Homepage / Technology / Amazon's moves in health care over the last year are finally starting to make sense
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election

Technology

Amazon's moves in health care over the last year are finally starting to make sense

Amazon has made a lot of seemingly unrelated moves in health care over the last year.

It put together a team to figure out how to bring down the cost of pharmaceuticals for its own employees. It has 40 to 50 people to figure out how to disrupt the entire drug supply chain. It hired a senior doctor out of an innovative primary care group.

Not all of these moves made a ton of sense at the time — until today when it announced a partnership with Berkshire Hathaway and JPMorgan Chase to improve health care for employees of the three companies in the United States.

Details about this coalition effort are still scant, but are expected to be communicated in the coming months. But we can glean a lot by looking at what Amazon has done over the last year — and why.

If Amazon was looking to bring down the cost of care, an obvious place to start is the multi-trillion dollar market for prescription drugs.

“For employers, drugs can be a quarter of their spend and it’s the fastest growing category from a cost perspective,” said Bob Kocher, a health investor at Venrock.

So how could Amazon make a dent?

Kocher speculates that Amazon could reduce costs by accepting lower margins than pharmacy benefits managers — intermediaries that now make huge profits through sales of generic drugs in particular.

That could have a huge impact. As studies have found, more than $1 in every $5 in spending on prescription drugs goes towards profits of intermediaries in the pharmaceutical distribution system.

Moreover, given Amazon’s expertise around logistics and distribution, they could think about warehousing, transporting and delivering drugs in a more cost effective way.

Companies might also rethink — or even replace — their relationship with the pharmacy benefits manager, which negotiate prices with drug manufacturers on one end, and manage pharmacy benefits for insurers on the other. “The PBMs will do things like quality reporting for Medicare, which a company like Amazon might want to avoid,” said Kocher.

“I don’t think they’d want to do everything a pharmacy benefits manager does, versus a reconfiguration of the relationship,” he added.

Amazon last year met with Kaiser, Iora Health and other groups that deliver innovative primary care, CNBC previously reported. It also invested in an innovative primary care group called Qliance. And it recently hired a doctor who ran a group of Seattle-based clinics from Iora. Those now seem like smart moves if Amazon and its partners want to reap significant savings.

“Better negotiating [with hospitals and other providers] won’t produce these types of savings, so owning clinics or building narrow networks may be the only way to make it work,” said Stephen Buck, co-founder of Courage Health and a founder of drug discount provider GoodRx.

Health experts point to a huge body of research showing that the best way to manage costs effectively is to provide great primary care for people with chronic diseases. “If I’m an employer, I want to engage effective primary care, and that isn’t easy in parts of the country,” said Kocher. And by that, he means rural America where patients often have to drive for miles out of their way to see a doctor. Without access to primary care, these patients will often end up in emergency rooms with urgent concerns, which can be tens of thousands of dollars in costs for their employers.

Some companies have experimented with on-site clinics, but getting sufficient volume can be a challenge. A coalition could form its own clinics to lower-costs in the long-run.

It’s no secret that Amazon CEO Jeff Bezos has been thinking about health care since the 1990s, when he took a hands-on role at Drugstore.com. It’s still top of mind.

He even has a team at Amazon called 1492 that have been thinking about disrupting the industry. And it’s no surprise to many health experts that the company is focusing a lot of its attention on employer-sponsored health care, and in particular on the challenge of driving down costs without reducing the quality of care.

Most health-technology start-ups will start there, as Kocher points out, because employers are paying a huge bill and they’re not wholly satisfied with the current set of options to bring down those costs. “When you create something that can save money and improve quality, you go to employers,” he said.

Source: Tech CNBC
Amazon's moves in health care over the last year are finally starting to make sense

Comments are closed.