Hey Mr. Business and Economics Columnist, you’ve been rattling on in this space for years about big changes coming to the health care industry and about how all Amazon has to do is glance at some line of business it’s not already in and the companies already in it go running for the hills in panic.
So this announcement of a new health care venture involving Amazon, Berkshire Hathaway and JP Morgan Chase is a pretty big deal, right?
Well, umm, (columnist quickly shifts into Stentorian Voice of Authority mode required of pundits), yes and no.
How’s that for a definitive, authoritative answer?
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It is a big deal just from the size, prominence and power of the companies involved. It involves three hugely influential business executives — Jeff Bezos, Warren Buffett and Jamie Dimon — running three huge and significant companies.
It could be an especially big deal in Washington. Amazon has more than 40,000 employees in Seattle alone. JP Morgan Chase, by virtue of its 2008 acquisition of Washington Mutual, is one of the state’s biggest banks, with 200 branches and 2,000 employees.
Maybe you don’t know much about Berkshire Hathaway, or about Buffett (other than he’s rich and a buddy of Bill Gates), but you definitely know the companies in its ownership portfolio, many with significant operations in the state: BNSF Railway, Ben Bridge Jeweler, Precision Castparts (a Portland-based aerospace company that has made several acquisitions in Washington). Those ubiquitous and quirky ads from Geico? Yep, that’s a Warren Buffett enterprise, too.
That alone would suggest that, even if what the new venture produces is limited to employees of the participants and their subsidiaries, it’s going to have a big impact on health care nationally and in Washington, just from raw purchasing power.
But the significance could be greater than that.
All three executives are influential not just because they run big companies but because they have a penchant (Bezos and Buffett, in particular) for saying and doing the unconventional and for setting their own course even as the consensus conventional wisdom recommends something else. Because they tend to get results, what they say gets listened to and what they do gets imitated.
They’re also in a far better position to make things happen than others who have taken the plunge into American health care expecting to change it. Again, it’s not just the clout, considerable as it is, they wield as head of big companies. They’ve got lots on their plates already. They’re not taking on this project because they’re bored, and they’re not likely to spend time, attention, energy and money on a vanity project that accomplishes nothing. They’re going to want results.
But careful readers will have noted the presence of a number of qualifiers and conditional language like “if” and “could.” That’s not just a pundit trying to avoid being pinned down to a prediction he might later be held accountable for. There are some big questions and obstacles to what the three are trying to accomplish.
That starts with the fact that it’s not at all clear, at least publicly, what Bezos, Buffett and Dimon are trying to accomplish, much less how they plan to accomplish it. While the press release includes a wonderful turn of phrase describing the problem — “The ballooning costs of healthcare act as a hungry tapeworm on the American economy” — it also includes scant details about the new venture, which at this point doesn’t even have a name.
The verbiage following the tapeworm quote, attributed to Buffett, urges caution:
“Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
The world does not lack for or need another think tank or study group to talk endlessly about how to fix American health care. The announcement suggests that the venture initially will focus on “technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable cost.” Noble-sounding as the goals might be, the solutions don’t sound all that specific or promising. And just how involved will the new venture get with actually delivering health care?
But knowing what we do about the men organizing this venture, we may surmise (or hope) that they’ve got something much more specific in mind as to what they’ll be working on, and that its experiments are likely to show up soon (Amazon in particular isn’t known for waiting around when it gets an idea in its head).
Those are just the internal challenges. Then there are the external obstacles — the size of the health care industry, government involvement, the aging population, the nature of health care problems, the previous rounds of cures (wellness campaigns, now big data) that failed to deliver. This is a lot more complicated than fixing a malfunctioning company.
That’s just the start of reasons to be skeptical, if not downright pessimistic, that this venture will account for much change. But just the fact that these three think this is a problem they can do something about makes the news significant. If they deliver some real-world solutions — they don’t even have to solve every bit of the health care problem, just some sizable fixes would be welcome — then roll out all the superlatives you can find. They’ll be well earned.
Bill Virgin is editor and publisher of Washington Manufacturing Alert and Pacific Northwest Rail News. He can be reached at firstname.lastname@example.org.