Despite high-hopes and much fanfare, the collaboration failed to transform healthcare and lower healthcare costs for everyday Americans as many anticipated it would
Another anticipated “disruptor” to today’s healthcare market is closing its doors. Three years ago, in 2018, Amazon (NASDAQ:AMZN), Berkshire Hathaway (NYSE:BRK.A), and JPMorgan Chase (NYSE:JPM) announced a joint venture to enter into the healthcare market and use their combined market leverage to secure lower-cost healthcare for their 1.2 million employees. At that time, healthcare business experts suggested Haven Healthcare (Haven), as the non-profit joint venture was named, might become a transformative healthcare model other companies could follow.
But that was not to be. In January, the companies announced Haven would close its doors in February. Why did it fail to accomplish its goals? And how will its demise affect the healthcare benefits provided to the thousands of people employed at these companies? The answers to these questions should be of interest to pathologists and medical laboratory managers who want to position their clinical labs as high-quality, added-value contributors to patient care.
One Expert’s Opinion on Demise of Haven Healthcare
In an article he penned for Harvard Business Review, titled, “Why Haven Healthcare Failed,” John S. Toussaint MD, an internist, former healthcare CEO, and founder and Executive Chairman of Catalysis, a non-profit healthcare educational institute, outlined three major reasons for Haven’s closing:
Insufficient Market Power: According to Toussaint, the three companies simply did not have the market power to dominate a large enough share of any local market. In addition, with a combined 1.2 million employees, the companies did not have enough employees to incentivize providers into lowering prices.
Perverse Incentives: In the current healthcare environment, US insurers and providers make huge profits from treating disease. This means there is little incentive to keep people out of hospitals or accept the risks associated with fixed-price capitation.
Poor Timing: The COVID-19 pandemic forced providers to focus on and manage the crisis, which, in turn, caused them to postpone or even cancel elective and non-emergency medical procedures, resulting in financial hits and the unwillingness to take on the uncertainty associated with new, possibly dubious arrangements.
Why Is It Hard to Disrupt Healthcare?
Jeff Becker, Principal Analyst, Healthcare, CB Insights, told Quartz, “Haven is yet another cautionary tale to outsiders [who] hope to disrupt the industry that their ambition is likely unrealistic and that solving key industry problems proves to be far more difficult than most anticipate.”
Other experts point to a vague plan, an overly ambitious strategy, difficulty retaining top talent, a lack of visible progress, and the divergence of interests between the three companies as potential reasons for Haven’s demise, Quartz reported.
Did Haven Healthcare Demonstrate Any Innovation?
It is unclear what the collaboration accomplished or what exactly led to its demise, but it does seem that some positive developments were created through the venture.
According to Forbes, Haven Healthcare stated on its now-defunct website, “In the past three years, Haven explored a wide range of healthcare solutions, as well as piloted new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable. Moving forward, Amazon, Berkshire Hathaway, and JPMorgan Chase and Co. will leverage these insights and continue to collaborate informally to design programs tailored to address the specific needs of their own employee populations.”
At least one of the three partners may have anticipated Haven’s closure and taken proactive steps. In January of 2020, Dark Daily reported that Amazon Care launched a pilot program which offers virtual primary care to its Seattle employees, and features both telehealth and in-home care services, including clinical laboratory testing.
At that time, we noted the similarities with Haven Healthcare.
And in “Amazon Building Labs to Do COVID-19 Testing,” Dark Daily’s sister publication The Dark Report covered how, as a result of the COVID-19 pandemic, Amazon built and now operates multiple clinical laboratories for testing its employees.
Amazon has a history of entering an industry and successfully disrupting it. Its willingness to build lab testing facilities to do its own COVID-19 testing may be the first step in a multi-year strategy to enter the clinical laboratory industry and disrupt it by offering better quality lab testing services at a cheaper price.
Thus, it is likely these medical laboratories will continue to deliver clinical testing even after the pandemic has officially ended and will compete with local independent clinical laboratories.
Financial losses for hospitals and health systems due to cancelled procedures and coronavirus expenses will lead to changes in healthcare delivery, operations, and clinical laboratory test ordering
COVID-19 is reshaping how people work, shop, and go to school. Is healthcare the next target of the coronavirus-induced transformation? According to two experts, the COVID-19 pandemic is pushing hospitals and health systems toward a “fundamental and likely sustained transformation,” which means clinical laboratories must be prepared to adapt to new provider needs and customer demands.
Burik and Fisher called attention to the staggering $50 billion-per-month loss for hospitals and health systems that was first revealed in an American Hospital Association (AHA) report published in May. The AHA report estimated a $200 billion loss from March 1, 2020, to June 30, 2020, due to increased COVID-19 expenses and cancelled elective and non-elective surgeries.
Adding to the financial carnage is the expectation that patient volumes will be slow to return. In “Hospitals Forecast Declining Revenues and Elective Procedure Volumes, Telehealth Adoption Struggles Due to COVID-19,” Burik said, “Healthcare has largely been insulated from previous economic disruptions, with capital spending more acutely affected than operations. But this time may be different since the COVID-19 crisis started with a one-time significant impact on operations that is not fully covered by federal funding.
“Providers face a long-term decrease in commercial payment, coupled with a need to boost caregiver and consumer-facing digital engagement, all during the highest unemployment rate the US has seen since the Great Depression,” he continued. “For organizations in certain locations, it may seem like business as usual. For many others, these issues and greater competition will demand more significant, material change.”
A Guidehouse analysis of a Healthcare Financial Management Association (HFMA) survey, suggests one-in-three provider executives expect to end 2020 with revenues at 15% below pre-pandemic levels, while one-in-five of them anticipate a 30% or greater drop in revenues. Government aid, Guidehouse noted, is likely to cover COVID-19-related costs for only 11% of survey respondents.
“The figures illustrate how the virus has hurled American medicine into unparalleled volatility. No one knows how long patients will continue to avoid getting elective care or how state restrictions and climbing unemployment will affect their decision making once they have the option,” Burik and Fisher wrote. “All of which leaves one thing for certain: Healthcare’s delivery, operations, and competitive dynamics are poised to undergo a fundamental and likely sustained transformation.”
As a result, the two experts predict these pandemic-related changes to emerge:
Payer-Provider Complexity on the Rise; Patients Will Struggle. As the pandemic has shown, elective services are key revenues for hospitals and health systems. But the pandemic also will leave insured patients struggling with high deductibles, while the number of newly uninsured will grow. Furthermore, upholding of the hospital price transparency ruling will add an unwelcomed spotlight on healthcare pricing and provider margins.
Best-in-Class Technology Will Be a Necessity, Not a Luxury. COVID-19 has been a boon for telehealth and digital health usage, creating what is likely to be a permanent expansion of virtual healthcare delivery. But only one-third of executives surveyed say their organizations currently have the infrastructure to support such a shift, which means investments in speech recognition software, patient information pop-up screens, and other infrastructure to smooth workflows will be needed.
The Tech Giants Are Coming. Both major retailers and technology stalwarts, such as Amazon, Walmart, and Walgreens, are entering the healthcare space. In January, Dark Daily reported on Amazon’s roll out of Amazon Care, a 24/7 virtual clinic, for its Seattle-based employees. Amazon (NASDAQ:AMZN) is adding to a healthcare portfolio that includes online pharmacy PillPack and joint-venture Haven Healthcare. Meanwhile, Walmart is offering $25 teeth cleaning and $30 checkups at its new Health Centers. Dark Daily covered this in an e-briefing in May, which also covered a new partnership between Walgreens and VillageMD to open up to 700 primary care clinics in 30 US cities in the next five years.
Work Location Changes Mean Construction Cost Reductions. According to Guidehouse’s analysis of the HFMA COVID-19 survey, one-in-five executives expect some jobs to remain virtual post-pandemic, leading to permanent changes in the amount of real estate needed for healthcare delivery. The need for a smaller real estate footprint could reduce capital expenditures and costs for hospitals and healthcare systems in the long term.
Consolidation is Coming. COVID-19-induced financial pressures will quickly reveal winners and losers and force further consolidation in the healthcare industry. “Resilient” healthcare systems are likely to be those with a 6% to 8% operating margins, providing the financial cushion necessary to innovate and reimagine healthcare post-pandemic.
Policy Will Get More Thoughtful and Data-Driven. COVID-19 reopening plans will force policymakers to craft thoughtful, data-driven approaches that will necessitate engagement with health system leaders. Such collaborations will be important not only during this current crisis, but also will provide a blueprint for policy coordination during any future pandemic.
As Burik and Fisher point out, hospitals and healthcare systems emerged from previous economic downturns mostly unscathed. However, the COVID-19 pandemic has proven the exception, leaving providers and health systems facing long-term decreases in commercial payments, while facing increased spending to bolster caregiver- and consumer-facing engagement.
“While situations may differ by market, it’s clear that the pre-pandemic status quo won’t work for most hospitals or health systems,” they wrote.
The message for clinical laboratory managers and surgical pathologists is clear. Patients may be permanently changing their decision-making process when considering elective surgery and selecting a provider, which will alter provider test ordering and lab revenues. Independent clinical laboratories, as well as medical labs operated by hospitals and health systems, must be prepared for the financial stresses that are likely coming.
Strategists agree that big tech is disrupting healthcare,
so how will clinical laboratories and anatomic pathology groups serve virtual
healthcare customers?
Visionary XPRIZE founder Peter Diamandis, MD, sees big tech as “the doctor of the future.” In an interview with Fast Company promoting his new book, “The Future Is Faster Than You Think,” Diamandis, who is the Executive Chairman of the XPRIZE Foundation, said that the healthcare industry is “phenomenally broken” and that Apple, Amazon, and Google could do “a thousandfold” better job.
Diamandis, who also founded Singularity University, a global learning and innovation community that uses exponential technologies to tackle worldwide challenges, according to its website, said, “We’re going to see Apple and Amazon and Google and all the data-driven companies that are in our homes right now become our healthcare providers.”
If this prediction becomes reality, it will bring significant changes in the traditional ways that consumers and patients have selected providers and access healthcare services. In turn, this will require all clinical laboratories and pathology groups to develop business strategies in response to these developments.
Amazon Arrives in Healthcare Markets
Several widely-publicized business initiatives by Amazon, Google, and Apple substantiate these predictions. According to an Amazon blog, healthcare insurers, providers, and pharmacy benefit managers are already operating HIPAA-eligible Amazon Alexa for:
Alexa also enables HIPAA-compliant blood glucose updates as part of the Livongo for Diabetes program. “Our members now have the ability to hear their last blood glucose check by simply asking Alexa,” said Jennifer Schneider, MD, President of Livongo, a digital health company, in a news release.
And Cigna’s “Answers By Cigna” Alexa “skill” gives members who install the option responses to 150 commonly asked health insurance questions, explained a Cigna news release.
“Google plans to disrupt healthcare and use data and artificial intelligence,” Toby Cosgrove, Executive Advisor to the Google Cloud team and former Cleveland Clinic President, told B2B information platform PYMNTs.com.
PYMNTs speculated that Google, which recently acquired Fitbit, could be aiming at connecting consumers’ Fitbit fitness watch data with their electronic health records (EHRs).
Apple Works with Insurers, Integrating Health Data
The Apple Watch health app also enables people to access medical laboratory test results and vaccination records, and “sync up” information with some hospitals, Business Insider explained.
Virtual Care, a Payer Priority: Survey
Should healthcare providers feel threatened by the tech giants? Not necessarily. However, employers and payers surveyed by the National Business Group on Health (NBGH), an employer advocacy organization, said they want to see more virtual care solutions, a news release stated.
“One of the challenges employers face in managing their healthcare costs is that healthcare is delivered locally, and change is not scalable. It’s a market-by-market effort,” said Brian Marcotte, President and CEO of the NBGH, in the news release. “Employers are turning to market-specific solutions to drive meaningful changes in the healthcare delivery system.
“Virtual care solutions bring healthcare to the consumer
rather than the consumer to healthcare,” Marcotte continue. “They continue to
gain momentum as employers seek different ways to deliver cost effective,
quality healthcare while improving access and the consumer experience.”
“If you use Google in the United States to check symptoms,
you’ll get five-million to 11-million hits,” Schwab told The Dark Report.
“Clearly, there’s plenty of talk about symptom checkers, and if you go online
now, you’ll find 350 different electronic applications that will give you
medical advice—meaning you’ll get a diagnosis over the internet. These
applications are winding their way somewhere through the regulatory process.
“The FDA just released a report saying it plans to regulate
internet doctors, not telehealth doctors and not virtual doctors,” he
continued. “Instead, they’re going to regulate machines. This news is
significant because, today, within an hour of receiving emergency care, 45% of
Americans have googled their condition, so the cat is out of the bag as it
pertains to us going online for our medical care.”
Be Proactive, Not Reactive, Health Leaders Say
Healthcare leaders need to work on improving access to primary care, instead of becoming defensive or reactive to tech companies, several healthcare CEOs told Becker’s Hospital Review.
Clinical laboratory leaders are advised to keep an eye on
these virtual healthcare trends and be open to assisting doctors engaged in
telehealth services and online diagnostic activities.
Experts say Amazon could be planning a roll-out of healthcare services to its Prime members and others
Clinical laboratory leaders will want to note that the Telehealth and home healthcare industries have expanded with the launch of Amazon Care, a virtual medical clinic and home care services program from global retailer Amazon.com, Inc. (NASDAQ:AMZN).
Amazon is piloting Amazon Care as a benefit for its 53,000
Seattle-area employees and their families, according to published reports. Could
this indicate the world’s largest online retailer is moving into the primary
care space? If so, clinical laboratory leaders will want to follow this
development closely, because the program will need clinical laboratory support.
Amazon has successfully disrupted multiple industries in its
corporate life and some experts speculate Amazon may be using its own employees
to design a new medical delivery model for national roll-out.
The S&P report goes on to state, “In as little as five years, the Seattle-based e-commerce company could interlink its system of capabilities and assets to launch various healthcare products, insurance plans, virtual care services, and digital health monitoring to a broader population. The rollout would be part of a larger plan by Amazon to deliver convenient, cost-effective access to care and medications across the U.S., likely tied to Amazon’s Prime membership program, according to experts.”
Modern Healthcare reported that Amazon Care services include telemedicine and home visits to employees enrolled in an Amazon health insurance plan.
Experts contacted by S&P Global Market Intelligence
suggest Amazon:
Plans a “suite of customized health plans and
services for businesses and consumers;”
May offer health services to its five million
seller business and more than 100 million Amazon Prime members; and
Sees healthcare as a growing market and wants
greater involvement in it.
How Amazon Care Works
Amazon Care offers online, virtual care through a
downloadable mobile device application (app) as well as in-person home care for
certain medical needs, such as:
Colds, allergies, infections, and minor injury;
Preventative consults, vaccines, and lab tests;
Sexual health services; and
General health inquiries.
Becker’s Hospital Review reported that once a participant downloads the Amazon Care app to a smartphone or tablet and signs up for the program, he or she can:
Communicate with healthcare providers via text
or video;
Plan personal visits if needed;
Set payment methods in their user profile; and
Receive a “potential diagnosis” and treatment
plan.
“The service eliminates travel and wait time, connecting employees and their family members to a physician or nurse practitioner through live chat or voice,” an Amazon spokesperson told CNBC, “with the option for in-person follow-up services from a registered nurse ranging from immunizations to instant strep throat detection.”
The “mobile health nurse” may also collect clinical laboratory
specimens, the Verge
reported.
Amazon has partnered with Oasis Medical Group, a family primary care practice in Seattle, to provide healthcare services for Amazon Care patients.
Paving the Way to Amazon Care
The Healthcare Financial Management Association (HFMA) compares Amazon’s piloting of Amazon Care to similar healthcare projects that studied population health by first involving employee health plans.
HFMA’s analysis noted that Amazon Care is similar to Haven, a patient advocate organization based in Boston and New York that was created in 2018 by Amazon, JPMorgan Chase, and Berkshire Hathaway to lower healthcare costs and improve outcomes for participating companies.
Tech Crunch reported that in 2018 Amazon also purchased PillPack for nearly $1 billion and integrated its prescription delivery services into Amazon Care.
More recently, Amazon acquired Health Navigator and plans to bring those offerings to Amazon Care as well, CNBC reported. Founded in 2014, Health Navigator provides caregivers with symptom-checking tools that enable remote diagnoses.
Should Telemedicine Firms Be Nervous?
Dark Daily recently reported on Doctor on Demand’s launch of its own virtual healthcare telehealth platform called Synapse. The e-briefing also covered Doctor on Demand’s partnership with Humana (NYSE:HUM) to provide virtual primary care services to the insurer’s health plan members, including online doctor visits at no charge and standard medical laboratory tests for a $5 copayment.
So, should telemedicine firms be concerned about Amazon competing in their marketplace? Business Insider predicts Amazon will need time to beef up its medical resources to serve people online and in-person through Amazon Care.
But that’s the point of Amazon’s pilot, isn’t it? What comes
from it will be interesting to watch.
“Meanwhile, telemedicine firms can ink strategic
partnerships and strengthen their existing payer relationships to safeguard
against Amazon’s surge into the space,” Business Insider advised.
It remains to be seen how medical laboratory testing and reports
would fit into an expanded Amazon Care health network. Or, how clinical laboratories
will get “in-network” with Amazon Care, as it grows to serve customers beyond
Amazon’s employees.
As Dark Daily recently advised, medical laboratory leaders will want to ensure their lab’s inclusion in virtual care networks, which someday may include Amazon Care.
Since Alexa is now programed to be compliant with HIPAA privacy rules, it’s likely similar voice assistance technologies will soon become available in US healthcare as well
Shortages of physicians and other types of caregivers—including
histopathologists
and pathology
laboratory workers—in the United Kingdom (UK) has the UK’s National Health Service (NHS) seeking alternate
ways to get patients needed health and medical information. This has prompted a
partnership with Amazon to use the Alexa virtual assistant to
answer patients healthcare inquiries.
Here in the United States, pathologists and clinical
laboratory executives should take the time to understand this development.
The fact that the NHS is willing to use a device like Alexa to help it maintain
access to services expected by patients in the United Kingdom shows how rapidly
the concept of “virtual clinical care” is moving to become mainstream.
If the NHS can make it work in a health system serving 66-million
people, it can be expected that health insurers, hospitals, and physicians in
the United States will follow that example and deploy similar virtual health
services to their patients.
For these reasons, all clinical laboratories and anatomic
pathology groups will want to develop a strategy as to how their
organizations will interact with virtual health services and how their labs
will want to deploy similar virtual patient information services.
Critical Shortages in Healthcare Services
While virtual assistants have
been answering commonly-asked health questions by mining popular responses on
the Internet for some time, this new agreement allows Alexa to provide
government-endorsed medical advice drawn from the NHS website.
By doing this, the NHS hopes to reduce the burden on
healthcare workers by making it easier for UK patients to access health
information and receive answers to commonly-asked health questions directly from
their homes, GeekWire
reported.
“The public needs to be able to get reliable information
about their health easily and in ways they actually use. By working closely
with Amazon and other tech companies, big and small, we can ensure that the
millions of users looking for health information every day can get simple,
validated advice at the touch of a button or voice command,” Matthew Gould, CEO of NHSX, a division of the NHS that focuses
on digital initiatives, told GeekWire.
The
Verge reported that when the British government officially announced
the partnership in a July press
release, the sample questions that Alexa could answer included:
Alexa, how do I treat a migraine?
Alexa, what are the symptoms of the flu?
Alexa, what are the symptoms of chickenpox?
“We want to empower every patient to take better control of
their healthcare and technology like this is a great example of how people can
access reliable, world-leading NHS advice from the comfort of their home,
reducing the pressure on our hardworking GPs (General Practitioners) and
pharmacists,” said Matt
Hancock, Secretary of State for Health and Social Care, in the press release.
MD
Connect notes that the NHS provides healthcare services free of charge to
more than 66-million individuals residing in the UK. With 1.2 million
employees, the NHS is the largest employer in Europe, according to The
Economist. That article also stated that the biggest problem facing the
NHS is a staff shortage, citing research conducted by three independent
organizations:
Their findings indicate “that NHS hospitals, mental-health
providers, and community services have 100,000 vacancies, and that there are
another 110,000 gaps in adult social care. If things stay on their current
trajectory, the think-tanks predict that there will be 250,000 NHS vacancies in
a decade,” The Economist reported.
“This idea is certainly interesting and it has the potential
to help some patients work out what kind of care they need before considering
whether to seek face-to-face medical help, especially for minor ailments that
rarely need a GP appointment, such as coughs and colds that can be safely
treated at home,” Professor
Helen Stokes-Lampard, Chairman at the Royal
College of General Practitioners, and Chair of the Board Of
Directors/Trustees at National
Academy of Social Prescribing, told Sky News.
“However,” she continued, “it is vital that independent
research is done to ensure that the advice given is safe, otherwise it could
prevent people seeking proper medical help and create even more pressure on our
overstretched GP service.”
Amazon has assured consumers that all data obtained by Alexa
through the NHS partnership will be encrypted to ensure privacy and security,
MD Connect notes. Amazon also promised that the personal information will not
be shared or sold to third parties.
Alexa Now HIPAA Compliant in the US
This new agreement with the UK follows the announcement in April
of a new Alexa
Skills Kit that “enables select Covered Entities and their Business
Associates, subject to the US Health
Insurance Portability and Accountability Act of 1996 (HIPAA), to build
Alexa skills that transmit and receive protected
health information (PHI) as part of an invite-only program. Six new Alexa
healthcare skills from industry-leading healthcare providers, payors, pharmacy
benefit managers, and digital health coaching companies are now operating in
our HIPAA-eligible environment.”
Developers of voice assistance technologies can freely use
these Alexa skills, which are “designed to help customers manage a variety of
healthcare needs at home simply using voice—whether it’s booking a medical
appointment, accessing hospital post-discharge instructions, checking on the
status of a prescription delivery, and more,” an Amazon
Developer Alexa blog states.
The blog lists the HIPAA-compliant Alexa skills as:
Express
Scripts: Members can check the status of a home delivery prescription and can
request Alexa notifications when their prescription orders are shipped.
Cigna
Health Today by Cigna (NYSE:CI): Eligible employees with one of Cigna’s
large national accounts can now manage their health improvement goals and
increase opportunities for earning personalized wellness incentives.
Swedish
Health Connect by Providence St.
Joseph Health, a healthcare system with 51 hospitals across seven states
and 829 clinics: Customers can find an urgent care center near them and
schedule a same-day appointment.
Atrium
Health, a healthcare system with more than 40 hospitals and 900 care
locations throughout North and South Carolina and Georgia: Customers in North
and South Carolina can find an urgent care location near them and schedule a
same-day appointment.
Livongo,
a digital health company that creates new and different experiences for people
with chronic conditions: Members can query their last blood sugar reading,
blood sugar measurement trends, and receive insights and Health Nudges that are
personalized to them.
HIPAA Journal notes: “This is not the first time that Alexa skills have been developed, but a stumbling block has been the requirements of HIPAA Privacy Rules, which limit the use of voice technology with protected health information. Now, thanks to HIPAA compliant data transfers, the voice assistant can be used by a select group of healthcare organizations to communicate PHI without violating the HIPAA Privacy Rule.”
Steady increases associated with the costs of medical care
combined with a shortage of healthcare professionals on both continents are
driving trends that motivate government health programs and providers to
experiment with non-traditional ways to interact with patients.
New digital and Artificial
Intelligence (AI) tools like Alexa may continue to emerge as methods for
providing care—including clinical laboratory and pathology advice—to healthcare
consumers.