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The Healthcare Industry Is Not Immune From The Amazon Effect

Kate McCarthy
Senior Analyst
January 30, 2018

Perhaps no company has been so consistently disruptive as Amazon. Their ability to step in to new markets and upend the status quo by delivering consistent customer experiences with digital innovation that provide scale and price competition is unrivaled. They have set their stakes on healthcare next with an announcement this morning that will bring Amazon together with Warren Buffett (Berkshire Hathaway) and JPMorgan to stand up an independent healthcare company. This new company is likely to initially serve their employee base of 1 million+ employees. If they stand up an insurance product, they could serve over a million lives right out the gate.

Without spending too much time speculating – the art of the possible here is tremendous. An Amazon/Buffett/JPMorgan play makes almost anything possible: insurance products, consumer products, robust analytics and customer insights, pharmacy and PBM, retail healthcare…the list is endless. The healthcare industry’s laggard performance will benefit from whatever products and services these three decide to bring to the market.

What It Means

Healthcare’s Uncertain Future Certain To Disrupt

Rumors of an Amazon entry to the US healthcare market have largely been met with skepticism. Naively, industry insiders have held on to the belief that the healthcare industry is too complex, too regulated for even Amazon to disrupt. Even as other tech giants-Apple, Google, Salesforce, Microsoft, Samsung-have made their foray into healthcare, they have kept their stakes relatively small and inside their sweet spots. But when you consider the alignment and horsepower of a Warren Buffett, Jeff Bezos and JPMorgan trio, no industry is immune to their talent. Healthcare leaders should prepare now for the future to look very different. This is great news for customers who have been stuck with digital experiences that look like they belong in the early millennium and costs that continue to escalate.

Healthcare leaders, are you ready to be disrupted? Unlike bookstores, you’re getting a warning flare. The time to embrace customer obsession and digital disruption is now if you want to survive.

 

Thoughts or questions on any of this? Always happy to chat, reach out to Kate McCarthy @Healthcare_Kate or kmccarthy@forrester.com.

 

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