Amazon recently announced its intention to purchase the online pharmacy startup PillPack. This allows Amazon to jump into the health-care business with immediate access to a nationwide drug network. The deal, estimated at a purchase price of over $1 billion, is said to close by end of 2018.
The news has had a significant negative effect on stock prices of retail drug chains, and will continue to provide uncertainty in the market.
Meanwhile, CEO of the Amazon-Berkshire-JPM healthcare partnership, Dr. Atul Gawande, is becoming more visible and vocal with plans to target health care system middlemen. He shared that the plan is to target three kinds of waste: administrative costs, high prices and improper health care usage.
“We are screaming right now about pharmaceutical costs … and that is just 10 percent” of all U.S. health care spending,” Gawande reported at the recent annual meeting of American’s Health Insurance Plans. Surgery outpaces pharmaceutical costs as the single biggest health care expense, according to the doctor heading the fight to contain costs for Amazon, Berkshire Hathaway and JPMorgan Chase.
In addition, Gawande, who practices general and endocrine surgery at Brigham and Women’s Hospital in Boston, criticized end-of-life care for not taking into account patients’ wishes.
The selection of Gawande to head up the new health care venture launched in January has alerted investors to the potential for the venture to focus on the whole health care system, according to the report, instead of just cutting prescription drug costs as had been expected. The companies say they plan to use big-data analysis and other high-tech tools to improve care and cut waste.
As Gawande focuses on surgery rather than prescription drugs, he spoke at the meeting about how he has worked with hospitals to standardize procedures not just to cut costs but also to get better patient results.
In the report, he says, “We need to act through data tracking … to see when treatments are benefiting and when they are not.”
End-of-life care is something he says has room for improvement, noting, “People have priorities besides just living longer. We have to ask that, but we don’t ask. … The result is the care we provide is not in alignment with their priorities.”
He’s also concerned about any move to allow health plans to deny coverage based on preexisting conditions, according to the report. He said, “That is a disaster for any kind of health care. … Life is the accumulation of chronic illnesses.” He also says that high-deductible health plans tailored for catastrophic coverage lead patients to ignore chronic health needs — and that in itself drives up overall spending.