Earlier this year, Amazon founder Jeff Bezos, billionaire investor Warren Buffett, and JP Morgan Chase CEO Jamie Dimon announced they were teaming to create their own health care company.
Their aim: To provide quality care to their companies’ United States employees in at a more “reasonable” cost than the country’s current, inefficient health insurance system, which Buffet described as a “hungry tapeworm on the American economy.” The news roiled the health care industry.
“We share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes,” the Berkshire Hathaway CEO said in a January announcement.
Six months later, the mysterious new venture still has no name nor a clearly defined strategy. But it does have a leader and a home.
Dr. Atul Gawande, the renowned Brigham and Women’s Hospital surgeon, author, and New Yorker writer, was announced this week as the CEO-backed company’s own CEO. The announcement also revealed that the company will be based in Boston.
The reaction was swift. Here’s what experts are saying about Gawande, Boston, and the company’s aspirations in the wake of last week’s news.
Though a celebrity in his field, Gawande was a surprising and perhaps “unconventional” pick. While he has done revealing, influential work within the health care industry, he also has no experience at the helm of a company.
But is that necessarily a bad thing?
Dr. Elliott Fisher, director of the Dartmouth Institute for Health Care Policy and Clinical Practice, to The Boston Globe:
“US health care obviously needs a heart transplant. Who better than a surgeon, with deeper knowledge of US health care than anyone I know, to guide this effort?”
Larry Levitt, senior vice president of the Kaiser Family Foundation, on Twitter:
The interesting thing about the choice of @Atul_Gawande for the Amazon/Berkshire/JPM effort is that his focus has been on policy, communication, and medical practice, not business. That would seem to present some potential unpredictable directions for the new organization.
Dylan Byers, senior business and technology reporter for CNN:
“This is about as marquee a hire as you can make in healthcare. Gawande is as prominent in health policy as he is in health journalism, thanks in part to a 2009 New Yorker article on soaring healthcare costs. But he has no experience running a company.”
Paul Keckley, independent health care policy analyst, to Bloomberg:
“His work has largely been focused on quality and safety.
That looks to be a selection with marquee value, but the promise that Amazon, JPMorgan, and Berkshire made is to be a disruptive force in the industry that would reengineer it toward more value and lower cost. You imagine that Atul will be a very effective spokesperson, but they’re going to have to bring in a pretty strong team under him.”
Felix Salmon, business writer for Slate:
Gawande is an unconventional choice for CEO. He has no experience running a big business, and that’s good: ABC didn’t want a typical corporate CEO, because ABC is not a typical corporation. It wanted a leader with a deep understanding of the health care industry, and it wanted someone who has the respect of the entire profession. It’s succeeded on both counts.
Gawande has made it his life’s mission to improve people’s health while keeping costs low, and he deserves an enormous amount of credit for being able to successfully navigate the notorious internal politics of two different Boston institutions in order to achieve that outcome at Ariadne [a joint health initiative launched by Brigham’s and Harvard]. Clearly, he’s more than capable of managing up, even when he has multiple bosses who work for entirely separate institutions.
Don Berwick, former administrator of the Centers for Medicare and Medicaid Services, to WBUR:
“Atul has a strong track record in implementation and management. He masterminded a project on safe surgery that affected almost every hospital in South Carolina. He has the executive competence to do this job, I’m fully confident.”
Vivek Murthy, former U.S. surgeon general, on Twitter:
The choice of @Atul_Gawande to lead the Amazon-Berkshire-JP Morgan initiative is simply brilliant. There are few health care leaders more skilled, thoughtful, eloquent, and incisive than Atul. Most importantly, his moral commitment to improving health for all is unshakeable.
What does this news mean?
The company’s stated goal is to use its scale to reduce health care costs through an independent company “free from profit-making incentives and constraints.” Experts say the recruitment of Gawande signals that Bezos, Buffett, and Dimon may be looking to do that, not just for just for their own employees, but for the entire country.
Kenneth Kaufman, health care consultant, to the Globe:
“What’s interesting about these big companies is they can use their employees as a laboratory. To create a laboratory model that changes health care in the US? That’s something that gets Atul up in the morning.”
Richard Gregg, director of programs for Healthcare Administration at Suffolk University, to the Boston Herald:
“It’s a huge win for Boston. I’m very excited about this. It draws more attention to Boston — that’s a major benefit. It further solidifies our reputation as a worldwide leader in health care development. This is going to be a real learning laboratory in a relatively controlled environment. These three companies have the resources to do the work and investigate best practices.”
Andy Slavitt, former acting administrator of the Centers for Medicare and Medicaid Services, to STAT:
“They have hired somebody who is going to think about the big pictures of public health issues as opposed to narrow commercial interests. … This signals that they’re interested in solving the problem, not just finding a business opportunity.
It’s a tough job, trying to solve big problems, and there’s [special] interests everywhere. They already said that they will stick to [Gawande’s] ethical and moral center based upon what’s right for patients and people. As long as [Gawande] sticks with that, I think he’ll be fine.”
What, exactly, is this company trying to do?
Buffet has said that their goal is to at least halt the increasing proportion of the economy spent on health care. While there are some nut-and-bolts changes that could be made to how care is delivered, the combination of Gawande’s expertise with the resources and record of Amazon, Berkshire Hathaway, and JP Morgan also makes for some intriguing possibilities.
Felix Salmon in Slate:
“Certainly there’s a lot of low-hanging fruit: He has the opportunity, for instance, to bring a lot of routine health services in-house using salaried doctors and nurse practitioners, and to use those employees not only to treat common conditions but also to work hard on preventing those conditions from occurring in the first place. The potential savings are not only obvious but also enormous, even if you look only at the massively reduced amount of paperwork and billing. And the insurers will have to play nice with ABC, because of the consortium’s sheer size and market power. It’s even possible, if improbable, that ABC will attempt to replace insurers entirely.”
J.B. Silvers, professor of health finance at Case Western Reserve University, on MarketWatch:
“There’s ample room to replicate that success in health care, because the system in the U.S. has long been plagued by excessive transaction costs — the expenses incurred when buying or selling goods and services. These include irrational pricing, as evidenced by the price of services varying wildly for hospitals, insurers and patients. This, along with unnecessarily complicated billing systems, creates the need for extensive bureaucracies to manage all the varied relationships.
Businesses like Amazon try to fix this sort of mess and make shopping for services more convenient and transparent. Imagine an easy-to-use platform where patients can readily assess the price and quality of competing providers and quickly schedule appointments or perhaps even initiate an online consultation. We bet Dr. Gawande is imagining it.”
Dylan Byers in CNN:
“A source familiar with the firm’s plans says it will focus on cutting out pharmacy benefit managers who were meant to reduce costs but are now driving them up.”
Lisa Bielamowicz, cofounder and president of the consultancy firm Gist Healthcare, to the Globe:
“One of the things Amazon has done very well is they view consumer value as the guiding light for every decision they make.
How do you create an Amazon Prime for health care? How do you deliver so much value that people want to be a member?”
Andrew Dreyfus, CEO of Blue Cross and Blue Shield of Massachusetts, to the Globe:
“Whether we call them patients or consumers, they find health care confusing, fragmented, and sometimes even hostile to their needs. In the retail environment, we expect on a 24/7 basis to be able to search, purchase, and have an easy transaction. Those adjectives do not describe the health care experience.’’
Steve Klasko, president and CEO of Thomas Jefferson University and Jefferson Health, to STAT:
“One of the challenges will be to bring the power of purchasing to the person. If you think about it, we’re going through a once-in-a-multigenerational change. From a business-to-business model to a business-to-consumer model. From a physician and administrator is the boss to patient is the boss. From hostile company to consumer health entity. So if he starts from day one, thinking that way and then have everything else be a dependent variable — he doesn’t listen to the ‘No, let me tell you how it’s done’ from every lobby organization in the world, if he refuses to listen to them for the first four weeks and only listens to what other industries of have done to transform their industry — then I think he’ll be successful.”