Using Technology to Fix a Broken Health Care System
Updated: Jan 17, 2020
Innovation, risk-taking and fresh thinking are driving solutions to business and social challenges of all sizes. Health care is one of the greatest social challenges we face in our country today, and it currently stands to be transformed by three of the foremost minds in the private sector.
This is a long overdue example of how the private sector can help create an effective solution to a major public policy issue, even when politicians have long been unable to. If this effort is successful, it could pave the way for the private sector to provide solutions to many other widespread, public issues, including educating our workforce, reducing student loans and curbing poverty.
But now, all eyes are on the current challenge to the health care status quo. Access to timely, effective and high-quality health care in the United States lags that of many other countries in the OECD. It has the second-lowest rate of insurance coverage, beating out only Greece. At the same time, the cost is far higher than any other OECD country. In 2016, health care spending was 17.9 percent of GDP, more than double that of the average. While the United States health care system is both broken and Byzantine, the issues it faces are not insurmountable - given the right people are taking them on.
Bezos, Buffett and Dimon
And they are. In late January, Jeff Bezos, founder and CEO of Amazon.com; Warren Buffett, chairman and CEO of Berkshire Hathaway; and Jamie Dimon, chairman and CEO of JPMorgan Chase, announced the formation of an independent health care company for their companies' employees as a first step in fixing the health care system in the United States. While none of these men have worked directly in health care, it would be difficult to assemble a team with better bona fides:
Bezos has amply demonstrated his genius at using software and analytics to disrupt how people receive goods and services.
Buffett, the "Oracle of Omaha," has used his unique ability to synthesize information in order to find and exploit unique opportunities for more than half a century.
Dimon is not only the chairman and CEO of the largest bank in the world, but has also sat on the board of directors of the Federal Reserve.
As a complement to their world-class experience, these three men share a bond few others do. "We've got the perfect partnership with Jeff and Jamie [and me]," Buffett said. "We trust each other." So much so, in fact, that they've come together to solve complex problems before.
Amazon, Berkshire and JP Morgan
They are each backed by their own behemoth corporations that can provide them with the resources necessary to create and implement solutions, as well as the scale to test them. And the corporations' unique structures - Berkshire Hathaway manages more than 370,000 employees with just 25 staff members - grant them the agility necessary to rapidly iterate on possible solutions. "Our companies are big, and yet we can still make things happen. We don't have bureaucratic problems or constituency problems that some others might, and we like we each other," said Buffett.
Exploring possible solutions
Despite these formidable forces, reducing the cost of health care while maintaining or increasing quality is not an easy problem. The partnership is not dedicated to blowing up the current system, but neither are they just looking to shave off a few percentage points. The stated focus of the new company will be to create technology solutions that can give U.S. employees and their families reasonably priced, simple, high-quality health care. To that end, all health care data will be shared with the new entity, and the partnership will be free from profit-making incentives in order to ensure that interests are properly aligned.
It is easy to doubt that this partnership will be able to accomplish what so many have tried - both federally and privately - and failed to do. However, they are moving forward fast, and the CEO of the company is expected to be announced soon. Many believe they will be able to challenge the status quo, as health care stocks such as CVS Health and UnitedHealth Group dropped immediately after the announcement.
In the long term, the effects could be far greater. Purchasing power could be impacted in everything from prescriptions to service delivery. The move could be the beginning of a trend in corporate self-insurance, eliminating middlemen. Finally, while the announcement may be terrifying for established vendors in health care, it should be exciting for consumers, who stand to gain affordable access to quality health care.