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Healthcare Disruption Hits Insurance

March 29, 2018
Posted by: Gerald “Pharmacist Jerry” Finken, RPh, MS; Contributor, Meghan Mosser

Healthcare Disruption Hits Insurance

Disruption is coming to the healthcare industry.  In recent months multiple announcements have been made about enterprises joining together. Between Amazon dabbling in the pharmacy industry and CVS and Aetna announcing a potential merger, disruption is here. But it doesn’t stop there. Now Amazon, Berkshire Hathaway and JPMorgan have a plan to overhaul health insurance.  This pre-disruptive activity is a big deal. But, will it work? And, if it does, how will it change healthcare as we know it today?

An article was recently published by The New York Times detailing how the trio plans to form a new insurance company, a telltale sign that the industry needs a change. Note: The new insurance company would first only provide coverage for their employees.

However, they are taking it slow. The three companies are still considering how they’re going to shake up healthcare.  The only thing for sure is that technology will play a huge part. As Apple Chief Executive John Sculley said in The New York Times, “Each of those companies has extensive experience using transformative technology in their own businesses.”

The need for change is clear from the numbers. According to the article, insurance premiums are on the rise and employees are paying for 30 percent of the cost. The trio intends to create a new healthcare system that is simple and sustainable. It is indeed possible that this joint initiative could revolutionize healthcare if they make the right moves. They may not have all the answers, but they do have the clout and the resources to figure it out.

However, the road to disruption clearly has its speed bumps and not everyone thinks this is a good idea.  The move is rattling the stock market. According to an article titled How Amazon Rattles Other Companies, Amazon consistently sends legacy companies downhill when they step into their territory. When Amazon, along with Berkshire Hathaway and JPMorgan, announced their entrance into the insurance world, Anthem’s and United Healthcare’s share prices fell by more than five percent. The same thing happened with CVS and Walgreens shares when rumors started about Amazon entering the pharmacy business.

The fact of the matter is that these companies could make a huge impact not only in the insurance world, but in the overarching umbrella of healthcare. They are enterprises that are stepping up to the challenge with an open mind and a determination to succeed. Will this lead to disruption? I think so.

What do you think?

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