Amazon Transformed Retail. Can It Transform Health Care Too?
Online retail giant announces new health care partnership with Berkshire Hathaway and J.P. Morgan-Chase.
As I read the news this morning that Amazon, Berkshire Hathaway, and J.P. Morgan-Chase were launching a health care venture aimed at reducing costs for their employees, I couldn't help but think of my recent Amazon order history.
Since the start of 2018, my household has ordered the following items from Amazon: a jar of truffle honey, a dough hook attachment for a Kitchenaid stand mixer, a 34 pound bag of "weight management" formula dog food, two packs of stainless steel drinking straws, a cast-iron commercial citrus juicer, two men's t-shirts, a wallet, a 12-pack of paper towels, a warm winter beanie, two pairs of earbuds, a copy of the video game Wasteland 2, and nearly a dozen books, mostly novels, including the entire Wrinkle in Time quintet in a box set.
This is a pretty weird, eclectic list, even to me, and I bought most of the stuff. Yet it's also fairly typical for any given month at my home. And it's suggestive of both the strange sort of bounty that the online store offers—a bounty that many of us now effectively take for granted—and our near-comprehensive reliance on it for practically every category of purchase.
We don't actually buy everything from Amazon. But sometimes it feels like we do. Or at the very least, like we could.
And all of these items were, of course, delivered directly to my doorstep. Some of them—the dog food, the paper towels—I didn't even have to order, because Amazon delivers them on a schedule, as part of a subscription. Regular trips around town to purchase basics were a fixture of the first twenty five years or so of my life. But over the last decade or so, I have all but given up on the idea of commerce as an exchange, located in a particular place, that requires me to venture out of my house. When I do go to stores now — there are a few local record shops that I like to browse — it's almost always as a leisure activity rather than a necessity. This is almost entirely the result of years of increasing reliance on Amazon. It has ingrained in me the idea that stores as I used to think of them are simply unnecessary.
There are other ways that Amazon has infiltrated and altered my daily life as well: The Echo, a tube-shaped digital assistant with a speaker, makes a great music player for the kitchen, since you control it with your voice. Amazon's in-house streaming video service is competitive with Netflix (and, importantly, unlike Netflix, it has every episode of Batman: The Animated Series). On occasion, I've used Amazon to order dinner from local restaurants.
Amazon has limitations, of course. Its deliveries are sometimes delayed or lost. Its recommendation technology doesn't always work. This morning, for example, it tried to recommend a set of cat-face measuring cups. I don't like cats, and I have plenty of measuring tools already. But it has a consistent track record of making my life more pleasant and more convenient, of making irritating transactions easier and less irritating.
My point with all this is not merely to ruminate on how much Amazon has changed the way I and millions of others go about doing all sorts of everyday tasks for the better, though of course it has.
Instead, it is to highlight how thoroughly Amazon has transformed my conception of what it means to interact with the retail economy, and my expectations about how buying almost anything should work. It is not just a better experience than I had twenty years ago, but a fundamentally different one—and one that I wouldn't have expected or predicted.
So of course when Amazon announces that it will be entering the health care sector along with two other wealthy corporations, I'm more than a little bit interested. I'm interested even though there are, so far, scant details about what the venture will do, or what it is. There's no specific business plan being discussed or particular technology being deployed. It's not clear if the intent is to start something like an insurer, or a provider billing group, or a network of new care centers, or something else entirely.
"The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty," Amazon founder Jeff Bezos said in a statement. "Hard as it might be, reducing health care's burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner's mind, and a long-term orientation."
My guess is that even Bezos and his partners don't know precisely what they're creating yet. Today's announcement represents a commitment of financial and human resources, in hopes of building something worthwhile in the long run.
As Bezos says, this won't be easy. Even still, I wonder if he understands just how difficult a project like this is likely to be. Tech companies have chased health care business for nearly long as the tech industry has existed, yet few have succeeded. Purchasing agreements between large employers have been tried before. Delivering affordable, high-quality health care is in part a business problem involving the application of money, systems management, and technology. But it's also a legal challenge that involves dealing with a web of regulations, as well complex individual human behaviors that can be maddeningly difficult to understand or influence. Pricing in health care is frustratingly opaque, due in large but not exclusive part to the influence of government payment systems. Without clear market price signals, it can be difficult to find efficiencies or savings.
Adding to the difficulty is that in health care, the consequences for failure can be much higher than in, say, online shoe and book delivery, which leads to both higher costs and a lower overall tolerance for risk. At a minimum, health care is perceived as categorically different from other sectors of the economy, and allowing for that perception will be necessary for any project to succeed.
All the same, I'm intrigued and even cautiously hopeful, because many of the problems with health care are problems with the way it is provided now, with the legacy systems and cost structures and rules and regulations that have grown up over decades. Too often we think of health care as essentially a government project, with expansions and innovations coming from regulations and tax incentives, which is fair, in some sense, given government's influence over the financing and delivery of care.
What the U.S. health care system needs most is not to do the same thing it's doing now, just a little better or more efficiently, with government at the center. It needs a systematic transformation in both form and expectations, one that, over time, we can simply take for granted. And while I recognize that whatever it is that Amazon and its partners are attempting will be difficult, and that it might just end in whatever the health care equivalent of a cat-face measuring-spoon recommendation is, my hope is that this new venture can serve as a test bed for that sort of change.