Clinical OMICS

MAY-JUN 2018

Healthcare magazine for research scientists, labs, pathologists, hospitals, cancer centers, physicians and biopharma companies providing news articles, expert interviews and videos about molecular diagnostics in precision medicine

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www.clinicalomics.com May/June 2018 Clinical OMICs 11 I n late January, the healthcare and tech industries were rocked by an announcement that Amazon, JP Morgan Chase (JPM), and Berkshire Hathaway (BH) were joining forces to take on healthcare. They aren't the first to tackle healthcare, but their combined acumen and unique market positions make this alliance differ- ent. No plans detailing how they will accomplish this have been published, but this alliance has the potential to succeed where others have failed—if they focus on what they (and their companies) know how to do best. Regulation One of the biggest barriers in the healthcare industry is the amount of regulation, making it difficult for new, non-healthcare–specific players to enter the industry. Yet, banking and insurance are tightly-regulated and have learned how to navigate complex rules, even when they dif- fer significantly globally. Both indus- tries have been utterly transformed by technology. Online banking and access to accounts through ATMs and smartphones is nearly ubiquitous and interoperability is standard. Insurers have similarly embraced technology. Understanding how the banking and insurance industries navigated regulation while embracing transfor- mative technology and data analytics will be invaluable for the new com- pany. Security will be of paramount concern and the banking industry has taken the lead on using blockchain for this purpose. Lessons learned by JPM and BH's insurance subsidiaries can be leveraged for healthcare. Consumer Experience Amazon has utterly transformed the way consumers purchase everything from books to home goods, and devel- oped an overall positive user experi- ence along the way. The company has successfully developed a method for easy price and feature comparisons, driven down prices, and created an efficient logistics system. Their user experience is so good that recent sur- veys found consumers open to Ama- zon health insurance plans and an Amazon-like experience for health benefits enrollment. Amazon's back- ground developing the optimal con- sumer experience will be essential for the new venture. Business Acumen Warren Buffett's business acumen and management of BH has been well-doc- umented throughout the years and Buffett has demonstrated that he's not adverse to technology, investing in tech companies like Apple and IBM. Jeff Bezos' business skills have led some to call him "the smartest guy in business." Though some of Amazon's initiatives have fallen flat with con- sumers, the company's market value is ranked third globally. Buffett's steady, conservative approach will be valuable for the new company as it seeks to separate hype from capabil- ities in healthcare technology, while Bezos' daring, even at the cost of fail- ing, can keep the new company on the cutting edge. Technology The three companies have seen tech- nology transform their industries over the decades. As healthcare increas- ingly relies on Big Data and analytics, Amazon's tools, data, and expertise in cloud computing will come in handy to predict what and when consumers will buy products. This isn't that dif- ferent from what health systems are looking to do for their patient popu- lations: identify patients who will uti- lize specific resources and determine a more efficient and less costly mech- anism for them to do that. While the three have been criticized for jumping into healthcare without any experience in the industry, their technological prowess could level the playing field. Is the Industry Ready for a New Model? The Amazon-JPM-BH initiative has been met with both optimism and skepticism that the trio could produce meaningful change within the indus- try. But a change is on the horizon. The might of the three companies alone set them apart from earlier approaches. So is the timing. As the future of healthcare will rely increasingly on digital tools and analytics, there is plenty of room for new ways to do nearly everything in healthcare. Con- sequently, there is substantial interest in seeing how the new company will use technology and data to its advan- tage in this landscape. Harry Glorikian is a general partner with venture capital firm New Venture Funds. OP-ED Harry Glorikian General Partner New Ventures Funds Why Amazon, JPM, and Berkshire Hathaway Can Succeed with Healthcare

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