The joint health care venture created by Amazon, Berkshire Hathaway, and JPMorgan Chase plans to explore how to redesign health insurance benefit design, among other priorities, according to recently unsealed court testimony from the venture's COO, Jack Stoddard.
Amazon, Berkshire Hathaway, and JPMorgan announced the partnership in January 2018. At the time, the companies said their goal was to identify "technology solutions" that would provide "simplified, high-quality, and transparent health care at a reasonable cost." The companies said the new health care company will be "free from profit-making incentives and constraints."
Related news on the venture
In February 2018, Berkshire Chair Warren Buffett in a CNBC interview added that the venture would aim to find a lower-cost way of delivering better health care. In June 2018, it was announced that Atul Gawande, a prominent surgeon at Brigham and Women's Hospital would lead the venture.
However, not much else is known about the venture's plans. It has not announced a name, and it is referred to in court documents as "ABC."
New venture faces lawsuit over noncompete agreement
Stoddard's testimony came in response to a lawsuit filed by Optum aimed at preventing former Optum employee David Smith from joining the venture. In the lawsuit, Optum argues that Smith is bound by a noncompete agreement—but ABC argues that it will not directly compete with Optum.
(The Daily Briefing is published by Advisory Board, a division of Optum.)
The testimony was unsealed in response to a motion filed by Dow Jones & Co. Inc., the publisher of the Wall Street Journal, and Boston Globe Media Partners. While the new venture had wanted part of Stoddard's testimony to remain sealed, U.S. District Judge Mark Wolf ruled a full transcript of the testimony should be released.
Wolf has not ruled on a request from Optum for a temporary restraining order that would prevent Smith from working for the new venture or sharing trade secrets.
What was revealed about the new venture
Stoddard in his testimony said the venture is focusing on redesigning health insurance to make it intelligible to employees. "It's very difficult for the employees when we talk to them to be able to understand what’s covered, to afford their coverage," he said.
Further, the venture is focusing on analyzing data to "understand where there's variation in care, quality, where prices don't match value, where doctors are performing," Stoddard said. He added, "We're setting up our company, so we have to figure out what data do we need. What data do we have, what insights can we glean from that data around cost and quality of care so that we can help then make that available as we think about helping patients choose doctors that are going to help them get better outcomes on the quality side at the best price."
In addition, Stoddard said the venture wants to "make it easier for doctors to do good care and to spend more time" with patients.
Regarding prescription drugs specifically, Stoddard said the new venture was studying how pharmacies work and how an employer might build a better understanding of a drug's true price.
Stoddard said that, as of now, the venture has no plans to compete with existing pharmacy benefit managers. However, he added, "But we will look and say, could we contract with one of them to get more transparency?"
Stoddard said the venture will begin with small-scale tests of ideas to improve health care, such as making primary care more accessible or maintenance drugs cheaper. If the tests are promising, the venture owners could scale them up (Kamp/Mathews, Wall Street Journal, 2/20; Sheridan, STAT News [subscription required], 2/20).
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