Published: 02/27/2018 | Author: Erica Jacobovits, JD
It is almost a truism that the health care system in the United States is one of the largest challenges currently facing our nation. It would seem that quality, affordability, and innovation present inherent tradeoffs – increasing one inextricably reduces the other, and it is thus difficult to implement lasting policy changes due to the demand for all three and the ostensibly irreconcilable nature surrounding these laudable goals. This observation is particularly true in the current health care climate, where our system is slowly pushing towards a shift rewarding value of care and cost-saving measures, with manifested efforts including accountable care organizations (ACOs) and the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA).Nevertheless, like any valiant effort, the battle to implement change may feel upstream in a culture reticent to change as all major players, including both government and commercial payors, are notoriously slow-acting. However, three new players have now entered the marketplace in a coordinated effort to expedite healthcare reform: innovative corporate giants Amazon, Berkshire Hathaway, and JPMorgan Chase. Announced by JPMorgan Chase in Business Wire, the “partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs”1 with the resulting “independent company [which] is free from profit-making incentives and constraints.”
While no concrete details have emerged detailing how the company will operate, the collective effort will likely shakeup the healthcare marketplace. With the focus of the new company on improving health care delivery and results, and not on the cost of such efforts—a problem that intrinsically plagues the industry—there is a real opportunity for the company to find success in avenues such as developing innovative treatments2 and eventually working to lower costs by moving towards efforts to “decommercialize the health insurance system”3. Should these efforts prove successful, they would likely direct the movement related to the reimbursement practices exercised by major payors. However, there are those who have cast doubts on the new company affecting payor trends and practices, with the New York Times quoting experts in the field who question whether the company would be successful in negotiating lower prices from hospitals and doctors.4 Despite the challenges, the founders exude a realistic confidence which is a testament to the arduous task ahead of them, with Amazon founder Jeff Bezos proclaiming, “[h]ard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”5
As the newly formed healthcare company begins its efforts to reform healthcare delivery, any impact on the overall healthcare industry, particularly in terms of reimbursement trends and payor attitudes, remain uncertain. When determining the FMV of compensation under professional services arrangements, healthcare operators must stay abreast of the potential change in reimbursement trends.
1 Amazon, Berkshire Hathaway and JPMorgan Chase & Co. to partner on US. Employee healthcare (January 30, 2018), https://www.businesswire.com/news/home/20180130005676/en/Amazon-Berkshire-Hathaway-JPMorgan-Chase-partner-U.S.
2 “Innovators in healthcare have to worry about revenues and reimbursement, usually from insurance. With deep pockets and the potential to recoup cost through savings, Amazon has great flexibility to experiment without such concerns.” Chunka Mui, Here’s How Amazon Could Disrupt Healthcare (Part 3) (February 7, 2018), https://www.forbes.com/sites/chunkamui/2018/02/07/heres-how-amazon-could-disrupt-healthcare-part-3/#24e059373915.
3 “[T]his new health care company will pursue technology solutions to provide health care and lower costs. . . . [t]he way to fix health care . . . is to decommercialize the health insurance system.” Richard Master, Amazon’s health care experiment shows exactly why we need healthcare for All (February 7, 2018), https://www.usatoday.com/story/opinion/2018/02/07/amazon-health-care-experiment-shows-why-we-need-medicare-all-richard-master-column/309251002/.
4 Quoting Sam Glock of the management consulting firm Oliver Wyman. Nick Wingfield, et al., Amazon Berkshire Hathaway and JPMorgan Team Up to Try and Disrupt Health Care (January 31, 2018), https://www.nytimes.com/2018/01/30/technology/amazon-berkshire-hathaway-jpmorgan-health-care.html.
5 See footnote one.