Unless you’ve been under a rock the past few days, you’ve heard that Amazon, Berkshire Hathaway, and JPMorgan Chase announced a collaboration to do something about health care for their employees. While the announcement highlighted goals of transparency, tech innovation and forsaken profits – it didn’t include details of how these goals would be achieved. So, what are we supposed to think?
I’ve read at least 10 articles on the topic and it’s BIG in all ways! (ICYMI: Amazon is the biggest retailer, JP Morgan is the biggest bank and Berkshire Hathaway has substantial minority stock holdings in some of the biggest and best-known publicly traded companies in the United States. The health-care industry is 18 percent of the GDP and within two hours of the announcement, speculation caused key health care companies to drop $30 billion dollars in market value.)
As a previous senior manager at Amazon, I have great confidence in this collaboration because Jeff Bezos demonstrates the characteristics this endeavor will require: vision, financial strength, tech innovation, enthusiasm and a passion for the customer. I’m excited to see these three giants of tech, finance, and industry collaborating.
My career at Amazon brings to mind five thoughts about this announcement:
1. This collaboration is unique
It’s unique for two specific reasons:
These three companies are using their own employee populations to “test” some ideas that could have a broader reach in the future. In the next few years, the companies are projected to provide health insurance for over 1 million employees and 2.5 million members in the US. Based on the average employer spend per employee, these three companies are looking to pay a combined $14 billion dollars annually on health care costs. This strategic partnership with such a large population will create opportunities to reduce cost, improve transparency, and build technological solutions.
While each company is an expert in their own industry, none of them know health care. They might not KNOW health care, but they sure spend a lot on it. health care spending is a major expense for employers and can cause a competitive disadvantage. Starbucks spends more on employee health benefits than on coffee beans, and GM spends more on it than on steel.
During my time at Amazon, we entered product categories that weren’t our expertise. We were known for selling books and CDs, but broke into the footwear and clothing market. To gain expertise fast, Amazon would sometimes acquire industry innovators. One of the best-known acquisitions was Zappos, an expert in the footwear industry with great insights, innovation and a relentless focus on customer experience. Amazon became a student of Zappos and as a result is now the top retailer for footwear in the US. I think this deal opens opportunities for more partnerships with health care leaders and experts who have proven to bring innovation and customer-focus.
2. Amazon’s culture was made for this challenge
Curiosity may have killed the cat, but it does wonders for Amazon! It’s part of the culture to always be learning and seeking to improve. When most retailers would ship, pack and land your order in a “fast” two weeks – Amazon challenged the status quo and delivered in two days. Amazon was not in the logistics business, they were in the book-selling business. Yet, today they are logistics gurus because they learned, hired experts, sacrificed short-term gains, and prioritized long-term improvement over profit.
It’s no secret that Jeff Bezos is curious about new possibilities and he acts to explore them. Recently he said, “success will require a beginner’s mindset.” While they don’t have the answer to this very complex, heavily regulated, highly political endeavor – I know that Amazon is entering this task with eyes wide open. They aren’t afraid to roll up their sleeves, challenge the status quo and spend the money and time to find the right solution(s).
I’m sure you noticed the phrase, “free from profit-making incentives.” While many in the industry may scoff at this, recognize what it means. Using their 2.5 million members, they’re willing to invest in new ideas and be a health care incubator for America. If there’s money to be made, I’m sure they’ll figure it out, but they don’t have the short-term constraint of bringing ideas to market profitably. This is a differentiator.
3. Leaders inspire results
Jeff Bezos has an amazing ability to create and communicate a bold direction that inspires results. I remember when he announced that Amazon would be the number-one clothing retailer in the US while we were still in “startup mode.” He created the vision, empowered his team, taught us to fail fast and funded the growth. Today Amazon is the number-one retailer in clothing.
Another example: Would we ever have made it to the moon if John F. Kennedy hadn’t announced before Congress, “this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to the Earth”?
I made a bold move leaving Amazon to help the team at freshbenies improve health care. I have observed that health care is a segmented industry with few leaders calling out a bold direction. I admire these 3 leaders for their audacious vision and ambition.
4. Information is useful, but rumors are useless
We should all take note of the information that has been released:
Three companies have decided to partner to figure out how to reduce health care costs for their companies and employees.
They will focus on technology solutions that can provide simplified and transparent health care, at a lower cost.
That’s what we know. The rest is only rumors. Amazon is usually pretty tight-lipped about their projects, so don’t expect to hear much until the launch.
In an earlier article, I noted that the health care industry is ripe for disruption, innovation, a better end-user experience, transparency, technological advances, etc. If you’re concerned about this deal, you should be concerned for EVERYONE coming after health care – Google, Apple and so many others! The space is primed for gutsy companies that will deliver a better experience. Speaking of that…
5. Customer experience will be the focus
While at Amazon the team would gather for “All-Hands” meetings with Jeff Bezos. In one of those meetings, an employee inquired about Jeff’s high customer service standard. Jeff said that his goal wasn’t to just elevate the customer experience at Amazon but to influence all industries to elevate their customer experience. To him, customer service is not a goal but the entire vision of his company. Jamie Dimon, Chairman and CEO of JPMorgan Chase said, “Our people want transparency, knowledge, and control when it comes to managing their health care.” I think it’s safe to say that elevating the employee experience will be a top priority!
Megan McArdle from Bloomberg View wrote, “health care costs are a bit like the weather: everyone talks about them, but no one ever does anything about it.” Maybe these three leaders will spark change and actually do something about it.