How Amazon’s Healthcare Venture 'Haven' Could Impact All Aspects of the Healthcare Industry
What are they building in there?
Ever since the announcement last year that three of America’s biggest companies — Amazon, Berkshire Hathaway and JPMorgan Chase — had united, Voltron-style, to fight for lower healthcare costs and forge “a better patient experience” for their combined 1.2 million employees, industry watchers have waited patiently for more details about what the healthcare hydra has planned.
For the most part, we’re still waiting.
Dubbed Haven, the alliance has since laid out some of its still-blurry vision. If you consider its leadership team (led by surgeon and best-selling writer Atul Gawande) and Amazon’s yearslong gesturing toward healthcare and previous comments by Berkshire Hathaway founder Warren Buffett, some clues come into focus.
“The health care problem is the No. 1 problem of America and of American business,” Buffett said in 2012. “It’s the tapeworm, essentially, of the American economy.”
Bezos posed an idea for a cure in 2016, saying that health care would be “one of those industries that is elevated and made better by machine learning and artificial intelligence.”
THE LONG LEAD-UP
Before we address the impact Haven will almost certainly have on the health sector at large, let’s examine how we got to this point.
Amazon’s healthcare dabbling stretches back to at least 2016. Teaming with Boston Children’s Hospital, it developed a then-groundbreaking Alexa feature that allowed the company’s AI-driven voice service to provide parents with basic health advice in response to questions about a child’s fever-like symptoms. Having recently become HIPPA-compliant, Alexa can now also be used to transmit private patient data for the purposes of monitoring prescriptions, booking appointments at nearby urgent care centers and other health-related tasks.
Additionally, in 2018 Amazon made major inroads into pharmacy services with its billion-dollar acquisition of PillPack. It also experimented with at-work clinics, piloting a health center at its Seattle headquarters, and dove deeper into patient data analysis via sophisticated natural language processing. And as part of its efforts to target the aging infirm, the company began offering Prime discounts to Medicare recipients.
Healthcare experts think it’s likely that all of those moves are prologue to Haven’s potential next steps.
Haven immediately made waves with its stated desire to tamp down healthcare costs for its employees and to eventually share its insights. Disruption seemed inevitable, at least to investors, and the stock prices of health insurance companies reflected that reality.
“Everybody, except providers who are still on the fee-for-service wagon, wants to reduce the cost of care and improve quality and outcomes,” said Allen Miller, CEO of Cope Health Solutions.
How exactly Haven will negotiate with payers remains unknown. (Haven couldn’t be reached for comment.) But experts say the goal is likely to direct patients toward doctors in a way that upends the common quantity-over-quality structure of healthcare that incentivizes doctors to see as many patients as possible.
The worst-case scenario for insurance companies would be if Haven successfully negotiates directly with health providers on behalf of its employer group — a tough task for any venture, even one of Haven’s stature.
“That would be pretty difficult, but not impossible,” said Will Hinde, head of West Monroe Partners’ healthcare and life sciences division. “They can certainly start in their HQ localities and begin that contracting process, set up a way to make that efficient, so it's not burdensome, which would take some of the administration out of it. That way you're eliminating claims, and you're eliminating a lot of the incentive for providers to have a fee-for-service approach.”
Veteran healthcare analyst Ana Gupte sees the direct-to-provider angle as an option, too — though a difficult one.
“Just the three large companies on their own, I'm not sure how much muscle they have around negotiating better rates,” Gupte said. “But just because it’s such a high profile venture, they may be able to get better unit pricing from providers or even swoop to value-based care.”
Indeed, it takes more than numbers to build networks; concentration is important, too. The more dispersed plan members are, the harder it is to create networks. Boeing, for instance, became one of the most successful examples of a large company going the direct-to-employer route, in part by leveraging its high population concentrations in Charleston, Seattle and other cities.
Many watchers have also wondered if Haven’s negotiating efforts would portend doom for pharmacy benefits managers (the profit-raking middlemen between insurers, pharmacies and drugmakers) from whom they broker discounts.
That fear is compounded by the fact that PBMs have increasingly been gobbled up by the insurance world.
“There's not too many independent big PBMs out there left,” Hinde said. “The insurance world in aggregate should be considered threatened by anything that comes along those lines. And certainly, yes, the PBMs.”
It’s an interpretation that clearly seems to jibe with Haven’s stated goal of making health costs more transparent.
The Amazon-owned PillPack could effectively sidestep PBMs by contracting directly with insurance companies. Analysts like Gupte, however, have cautioned against such readings. She suggests that Haven might build relationships with PBMs to take advantage of PBMs’ own relationships with providers and drug manufacturers. Haven could then explore ways to secure lower costs for generics and, potentially, some branded drugs.
“Building those relationships could reduce copays and deductibles and maybe wrap around some customized benefits-designed products,” she said. “That's one big pain point for employer-sponsored workers.”
Another way to drive down costs is by building more lower-cost care facilities like urgent care clinics and retail clinics. In that context, Amazon’s worksite care centers appear to be a pilot program of sorts.
“[It would be] somewhat competing with the CVS vision of the world, but not attached to a retail front store,” Gupte said.
JPMorgan Chase has also invested in on-site healthcare. The company has 54 “extensively visited” on-site health centers, “which are staffed with doctors, nurses, nurse practitioners and other health professionals,” CEO Jamie Dimon wrote in his most recent annual letter to shareholders. The centers see more than 600,000 visits per year, more than 100 of which involve potentially life-threatening issues, he wrote.
Such sites are gaining popularity among large employers, in part because they’re considered effective bulwarks against so-called presenteeism — the scourge of sick employees showing up for work. And they provide elevated care while tamping down costs.
Ashraf Shehata was senior director of healthcare practice at Cisco when the company opened a then-groundbreaking large-scale health center at its San Jose headquarters that includes clinics as well as recreational and wellness centers.
“They're fantastic,” Shehata said. “The one in San Jose prided itself on [the fact that] you would wait no longer than five minutes to be seen. And when you were seen, it was in a very elaborate place with electronic health records and data analytics. Very comfortable.”
The increased productivity justifies the investment.
“It’s been measured that it does reduce costs because you're keeping your members at places where quality measurements are high,” he said. “You're contracting with providers that are known to you in the organization. It’s a win-win.”
In a 2018 Mercer survey of employers with worksite medical clinics, 61 percent of respondents said they believed on-site clinics had successfully reduced costs, and 71 percent said they had improved employee health and wellness objectives. And if Haven can glean insights about how to best use worksite clinics, those findings will likely be valuable even for smaller companies that are joining the trend. A full third of the Mercer respondents with fewer than 5,000 employees run more than one on- or near-site clinic.
Gupte said Haven might also explore having patients travel to lower priced markets for expensive elective procedures as one option.
“Then you see whether that drives down healthcare costs while still delivering quality in an effective way that then maybe can be marketed beyond the three companies [that make up Haven],” she said.
Then there’s the long-rumored possibility of Haven opening pharmacies at stores in the Whole Foods chain, which Amazon bought in 2017. For what it’s worth, though, none of the experts Built In spoke with offered that as a likelihood.
DATA ANALYSIS and LOGISTICS
It’s not groundbreaking for a large company — or even a group of large companies — to self-insure and focus on reducing care costs. Indeed, most companies with more than 5,000 employees opt to self-insure, in part because it allows them to avoid individual state-based mandates.
But none has Amazon’s logistical strengths. The company notably parted ways with FedEx in August and continues to ramp up its complex delivery network: those ubiquitous delivery vans, plus cargo aircraft (which will eventually number 70, according to operations executive Dave Clark) and plans for drone delivery.
“Amazon is building its own delivery networks now across the country, and it’s just generally really good at delivering to people fast and cheap,” Miller said. “So are they going to use that as a way to differentiate themselves to members and networks?”
With its acquisition of PillPack, Amazon effectively became licensed to ship prescriptions in all 50 states. And as home medical services like dialysis continue to improve, Amazon’s logistics pipeline could better serve a growing medical device shipping industry, he added.
In a related though much darker twist, the company is facing political heat over how its shipping objectives have reportedly contributed to dangerous driving conditions and other abusive circumstances for contracted workers, among other issues.
For all the speculation about what Haven could and might be, there’s no question that one thing in particular will further set it apart: data. Haven has said data analysis will figure into the organization’s strategy, but it’s unclear how. Amazon’s Comprehend Medical division might provide some insight. The company’s natural language processing tool, it can comb through reams of health records and clinical trial results to pinpoint trends and outliers. (NLP has, for instance, helped researchers spot adverse drug reactions.) There’s also Textract. Another of the company’s machine learning text-extraction tools, it was extended to all Amazon Web Services users earlier this year. Companies like Healthfirst use both services to scan medical charts for missed diagnoses, measure reimbursement totals for patients and more.
Data analysis will of course drive how Haven steers patients toward lower-cost-better-outcome health professionals. Think: the ability “to choose providers in a community based on data and information,” said Shehata. In other words, “being able to direct and guide the transactions of healthcare to the best outcomes of cost and quality for the consumer.”
From there, you could potentially make a patient’s relevant personal health information available to that individual — “a portfolio of data,” Shehata calls it.
“It might be taking a history of their transactions,” he said. “It might be giving them the ability to store [their] information. It could be future data, like genomics data. It could be even information around health and wellness through wearables.”
Haven’s data projects will be run by Dana Gelb Safran, formerly of Blue Cross Blue Shield, where she analyzed a massive amount of statewide data to help design a notable value-based model called the Alternative Quality Contract.
“My suspicion is that they’re turning that [analysis] on their internal data right now and trying to prioritize where they could intervene and make an impact,” said Greg Maddrey, a Chartis Group director.
Of course, whenever talk turns to data and centralization, security and privacy concerns typically follow. Perhaps the most infamous recent data attacks — the Capital One breach — was allegedly staged by a former AWS employee against an AWS user.
“I think you should have concerns wherever your data is, and it’s unfortunate that as a consumer, you don't really have an understanding or bearing on that,” Hinde said.
An Amazon-affiliated company might inspire more confidence than the oft-breached legacy systems on which much of the healthcare system operates. Even so, Hinde said, “no matter where your data is, it’s vulnerable.”
KPMG’s Shehata views Haven’s leadership hirings as proof that it’s taking data concerns seriously. (The venture’s chief technology officer, Serkan Kutan, is the former CTO of appointment booking platform Zocdoc.) And the fact that cloud-based platforms like AWS are used by the most sensitive entities speaks to their trustworthiness, he said.
“AWS already is working very closely with the FedRAMP side, so they're building environments that are approved for federal use. That's encouraging.”
The outdated and propriety core healthcare systems that have yet to embrace cloud technology are the biggest challenge, he said.
“The organizations have to move with the technology. Haven is positioning itself with the latest cloud technology that is easily scalable, while having analytic tools to figure where to drive cost and quality,” Shehata said.
“Other health organizations may have to swallow some stranded costs tied to prior generation technologies by moving to cloud,” he added. “The opportunity to lower IT costs while improving analytics capabilities may make it worthwhile to move to a cloud platform to compete with Haven and other technologically sophisticated healthcare networks.”
ALEXA, DO I SOUND STUFFY?
Along with logistics, data and on-site clinics, conversational AI is another avenue by which Haven could make a serious impact on healthcare, experts say — no surprise given Amazon’s pioneering work in the field.
In some applications, voice still has a lot to learn. For example, what happens when you tell Siri or Google Assistant you can’t breathe? Nothing particularly reassuring, it turns out — at least according to this funny-scary Reddit thread that documents various virtual-assistant faceplant responses. Replies range from “Have a glass of water?” to a link to purchase Matt Taibbi’s book I Can’t Breathe.
The other end of the spectrum is more encouraging. Researchers at the University of Washington taught Alexa to listen for abnormal breathing patterns that often occur before or during heart attacks — and her ears were sharp, correctly spotting the warning sign 97 percent of the time. When capably harnessed, it seems, voice technology can have immense health implications.
Amazon, too, has been working on similar Alexa-based projects in-house. In 2018, the company was granted a patent for voice technology that allows Alexa to analyze vocal patterns for signs of colds, coughs, depression and other conditions. It can then potentially provide medicine recommendations or directions for symptom relief.
While other details are murky, most industry watchers Built In spoke with agreed that voice/AI will likely figure heavily into Haven’s efforts. That’s the main way it will differentiate itself from the Boeings and Intels — companies that have successfully driven down costs and improved outcomes for their employees by effectively sidestepping insurers, but haven’t disrupted healthcare in any significant way.
“I’m sure there are plans underway there that we don't know about,” Miller said. “But you can see the technology today doing some really cool home monitoring, ingesting that data and using it for risk scoring.”
And Alexa’s telemedicine-like applications continue to expand. The UK’s National Health Service made headlines even in America when it announced this summer that Alexa would give advice from the NHS website, rather than, say, parroting WebMD. But even as Alexa advances medically, Miller said, it won’t obviate the need for a network of health providers.
“You could theoretically give all your employees Alexa and connect it to a bunch of doctors and nurses on a warm line/information line, and that would cut down on some need to go to the doctor's office or the ER,” he said, “but not enough that you won’t still need a physical presence of providers who are either contracted with you are employed by you.”
Assuming Haven broadens Amazon’s provider relationships, there’s tremendous potential for expanding voice applications in hospitals and doctors’ offices. One day, perhaps, voice AI will essentially auto-populate electronic health records.
“In hospitals, on the inpatient side, there are keyboards, laptops and desktops that are moving around hallways with cords hanging out,” Shehata said. “The system is still very keyboard-centric, person-centric. And a lot of times you hire additional healthcare resources to type in what the doctors are saying. Imagine if we could move to voice analytics and dictation to essentially take the voice, turn into digital and then put it in the appropriate section of the chart. That could be a tremendous saver, and it could really improve quality.”
Amazon’s tech muscle will allow Haven to explore providing a streamlined host for the various digital health functions that populate our lives, a “digital front door for healthcare,” as Gupte calls it. She points to the plethora of Livongo-like apps, numerous but essentially siloed from one another. The market appears ripe for an interface that allows patients to bring together their medical data, their digital healthcare tools, doctor booking capabilities — as much as possible under one umbrella.
“Digitally, they could develop an easy-to-navigate front door across all the multiple technology-enabled point solutions that are picking up,” she said.
OTHER TEAM-UP SPIRIT
Haven isn’t the only Big Tech-affiliated entity to explore the healthcare sector. So far, though, tech’s track record ranges from false starts to flameouts, especially when it comes to consumer-facing efforts. Google Health was shuttered in 2011 after only about three years of operation, and Microsoft nixed its own personal health tracking system, HealthVault, earlier this year. That said, Apple — which made a big health splash in 2018 with Apple Health Records and Apple Watch ECG — appears well-positioned to succeed, according to some analysis.
But a better comparison might be the Healthcare Transformation Alliance. A cooperative that dwarfs even Haven in size, it includes more than 50 large companies representing more than 7 million employees. And the alliance has already secured significant healthcare savings for its employees: at least $400 million over the last four years, Yahoo reported.
Not surprisingly, data is also key to Healthcare Transformation Alliance’s approach. Through its affiliate IBM, the company uses IBM’s Watson supercomputer to analyze data from its massive collective employee pool and gauge the quality and cost of providers. The venture also partners with AI-centric startup Welltok, which helps guide employers toward options that make the most sense. Another Healthcare Transformation Alliance member is Haven’s own JP Morgan Chase — more evidence that CEO Dimon has been pondering this healthcare angle for some time.
Even so, the alliance has only a fraction of Haven’s by-land-or-by-air logistical brawn. Along with so much warehousing and shipping might, Amazon also provides Haven access to trailblazing conversational AI, plus insights as an on-site-health early adopter, plus a window into the prescription drug market. And, yes, it gets some strength-in-numbers leverage to help wrangle costs. But it’s the nexus of tech, data and delivery that could shift the healthcare axis most.
“The differentiator,” Miller said, “is the Amazon capability.”
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