By Steve Jordon / World-Herald staff writer
Everyone agrees that America’s health care problems — high costs, untreated people, low-quality outcomes, dissatisfied clients — are tough to fix.
But hopes are high for an effort initiated by Jeff Bezos, Warren Buffett and Jamie Dimon, three business leaders known for success.
Their businesses, Amazon, Berkshire Hathaway and JPMorgan Chase, respectively, announced a joint health care venture in January that has come to be known as ABC, after the three companies.
“The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable cost,” the announcement said, promising a “fresh approach to these critical matters.”
They’re still looking for a CEO, but the slow start hasn’t stopped the talk about its possibilities.
“If you’re going to get at that problem, then you’ve got to be much more innovative and bolder than just tweaking,” said Kenneth Kaufman, chairman of the health care consulting firm Kaufman, Hall & Associates of Skokie, Illinois.
“We have to do something, there’s no question about it,” said Dr. David Filipi, an Omaha physician for 43 years and medical director for a Midwestern doctors’ association. “Experts in finance, hospital administration, physician practice — you need to link all these things together.”
“It’s a big agenda,” said Lyndean Lenhoff Brick, CEO of the health care consultant Advis Group of Mokena, Illinois. “To me, they’re going to have to blow this whole thing up, starting at the patient level.”
So far, nobody knows how the initiative will work, said Dr. Rowen Zetterman, associate vice chancellor at the University of Nebraska Medical Center. “What we lack at the moment is good knowledge of what they’re thinking about.”
In an April interview with Yahoo Finance, Buffett said he had talked frequently about health care problems with Todd Combs, who is one of his investment lieutenants and a member of Chase’s board of directors.
“I think Todd developed some ideas about how something like this might work,” Buffett said. “There’s no sense jumping ahead and trying to plan out something. We need an extraordinary CEO because it takes a lot of imagination and it takes a whole lot of execution. And it takes somebody that has a fervor for doing this beyond just having a job.”
Combs declined to comment for this story. The other two companies’ point people, Marvelle Sullivan Berchtold, a managing director at Chase, and Beth Galetti, a senior vice president at Amazon, also have not discussed the venture publicly.
CNBC recently reported that the three are “struggling” to find the right CEO after considering ex-Aetna executive Gary Loveman; former Medicare chief Andy Slavitt; Todd Park, who was previously President Barack Obama’s technology chief; and Owen Tripp, CEO of Grand Rounds Health.
Regardless of who the CEO will be, said Brick, the Advis consultant, ABC’s biggest advantage is the companies behind it.
“In this example, they’ve got enough employees (1.2 million) and enough clout and enough money and knowledge, too, that they can create a brand-new model of health care,” Brick said. “And they wouldn’t be doing it if it weren’t going to be cost-effective.”
People behind the plan have a unique combination of skills in finance, technology and leadership, Brick said. Buffett is known for understanding risks and minimizing the chances of failure, which she said is an important skill in this case.
Within two or three years, she said, the ABC system could set the standard for all employers, both large and small, especially if they band together into health care alliances to gain clout.
“There’s going to be a big war going on, because if they succeed, what this means is they’ve punched insurance companies in the stomach, they’ve punched big pharma in the stomach, and providers, too,” Brick said.
Amazon did that with the retail system, she said. “That’s what they’re going to do with health care, and if they don’t disrupt, they’re not going to be successful.”
Filipi, the Omaha physician and former medical director for Blue Cross Blue Shield of Nebraska, said a more incremental approach might have a better chance of success, compared with earlier attempts that involved smart people but failed when their targets were too comprehensive.
“They failed because I don’t think a lot of people really understood the intricacies of practicing medicine and the complexity of the internal workings of medicine,” Filipi said.
“It’s easy to lose focus on what you’re really trying to do. You can go down a lot of rabbit holes with health care. It’s a huge expense, and there’s a lot of people heavily invested in these sorts of things. It’s going to be hard to get this thing cleared out.
“It’s just too big an industry. But it’s worth trying.”
He suggested starting by making the health care system transparent, from medical costs to payment systems to patient records, which must remain private but become readily available when needed.
“We don’t know how much things cost, and we don’t know the quality for what you pay,” Filipi said. “How can you have a market that survives in that system?”
If ABC could make health care transparent, he said, “that would be the radical thing to do. Then the rest can be incremental.”
Kaufman, the health care consultant, said Amazon’s presence in the group shows the importance of technology in the venture.
“I don’t think this can be done without linking the clinical care system to technology, which is the reason Amazon is in this,” Kaufman said. “If you’re truly, really reinventing the delivery system, then you have to say, how have we reorganized other economic transactions in this country over the last 15 to 20 years?
“We’ve done it by bringiing a completely unique and different technology to the transaction.”
Kaufman said he doubts the initiative will aim to make health care more transparent.
“If you look at the way that Bezos runs Amazon and what he’s done, I suspect he wouldn’t think that transparency was much of a goal,” Kaufman said. “You want to do something with technology that’s more spectacular than that.”
Zetterman, the UNMC vice chancellor, said the biggest cost-saving opportunity for ABC is administrative expense, which can make up 25 percent of medical costs.
Some direct-care systems are attacking those costs by having clients pay an amount each month with no billing for care, he said. Other changes could cut those costs sharply.
Within the three businesses, Zetterman said, “when you have a very stable coalition of people, you can provide preventive care, prevent disease and reap the benefits along the way.”
No matter what’s tried, he said, the No. 1 path to high-quality, lower cost health care is for each person to be under the care of the right physician.
Spending a lot doesn’t ensure good care, he said, citing studies showing the U.S. spending much more for health care but ranking nearly 30th in quality of care among developed nations.
“Clearly,” Zetterman said, “spending all that money has not made us No. 1 in quality of health care in the world.”
The Omaha World-Herald is owned by Berkshire Hathaway Inc.