enrollment in the 1940's. Henry Kaiser had clear goals: bind his employees to his shipyards with an attractive plan at a time when war time frozen wages could not perform this function and offer better workplace injury care in order to keep wartime production moving. It is no accident Henry Kaiser first developed a better workers comp system and then moved to employer sponsored health insurance. Finally, Henry Kaiser had an interest in redeeming his mother Mary Kaiser's death at the age of 52 from untreated kidney disease, what we now call chronic nephritis. Her kidney disease was untreated because she could not afford the care required and Henry, a teenager at the time, could not afford it for her.
We may be at the beginning of a "I can do it better myself" time in health care and health system innovation. It was only weeks ago that a number of hospitals announced their intention to found a pharmaceutical company, after all.
One collaborative press release does not an integrated health care delivery/health insurance company make. Even a collaborative press release as wonderful as today's quoting Warren Buffet vowing to help attack the health care costs that are a hungry tapeworm on American business and the American economy raises more questions than it answers. Yet, the disruption may already have begun with Wall Street's acknowledgement that the received wisdom on investing in health care related industries such as HMOs and pharmaceutical distribution companies may no longer be such a sure thing.
Soon to be X-posted at PrawfsBlawg