Ed Park posted some great ideas on re/code entitled What Health Care Can Learn From Amazon (https://on.recode.net/1bV3HjI) . It’s a great start to the lessons the US Health Care system can learn from Amazon. The key ideas outlined include putting the customer first every time, use big data effectively, cooperate and compete, and pioneer new paths. Let me build on some of these and add some new ones, perhaps adding some clarity to the opportunities. Fulfillment Matters — A Lot Just before cyber Monday in December, Jeff Bezos did an exclusive interview with Charlie Rose and announced “the drones”. What was lost in the hype on the drones, was that Amazon keeps focusing on shrinking cycle time and reducing friction between “customer wants” and “customer fulfilled” (read my summary of the Charlie Rose interview (Complaining is Not a Strategy: https://bit.ly/1bi1cAE) . When ordering from Amazon Fresh, Amazon’s home grocery business, customers pick 15 minute windows when delivery will happen. This degree of precision is a “killer feature” and incredibly difficult to replicate. Health care customers want more predictability — yes, predictability on appointment times, but more impactful would be predictability, quality of care, and insights to eligibility and outcomes. Reinvent Payments and Claims The most addressable and impactful area for health care innovation is in the insurance eligibility and payments cycle. If Amazon decided to enter the health care arena (and don’t think they wouldn’t), they would dramatically change the entire insurance cycle — understanding eligibility, quick (as in real-time) claims processing and creating much better payments options and tracking. I hope in my lifetime I get to see how the Amazon “Manage My Account” would translate to healthcare. Create Price and Service Transparency When we launched the third party selling business at Amazon in 2002, there was concern inside Amazon and with our merchant partners that we were creating too much price transparency. It was Jeff’s view that “putting the customer first” was the best long term strategy and insisted that we allow for multiple sellers to compete for a customer, all on the same Amazon product detail page. With the soaring health care costs, the key tool of understanding prices and creating competition is largely not available to customers “at the point of purchase” or need. Creating real provider options to customers to increase their choices and drive improved market dynamics would be a game changer – and one Amazon would push. This New York Times data is just an example of the dramatic cost differences in healthcare that easy to access transparency would change — As Hospital Prices Soar, a Stitch Tops $500 https://nyti.ms/1eLKzQ1. Prices for a cut finger range between $790 and $1,377. Efficiency and Costs — Welcome to the House of Pain Amazon has always had an efficiency and low cost culture and value proposition to its customers. Think Amazon would strip costs out of the health care system? Focusing on back office and administrative activities, Amazon would automate, push functions to customers and suppliers, and greatly improve upon the efficiency of healthcare, without even impacting how hospitals or doctors go about their business (they would get to this also). A big emphasis would be on technology — real-time systems, real-time data, algorithms predicting needs and outcomes, and incredible process control (you’d see an improvement in quality also). Amazon would also figure out how to impact the bureaucracy and layers of obfuscation which add costs and frustrates customers. Technology Chops As the botched launch of the Obamacare website demonstrates, launching and running “at scale” architecture is difficult (not as difficult as they made it, but still difficult). The general “technology IQ” of an Amazon-like health care firm would be 100x typical health care management firms. Every team at Amazon owns and runs technology at Amazon. System development engineers and architects are the top-of-food-chain people in the company, and are not “order takers”. To reinvent the health care customer experience, the data and technology IQ will have to have to change. Be Misunderstood Above all else, Amazon would be willing to be misunderstood. Amazon is willing to change entire industries (look at the book industry; watch out apparel industry). They may start one place in the industry value chain, and then they will go upstream or downstream in the customer experience – innovating and challenging the status quo along the entire route. If Amazon started in insurance, they could go upstream into equipment or drugs, or downstream into hospitials and clinics. In The Amazon Way: The 14 Leadership Principles of the World’s Most Disruptive Company, I outline the leadership principles that set the stage for this type of overdue change. Please post your comments, or send me an email at jrossman@alvarezandmarsal.com [twitter-follow screen_name=’johnerossman’]
