Smaller healthtech players could get a boost from Amazon’s new healthcare company

 

JPMorgan Chase and Berkshire Hathaway have joined forces with Amazon to form a new healthcare company for all U.S. employees. Details, at the moment, are so sparse that there’s not even a name associated with the new company.

For the industry, however, this is big news. Along with health insurance giants, there could be possible ramifications even for smaller tech companies that are open to either partnering with the company or being acquired by it.

The decision wasn’t made overnight. Reports suggest- Jamie Dimon, Warren Bffet and Jeff Bezos- the heads of each company, have chatted for years about how to fix the issue of high costs and a broken healthcare system.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” Buffet said in a statement this morning. “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.”
But others in tech, have only gotten bogged down with regulatory hurdles, while trying to jump into health care. Elizabeth Holmes, founder of Theranos, who did not have a medical background, was ultimately banned from operating in her own labs due to health and safety concerns, after running into regulatory issues.

Alphabet, Google’s parent company, along with Calico and Verily Life Sciences, had dipped its toes in the healthcare waters. Google, however, had to shut down Google Health, it’s health management platform, after it failed to gain traction.

“When [tech companies] start to understand the complexity, even just the idea of an electronic health record, they pull out,” says health consultant and CEO of Avalere Health Dan Mendelson.
Bezos has acknowledged the difficulties for tech companies in the space, saying the healthcare system is “complex” and that the three “. . . enter into this challenge open-eyed about the degree of difficulty.”
Mendelson points out that mainly those companies with a background in healthcare, have been largely successful in the industry Especially in the last year, the allure to get into the space, however, has fueled plenty of tech company attempts. Amazon has already been rumored to be in talks with drug makers and Apple has recently launched a feature with it’s iOS update that allows users to upload their medical records. Stronger technological chops is something the industry needs going forward. Amazon is in a position to provide these measures with machine learning, AI, online communications and other tools needed to make a more efficient and effective system. But outside help from health experts is likely needed, and it remains to be seen how these three iconic companies plan to move the ball forward without industry understanding.
Ali Diab, the founder of Collective Health, has one unsurprising suggestion: that the new company being formed collaborate with Collective Health.
Diab points out, that Collective Health has been providing healthcare coverage to large companies like eBay and Restoration Hardware for the past five years, through a cloud-based integrated health benefits platform for self-insured employers.

“I would suggest they focus exactly on what we are already doing, which is build infrastructure that knits everything together,” Diab says. “It’s not stuff that people see. It’s all the infrastructure to ingest data from various sources, process claims, to make that data analyzable, to build machine learning and AI-based systems on top of it that help identify people that need care way before they might even know.”
JPMorgan Chase, Berkshire Hathaway and Amazon could potentially snap up smaller tech companies like Collective Health that are working on these types of solutions, as well.
“It would not surprise me to see them start to acquire some of the technology that makes their goals possible,” says Mendelson. “This team is very capable from a mergers and acquisitions standpoint. That’s not an accident.”

 

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