Search

women holding her hand to her chin while typing on a computer with her other hand

How health care can take a leaf from Amazon's play book

Posted by Christine Murphy on July 17, 2018

As part of our recent series on ASO health plans, Christine Murphy, Vice President of Network Management, talks about her experience in Silicon Valley during the dotcom boom of the 90s – and how health care companies can learn from Amazon 

In the business-to-consumer space, why did Amazon become Amazon, while Pets.com became the poster child for dotcom failure? Because Amazon recognized that success was rooted in leveraging its technology platform, not in book selling. Similarly, health insurance providers and carriers who are transitioning from fully-insured /fee for service models to ASO/value based pricing models need to do more than provide service and process claims. They must join forces and leverage IT infrastructure intelligently to survive.

When I worked in Silicon Valley in the 90s, technology firms were starting up at a dizzying rate. I came from the software/database technologies business, and I frankly did not understand most of the startup business pitches I heard. Back then, you pretty much couldn’t go anywhere on the peninsula without hearing a business pitch, and as it turned out, many of these pitches didn’t, in fact, make any sense. I would often attend an “IPO party” on a Friday, and the following Thursday hear that the company in question had shut down, having burned through its cash.

B2C. B2B. And then there was Amazon.

So the IPO parties raged, and at the center of all the upheaval and disruption fomented by the Internet were two discrete sets of technologies. The first included “business to consumer” firms, i.e. those that leveraged the nascent Internet to sell goods directly to consumers (think Pets.com). The second type of technology was “business to business,” delivering development platforms and infrastructure that enabled organizations to establish an online presence for their own clients (think Cisco and Netscape).

And then there was Amazon. It was something of a hybrid. It began selling books online and then moved into the business of enabling companies to sell other things online. So, Amazon’s book business was simply a showcase for its real strategic asset: its internet marketplace platform.

What does all of this have to do with healthcare?

Healthcare is currently experiencing its own upheaval and disruption, driven by a variety of factors: consumers squeezed by premium increases; providers demanding more transparent payment mechanisms; and payers hamstrung by an impenetrable thicket of legacy technologies. All this drives demand for transformative thinking, payment innovation, and enabling technologies.

Leveraging data can add value and lead to innovation

As part of this demand for innovation, smart insurance companies are searching for ways to do what Amazon did and leverage our strategic assets – like data. One example of how leveraging data can add value and lead to innovation is the recent uptick of employers who are moving to self-funding health care for their employees, also known as the ASO model. ASO stands for administrative services only. You can read our ASO primer here.

Among other things, this means the employer takes on all the financial risk. In this context, a payer’s value lies not just in smooth front office functions but also in its ability to help employers mitigate their risk through actionable data. In the ASO world, competitive health insurance companies must focus on data, reporting, and transactional excellence.

Topics: Providers

Disclaimer: The content in this blog post represents the clinical opinions of the providers at AllWays Health Partners and is based on the most currently available clinical and governmental guidance.

If a friend sent you this article, you can subscribe to AllWays Insider by filling out the form below:

Recent Posts

If a friend sent you this article, you can subscribe to AllWays Insider by filling out the form below: