Becker's Hospital Review

47 47 CEO/STRATEGY Former Apple CEO John Sculley on the Amazon- JPMorgan-Berkshire Hathaway Collaboration: 'Finally, Corporate America Is Stepping In' By Julie Spitzer H ealthcare's newest disruptor — the Amazon, JPMorgan Chase and Berk- shire Hathaway collaboration — has everyone in the industry abuzz. e much-anticipated announcement of Am- azon's entrance to the healthcare industry on Jan. 30 came about a week aer Apple intro- duced health records on the latest update of its Health app and the same day Epic expand- ed its interoperability capabilities. Details of the collaboration have been vague, but center around leveraging technology to drive down healthcare costs for their U.S. em- ployees. Some healthcare leaders are excited about what will happen next in the trio's ef- forts, while others are concerned about the healthcare's newest competitor. Former Apple CEO and current RxAdvance CMO John Sculley shared his thoughts on the deal with Becker's Hospital Review. Here are five highlights. 1. e companies are undertaking a years-old problem that the government has long failed to solve. "Since the 2016 election, Congress has been obsessed with the ideological question of whether to repair or replace Obamacare. Ei- ther way, a political decision for this question, while important, will not reduce the cost of the U.S. healthcare system enough to make it affordable [for patients] at a sustainable cost [for the country]," he says. 2. "Finally, corporate America is stepping in with the goal to shi focus to real innovation possibilities that can transform the currently unsustainable cost of the U.S. healthcare sys- tem," Mr. Sculley says. He highlights that Berkshire Hathaway CEO Warren Buffet is an insurance expert, Ama- zon CEO Jeff Bezos mastered cloud platform productivity and JP Morgan Chase CEO Ja- mie Dimon knows how to finance large-scale, disruptive innovation. ese three "most re- spected corporate America CEOs'" combined expertise can tackle the complex system that is U.S. healthcare. 3. Mr. Sculley adds that chronically ill patients are incredibly expensive to care for, noting that nearly 2 percent of the U.S. population accounts for 40 percent of the entire $3.4 trillion each year spent on healthcare. Citing a McKinsey & Co. estimate, he says there is about $900 billion in waste, fraud, abuse, mis- use and avoidable medical costs which could be resolved with approaches other sectors take — using cloud-based platforms, smart automation and actionable analytics. "[e] healthcare industry has been slower than other industries to encourage disruption because this industry is so complex, so highly regulated, and much of its most important in- formation technology is several decades old." 4. Mr. Sculley believes the trio has the "pow- er and talent" to fix the high-cost problem in healthcare, but he says it won't be easy. "First, they have to understand the complex healthcare ecosystem, build or acquire dis- ruptive enterprise platforms to run entire health plan operations so that you don't have huge nightmare of integrating many vendor systems," he says. "Unfortunately, there aren't any such platforms in the market, hence they cannot acquire — at least that's the case today." 5. Amazon, JPMorgan and Berkshire Hatha- way set a goal for their company to save 20 percent of their health spend for their own employees, even though health plans are not making those profits. "[Health plans] make only 3 to 5 percent profits. But there is 20 to 25 percent wastage there," he says. "ey don't know how to cut the wastage due to their antiquated technology that is still widely prevalent in the healthcare industry." Mr. Sculley recommends health plans — and the trio's new company — begin by modern- izing their operations with enterprise process automation and medical intelligence, as well as value-based care models. n Henry Ford Allegiance, DOJ Settle 3 Years of Litigation Over Hospital's Marketing Practices By Morgan Haefner J ackson, Mich.-based Henry Ford Allegiance Health on Feb. 9 ended nearly three years of litigation concerning its marketing practices with rival hospi- tals after reaching a proposed settlement with the Justice Department. Here are three things to know about the settlement. 1. If the proposed settlement is approved by the U.S. District Court for the East- ern District of Michigan, it will settle claims Allegiance insulated itself from com- petition by engaging in anticompetitive marketing practices with three other hospitals. 2. The DOJ sued four Michigan hospital systems in June 2015, alleging the sys- tems unlawfully agreed for years to withhold outreach and marketing in each other's counties to limit competition. Henry Ford Allegiance Health was the last hospital of the four defendants to settle with the government. 3. Henry Ford Allegiance Health's proposed settlement with the DOJ requires the hospital to annually certify compliance with the terms of the final judge- ment; submit to compliance inspections; and reimburse the DOJ and the state of Michigan for certain litigation costs. n

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