Amazon, Berkshire Hathaway along with JPMorgan Chase plan to cut health costs

Experts noted that will one way employers have tried to address their health costs can be by narrowing networks of medical providers covered by insurance plans, limiting which doctors, hospitals along with labs patients can go to for care without paying significantly more out of pocket.

This particular completely new partnership could possibly create a completely new care network that will steers people away via expensive sites of care when that will’s unnecessary, said Tim Van Biesen, a partner in Bain & Company’s health-care practice.

One possibility can be Amazon creating a platform that will can direct patients to lower-cost options such as telemedicine or walk-in retail clinics. yet whether that will along with various other hypothetical steps taken by the three companies will result in markedly lower overall costs can be still unknown.

Also, the trio can be not the first group of outsiders to try to disrupt the health-care space.

“This particular industry has seen some big companies try along with change along with exit as quickly as they came in,” said Vaughn Kauffman, U.S. health services along with completely new entrants advisory leader at PwC.

The completely new joint venture “could be disruptive” along with put competitive pressure on pharmacy giants CVS along with Walgreens along with pharmacy benefit managers, said Mickey Chadha, a vice president at Moody’s. yet he added that will the regulatory burden around every aspect of health care puts “any completely new entrant inside space at a huge disadvantage, along with companies like CVS, Walgreens, United Healthcare, Aetna along with Express Scripts already have large scale, which allows for better vendor along with drug supplier received a contracting along with the ability to serve national clients.”

Experts have anticipated more deals along with vertical integration inside wake of CVS announcing its intention to buy Aetna. that will deal “can be even more compelling as a more coordinated approach to medical care can be necessary to lower the overall health-care costs for consumers,” Chadha said.

yet Craig Garthwaite, director of the health enterprise management program at Northwestern University’s Kellogg School of Management, said the thin amount of detail inside press Discharge announcing the companies’ venture does not give much reason to believe that will will result in radical change in health costs.

“While we don’t know their business plan, there’s not a lot of optimism their press Discharge generates given that will’s just retreading a lot of buzzwords given by people who don’t truly think about how to lower costs along with improve quality of health-care,” Garthwaite said.

Gary Claxton, vice president of the Kaiser Family Foundation, said the biggest driver of health costs can be the money spent on sick along with very sick people.

“that will’s not clear what private payers can do” to drive down those costs, Claxton said, referring to insurance plans such as those offered by Amazon, Berkshire Hathaway, J.P. Morgan Chase along with various other businesses, as opposed to large publicly provided health coverage systems such as Medicare along with Medicaid.

Claxton said that will once a patient can be undergoing treatment for their condition, costs can quickly pile up without the patient themselves having the time or the inclination to shop around for a better cost, particularly when their health plan can be picking much of the cost.

“If you’re in cancer treatment or your kid’s in cancer treatment, are you looking to save the next marginal dollar?” Claxton asked. “No.”

The relatively high cost of the American health-care system — which can be much higher than that will in various other wealthy countries — makes that will an attractive target for companies that will believe they can save money by finding efficiencies along with doing business differently than that will has been done inside past, said Claxton.

There have been prior initiatives by non-health-care companies to band together regionally to try to lower their combined health costs. Some have had “modest success,” at best, Claxton said. However, none of them lowered their costs so dramatically that will their type was adopted on a broad scale.

A completely new entrant trying to disrupt health-care costs faces a system that will has already seen large-scale consolidation across different subsectors of the industry — including insurers, hospitals along with drug companies — that will will make squeezing out extra dollars in savings more difficult, Claxton said. along with inside areas where big savings might be possible, there can be often a reluctance to take the steps necessary to achieve those savings.

“We’re not inside business of saying, ‘We don’t want completely new drugs developed,'” Claxton said.

He also cited the case of one CEO he had heard of who was told his company’s health plan could save $1 million annually by cutting out a local hospital via the network of providers covered by the plan.

Despite the fact that will the area where the company was located did not lack for various other hospitals, Claxton said, the CEO rejected the idea out of hand.

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