Rising costs are leading to disruption in the healthcare industry

Last week, Amazon, Berkshire Hathaway and JP Morgan Chase announced they are forming an independent healthcare company to offer healthcare to their employees. With limited specifics, one thing is expected from these leading companies: industry disruption. Mintel’s report on changing the face of US healthcare shows that just a third of US adults with employer-sponsored health insurance say they are satisfied with the cost of healthcare, indicating that addressing healthcare’s growing costs and inefficiencies likely can’t be solved with anything less.
34% of US adults with employer-sponsored health insurance are satisfied with the cost.
The costs associated with healthcare, including insurance, services and prescription medication, are the most concerning aspects of the healthcare system for consumers. And with employee satisfaction being a key component of the initial announcement, solutions to cost concerns will be essential to increase satisfaction.

Local disruptions and traditional models

Well-known healthcare brands have been evolving and new startups are emerging in the face of mounting healthcare costs. New care models have largely focused on proactive care, offering services at a lower cost and streamlining processes.

• CVS Health acquired all Target pharmacies and retail clinics in 2015. In 2017 the drugstore retailer announced a merger with Aetna, one of the largest health insurance providers.
• Walgreens began a new collaborative model in 2015, partnering with local hospitals to manage retail clinics in Walgreens drug stores.
• Zoom+Care, a technology driven healthcare clinic (and health insurance provider) in the Pacific Northwest, offers pricing transparency, same-day visits, extended hours, on-site labs and medications.
• Forward is a wellness clinic that functions like a gym. For a monthly subscription (health insurance is not accepted), users get access to genetic screenings, blood testing, weight-loss planning, generic medications and routine doctors visits.

What do consumers want?

The announcement from Amazon, Berkshire Hathaway and JP Morgan Chase is still in its genesis, with few details provided on what this healthcare company will do, offer or stand for. But we can make a few thoughtful suggestions based on what consumers are looking for when it comes to managing their health:

• Have a focus on everyday wellness: Reducing healthcare costs starts with improving people’s general wellness. The challenge will be motivating people, which is one of the top barriers adults face when trying to improve their health, according to Mintel’s US report on health management. Yet, many adults view their well-being as a journey. A platform that encourages adults to take small, daily steps toward managing their health, and holds them accountable, could help move the wellness needle forward.
• Technology should be central: There’s likely no doubt technology will be key to the development of this new healthcare company. It should also be fundamental in how employees manage their health. Mintel research highlights adults who use a fitness app feel healthier and general health app use is connected with increased engagement in wellness activities. Consumers use apps to make life more convenient, and fitness and health apps are no exception.
• Expand access to care with virtual health: These three brands have employees across the US. An approach to care should make the most of virtual health’s convenience. Not only is it cost effective, but people are open to using it: 43% of adults would meet virtually for health care. In addition to expanding access to care, virtual health appointments could be positioned as tools to help adhere to wellness activities and keep adults on track to meet their goals.
• Mental health services should be accessible: Half of US adults manage their mental health on a daily basis, highlighting the importance people are placing on this aspect of their wellness. However, interest is modest for employer provided mental health programs. Employees may be hesitant to seek out health care for some sensitive issues if they think their employer could find out.
• Ask Google to join the team: Google made its own healthcare announcement recently. The brand plans to use data to predict the medical outcomes of hospital patients. Amazon, Berkshire Hathaway and JP Morgan Chase bring unique and industry leading expertise to the table, except in healthcare.

What we think

While the design (and name) of this joint venture remains to be seen, leaving us to only speculate, there seems to be excitement, even from within the healthcare industry. This one collaboration could very well change the face of US healthcare. Where the government has stalled in finding a solution, three of the largest US brands are coming together to explore new possibilities, starting with their own employees. Mintel will continue to monitor this venture and the changes it brings as it evolves.