How Amazon could reshape U. S. health care

The burgeoning collaboration between Amazon, JPMorgan Chase and BerkshireHathaway seeking to transform the American health care system is long on ambition and short on details.

By their own admission, the companies are stepping up to the plate without much experience playing the game, which could easily translate into a swift strikeout.

But they’re already being taken seriously — and for good reason.

With two of the world’s three richest people leading the charge – AmazonCEOJeffBezos andBerkshireCEO Warren Buffett – as well as JPMorgan Chase CEO Jamie Dimon, the newly minted coalition is hoping to lower health care costs for the companies’ employees and deliver significant advancements for all patients.

The challenge is monumental. Health care spending represented 17.9% of the economy in 2016, totaling about $ 10,348 per person, and continues to rise, according to the Centers for Medicare & Medicaid Services.

Based on their accomplishments, how might the alliance leaders tackle what Buffett called “a hungry tapeworm on the American economy”?

Any prediction about the alliance’s plans must glean insight from Amazon’s success, which has been based on removing entire layers of product sales and distribution and adopting new ways of thinking.

With retail, Bezos refused to travel the well- worn path established by leaders in the business. The lesson for health care? The system you know today won’t necessarily exist in its current form for much longer.

To shake up health care, “it takes bold thinking on the part of thought leaderswho are willing to go out there and stake a claim that theywill be able to do something grand,” said Jean Abraham, a health care administration professor at the University of Minnesota.

One sign the new alliance is building momentum is that more companies are interested in joining them.

The Health Transformation Alliance, which was formed in 2015 by American Express, Macy’s, Verizon and Caterpillar, hailed the new coalition’s formation. Since its creation, the Health Transformation Alliance has added a few dozen additional members, including JPMorgan Chase and one of Berkshire’s subsidiaries, BNSF Railway.

Perhaps the biggest key to the coalition leaders’ strategy is their disavowal of profit motives. The new company they plan to establish will not seek to profit off of health care, unlike the industry’s leading for- profit insurers, drugmakers and many health care providers.

Experts say the alliance will likely focus on several key areas:

Slashing bureaucracy

What if the only way to lower health care costs is to slash the number of people in the industry?

The industry employed about 12.4 million people as of 2015, according to the Bureau of Labor Statistics.

Amazon has not been shy about pursuing technological innovation to transform the retail industry, gadgetry, Web services and shipping.

The parallels in health care could include more automation.

Expanding telemedicine

In an age when people store extremely sensitive personal data online, it’s remarkable that digital communication to help doctors and nurses diagnose and treat ailments remotely remains uncommon.

With expanded telemedicine, health care providers could share physicians and nurse practitioners, potentially lowering costs.

Transforming drug pricing

The complex nature of pharmaceutical manufacturing and delivery is seen as a contributor to high costs.

One layer of the pharmaceutical manufacturing and delivery systemis a category of companies called pharmacy benefit managers, or PBMs, such as Express Scripts and CVS Health’s Caremark. As middlemen, PBMs handle drug distribution.

Amazon has already signaled it may launch an online pharmacy. Could it cut out the middleman again?