AmazonCare – The New Solution?


Amazon delivers packages. Can it deliver better healthcare?

The stock market believes they can. The market responded to the announcement that Amazon, J.P. Morgan Chase, and Berkshire Hathaway would enter the healthcare insurance business by selling off healthcare stocks.

But just because Jeff Bezos, Jamie Dimon, and Warren Buffet want to work together to lower healthcare insurance costs, doesn’t mean they will solve the complex system of healthcare delivery. Many others have tried before.

Robert Laszewski, insurance industry analyst, recalls similar efforts in the early 1990s by leading employers in the Minneapolis-St. Paul market. That effort failed and he believes this one will, too.

To put this into perspective, Amazon, J.P. Morgan Chase and Berkshire Hathaway employ a little over one million people. That’s a lot of employees, but it’s only about the same number of covered lives as Blue Cross Blue Shield covers in Rhode Island and Delaware. Laszewski doesn’t see this as enough to make a real impact.

These industry titans believe they can change the status quo through improved data. No doubt they have used data effectively in their businesses. But Laszewski says by comparison, UnitedHealth, through its Optum data technology subsidiary, has detailed health care utilization information on over 115 million consumers, four out of five hospitals, 67,000 pharmacies, 100,000 physician practices, 300 health plans, and government agencies in 34 states and D.C.

Here is Laszewski’s prediction: “After a few years of high profile press releases and trade association presentations this one will end up in exactly the same place all of the others have. Nowhere.”

The Wall Street Journal editorial board seems to be in agreement. “The new creation will represent hundreds of thousands of employees, which sounds like a lot but isn’t enough scale to change U.S. health care, and the question is how transformative this enterprise will aim to be, A brick wall of interest groups – hospitals, insurers, the AMA – will resist any change and make Uber’s fights with taxi cartels look like minor league ball.”

The press release says the group will form an “independent company that is free from profit-making incentives and constraints.” But WSJ says the problem isn’t profit. In fact, profit often is the incentive that drives innovations and cures for diseases. The fundamental problem is that the cost of a service is disconnected from underlying value. Patients don’t know the price of services and consume health care as if it’s free since government or employers are the third-party payers for most Americans.

Further evidence that profit isn’t the problem comes from looking at government-financed healthcare. The government doesn’t care about profit – and that’s part of the problem. They have no difficulty spending the taxpayer’s money – and still they can’t deliver quality healthcare!

Quality healthcare that doesn’t waste money will only come when healthcare spending is tied to the consumer’s pocketbook. When choosing the way you spend your healthcare dollars is just as much a part of your budget as what you spend on groceries, then we will see the cost of healthcare go down and the quality go up. Competition for those dollars will lower the cost of healthcare treatment and raise the quality – because that’s what competition does in every other business.


Canadian Healthcare Failing Canadians – Part II


In Part I of this series on Canadian healthcare, we learned that waiting times for treatment by a specialist are getting worse. In Part II we will see how one doctor is trying to make things better – with little success.

Dr. Brian Day is an orthopedic surgeon, like myself, and he opened the Cambie Surgery Centre in 1996 with a simple goal: provide timely, state-of-the art medical care to Canadians who were unwilling to wait months – even years – for surgery they needed. Sally Pipes, writing in The Wall Street Journal, says his efforts have met such resistance from the government he has challenged them before the provincial Supreme Court.

Canada’s single-payer healthcare system is known as Medicare. It is notoriously slow with average waiting times from referral to a specialist to treatment now at 21.2 weeks. Private clinics like the one operated by Dr. Day are willing to see these patients sooner, but the government is prohibiting them from charging patients for operations that public hospitals would provide free – if they wait.

Private clinics like Cambie initially sprang up to treat members of the armed forces, Royal Canadian Mounted Police officers, and those covered by worker’s compensation claims. These and other protected classes are exempt from the single-payer system.

Pipes says the waiting times are actually worse than the numbers publically stated. The official clock starts only when a surgeon books the patient, not when a general practitioner makes the referral. That adds months and sometimes much longer.

Many people would gladly pay out of their own pockets to receive treatment sooner. But Canadian law bans private coverage for “medically necessary care” which the public system provides and effectively forbids the private clinics from charging patients directly for such services. Doctors who try to beat the system by accepting such payments can be disqualified from the single-payer system.

Ironically, the government itself has paid private doctors outside the system at times when the demands on the system have been considered unacceptable. Yet the government refuses to allow private citizens to use their own money to do the same.

Dr. Day claims the government has long tacitly approved of patients paying private clinics on their own. Politicians, both conservative and liberal, have privately praised his work while publically defending the single-payer system. Currently, private clinics perform more than 60,000 operations a year, saving the public treasury about $240 million.

The pending suit before the Supreme Court could greatly alter the healthcare system in Canada if Dr. Day prevails. Let us hope that we in America will never have to go to the Supreme Court just to be able to see a private physician even with our own money!