Dr. Atul Gawande is hitting the road.
In one of his first actions as a CEO, Gawande is planning to travel across the country to meet with the employees he will serve through the health care venture being formed by Amazon (AMZN), JPMorgan Chase, and Berkshire Hathaway.
Gawande intends to hold one-on-one meetings with a variety of employees who work for the sprawling companies, with the goal of understanding the breadth of their needs and the challenges they face in getting care, according to a person familiar with the plan. The expedition is set to take place in coming weeks and will be done without the involvement of the high-profile leaders of the three companies: Jeff Bezos, Jamie Dimon, and Warren Buffett.
The listening tour will put Gawande face to face with the enormity of his task: lowering costs and improving care for 1.2 million people whose incomes and health struggles are as diverse as their geography. The group includes fulfillment center workers and bank tellers, software engineers and store clerks. Berkshire Hathaway owns companies ranging from Duracell to GEICO to Acme Brick, with a workforce spread through factories, office towers, and shopping malls in rural and urban areas nationwide.
“Is Amazon’s goal to make the office workers healthier in Seattle or the warehouse workers healthier around the country?” said Dr. Kevin Schulman, a professor at Stanford’s medical and business schools. “Those are very different sets of challenges. Depending on where the warehouses are, there could be problems with access to health care. There could be problems with the quality of care available near some of these regional centers.”
The employees will have varying health care issues and may respond differently to solutions meant to manage chronic illnesses or prevent those illnesses from taking root in the first place. A crucial task for Gawande will be gaining the trust of employees, especially in an era of high-deductible insurance when much of the conversation is focused on cutting costs.
“Atul Gawande writes really nice things about health care, but do most Americans trust Atul Gawande?” asked Mark Schlesinger, a professor of health policy at Yale University. “No. He’s a person. They think, ‘Oh this guy’s working for the company, do I trust that he personally will have my self-interest in hand?’”
Gawande’s sessions with employees are just the first step in setting priorities for the new health venture, which is still a mystery on many fronts. It does not yet have a name or an office, and its organizational structure remains unclear.
Bezos, Dimon, and Buffett have said only that the company will operate free of profit-making incentives and constraints. While they will provide the funding for its work, it is unclear what goals they have set beyond lowering the costs of care, and potentially spinning off models to do the same for employers and other purchasers nationwide.
Gawande has emphasized that the company will operate independently and that money from its operations will not flow to the companies. It remains to be seen what lines of accountability will run between the organizations, and how frequently the health venture’s performance will be reviewed.
“I think what will happen is that he and his team will come up with a business plan, and then the sponsors will say, ‘We like that,’ and they’ll monitor it quarter-by-quarter,” said Schulman. “At some level, it’s going to be a startup, and then they’ll have to decide whether the strategy is effective and whether the team is effective in terms of executing.”
Their status as self-insured employers gives Gawande latitude to experiment broadly with the delivery of care and the contractual arrangements that underlie it. Several industry specialists said the new venture can make the greatest difference by rooting out excess costs and complexity created by the numerous parties in the health care supply chain.
Pharmacy benefit managers, consultants, and other parties extract billions of dollars in payments for facilitating services and sometimes embed perverse incentives that result in the delivery of unnecessary care or overpriced medicines.
“The secret of Amazon [outside health care] is that there are no middlemen,” said JB Silvers, a professor of health care finance at Case Western Reserve University’s Weatherhead School of Management. “They basically buy from a manufacturer and don’t pay anybody else, except maybe the postal service on the last mile. All the people in the middle get consolidated away.”
Silvers said Gawande can leverage his insider’s knowledge to accomplish the same feat for Amazon and its partners in health care. In addition to eliminating or re-negotiating terms with middlemen, he might also be able to cut better deals with providers on specific health care procedures and services.
“Nobody’s going to pull the wool over his eyes,” Silvers said. “He understands how physicians make decisions. So he has the ability to go in and say, ‘Cut the bull. I know how this really gets done.’”
But will he be able to achieve systemic change with broader significance to people and companies outside these three employers?
Niyum Gandhi, chief population health officer at Mount Sinai Health System in New York City, said that might be possible if, over a longer time period, the new company uses assets such as PillPack, the online pharmacy Amazon is buying, to reinvent whole segments of the supply chain.
“Are they going to stitch those sorts of assets together to deploy something unique that won’t blunt trends in year one or two or three, but it may actually build a replacement system?” Gandhi asked.
He added: “I wouldn’t put it past them to launch an AI-enabled digital primary care solution, and test it on all their employees first before they go broadly to market. I mean, if anybody could do it, it would be them. But they’re going to have to do things that are at national scale, which there just aren’t quick wins on.”
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