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Michael Cropp: Joint health care venture is a wake-up call for the industry that could rapidly accelerate innovation, technology

By Michael W. Cropp

Some industry observers are calling the recently announced partnership between Amazon, Berkshire Hathaway and JPMorgan Chase a potential “tipping point” in American health care delivery. We see it more as a wake-up call for a fragmented health care system that continues to underperform, yet accounts for 18 percent of the gross domestic product.

Although specific actions the companies might take are not yet known (a news release announcing the partnership said, “Our group does not come to this problem with answers”) and despite a lack of health care expertise, when three successful behemoths totaling a combined $501 billion in revenue and nearly 1.2 million employees join forces, it’s time to take notice. The fact these three companies have to turn a profit for shareholders is an indication of their confidence in removing waste from the health care system through this type of venture.

Is this alliance a threat to health plans and a possible disruption to the existing marketplace? Perhaps. But it also represents a healthy dose of competition. If successful, it could significantly accelerate innovation and technology in an industry that has traditionally moved slowly in adapting to change, including such areas as electronic medical records, claims processing and telemedicine.

U.S. health care spending continues to increase at an unsustainable rate. The cost of care for a typical American family of four covered by an employer-sponsored health plan in 2017 was $26,994, according to the Milliman Medical Index. If the cost of health care continues to grow at the historical 6 percent growth rate, that number will increase to $47,500 by the year 2025.

Berkshire Hathaway Chairman and CEO Warren Buffett called health care costs “a hungry tapeworm on the American economy,” saying the three organizations are teaming up to create a new, independent company with the goal of providing high-quality care for their U.S. employees at a lower cost.

Amazon founder and CEO Jeff Bezos added, “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.”

The ability to control health care costs remains one of the most important determinants of economic success for our nation and communities across the United States as well as for individual businesses. Health care can serve as an economic driver for an entire region, attracting new business and enabling employers to add more jobs because they are spending less on benefits and medical care. Those communities that get it “right” will have a leg up on other regions of the country.

It is therefore imperative we get health care costs under control and get the growth rate more in line with the consumer price index. To accomplish this, we must take costs out of the system and eliminate actions that don’t add value.

A major step in the right direction is the movement from a volume-based, fee-for-service model of care that drives the unnecessary overutilization of office visits, tests, treatments and procedures to a value-based system that rewards quality and safe, appropriate, effective care.

That movement is already happening in Western New York as Independent Health and some forward-thinking, high-performing physician practices here are on the leading edge of moving to the value-based model. More than 90 percent of our members are now aligned with a primary care physician (PCP) who is in a value-based agreement with Independent Health.

Our company’s long history of partnering with physicians includes the establishment of the Primary Connection, an alliance of nearly 200 visionary PCPs from 33 practices treating approximately 200,000 Independent Health members. A key aim of the Primary Connection is to coordinate care with the most qualified specialists and hospitals who share a similar vision of patient-centered, quality, cost-effective care.

This coordination has fostered more effective, closer working relationships between primary care physicians and key specialists who provide a high volume of critical services to our members.

A significant result of this collaboration is reflected by:

• A cost reduction in one specialty area from double digit increases annually to a 3.5 percent aggregate cost decrease.

• Less variation of care and closer adherence to evidence-based medicine (better quality).

• Improved patient satisfaction.

Serious strides are being made in the way urology care is delivered for better, lower-cost outcomes. We have teamed up with Western New York Urology Associates/Cancer Care of Western New York to develop a value-based reimbursement program that is improving the quality of care and treatment that patients with prostate cancer receive, while lowering overall medical costs and reducing unnecessary services.

Building upon the success we are achieving through partnerships with primary care physicians and specialists, we need to take this progress to the next level by providing health care consumers with resources to make more informed health care decisions, while addressing the administrative and scheduling headaches they too often face.

Technology is a major strength that Amazon, Berkshire Hathaway and JPMorgan Chase could bring to the table. Based on their retail history – particularly Amazon – they may be able to make health care more convenient through the use of advanced technology to improve access and provide consumers with greater transparency to high-quality providers for a patient’s particular illness burden or health care needs.

For example, a New York Times article reported the proposed partnership could include an “online dashboard that connects employees with the closest and best doctor specializing in whatever ailment they select.”

The Harvard Business Review reports Amazon’s involvement could significantly advance the use of electronic medical records and the integration of data analytics linking a patient’s medical record, genetic information, lab results and behavioral or lifestyle patterns.

At Independent Health, we are working to create a dynamic health care system that aligns with high-performing providers and helps members make the best decisions on their health. While it is still uncertain where this Amazon, Berkshire Hathaway, JP Morgan Chase alliance might go, one thing is certain – the entire health care industry has been put on alert to pick up the pace in transforming our health care system. It’s no longer a marathon, but rather a series of sprints.

Michael W. Cropp, M.D., is president and CEO of Independent Health and a board-certified family physician.
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