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Amazon's Soaring Healthcare Ambition: The Promise and the Problem

By Rob Enderle TechNewsWorld ECT News Network
Feb 5, 2018 10:57 AM PT

Healthcare is a mess in the United States. Consumers pay more and get less than in most other developed countries. Strong comprehensive healthcare is unaffordable for most without substantial help, which is why putting the burden on the government really does not work.

If people cannot afford something, individually aggregating it under what amounts to a tax is not really any better -- and given the extra overhead, arguably is worse.

What's needed is a way to bring costs down sharply so that whether it's funded by the state or paid for by individuals, healthcare becomes affordable.

One way to do that is to have a new player enter the market at massive scale and use its buying and political power to force the industry to reduce excessive pharmaceutical gouging, waste and excessive testing, and erect a stronger barrier to excessive litigation.

Amazon, which last week announced its entry into the healthcare market with JP Morgan and Berkshire Hathaway, could be that company. However, as I recently discovered, Amazon already has abused its power. What will happen if it gets massively more powerful?

I'll share my thoughts on that this week and close with my product of the week, one of the most innovative smartphones in the market.

The Real Healthcare Problem

Both political parties in the U.S. are so focused on the issue of control that neither seems focused at all on the real healthcare problem, which is that the cost/benefit analysis suggests the country is in horrid shape.

If you look at the World Health Organization rankings, the U.S. is No. 1 with a bullet on cost (the most expensive of any country in the survey) but ranks a lousy No. 72 on performance.

You know which country ranks first on performance on level of health? Oman, which is No. 62 on cost. France, a country often ridiculed, ranks No. 4 on performance and No. 4 on cost. Its state-sponsored system is aligned at least. However, Italy outperforms France, ranking No. 3 on performance but No. 11 on cost. Saudi Arabia is No. 10 on performance and No. 63 on cost.

Using President Trump's "winning" rhetoric, when it comes to healthcare, the U.S. not only is not winning, but also is arguably behind the world on cost benefit. Even North Korea is better aligned than the U.S. -- it is No. 172 on cost and No. 153 on performance (North Koreans do not get much, but they pay even less).

With all of its technology and unique advancements, the United States sucks at healthcare. The real problem with Obamacare is that it does not fix the "suck" part or the cost part -- it just shifts where the bill goes.

So, a whole bunch of U.S. citizens, myself included, now are paying more and getting less coverage. That is neither any way to get re-elected nor any way to run a country. Typically screwing your constituents does not work well for elections, and that played a much bigger role in the last election than most realize (or want to admit).

Amazon Benefits

I think Jeff Bezos gets this -- it's not rocket science. He likely understands that if the government really is not going to step up (it still is arguing over who pays, not the amount on the bill) then a heavy-hitting corporation must.

Amazon has the reach and capability to reduce healthcare costs massively through better records management; implementation of aggressive artificial intelligence-based diagnoses or diagnosis validation; ability to negotiate better drug prices; scalable AI-based patent monitoring; and policies that could address abuses, such as the overuse of painkillers, more effectively.

Individual benefits would include better and more comprehensive access to medical records; programmatic analysis of those records, triggering proactive medical procedures; more aggressive health monitoring; and far broader access to emerging medical technology and drugs.

Amazon has the capability both to lower healthcare costs and raise performance, so that Americans no longer would be paying the most for healthcare while being outranked in performance by 72 countries whose citizens pay less, often far less.

The Problems With Amazon

Amazon already has gained an inordinate amount of power, and there have been signs of organizational abuse. I personally experienced it when I questioned a series of charges on a little-used credit card, and Amazon suddenly dropped me, with no warning, back into the pre-Echo dark ages. I'm still rebuilding the damage it did, even though it reinstated me last year.

David Caulton covers the same topic, but Amazon is hardly the only big company to abuse its power. Our own Mick Brady got kicked in the butt by AT&T, the brand that keeps on giving.

With Amazon increasingly handling everything its customers consume, a dispute with the company could result not only in the loss of Echo functionality, but also in access to critical healthcare.

You dispute a bill and have a heart attack, you likely will be dead -- and that level of control would be unprecedented except for the harshest of governments, let alone a retailer.

Without far stronger customer controls, I have my doubts whether Amazon's foray into healthcare will end well rather than becoming just another, deadlier, problem for many American consumers.

Amazon's Problems

Consumers are not the only ones with problems. Amazon is moving into one of the most heavily regulated areas in the United States and one of the areas with some of the strongest lobbies (pharmaceuticals).

In addition, thanks to also owning The Washington Post, Bezos is not exactly close to the current administration. The result is that getting through regulatory approval and not suddenly finding a whole bunch of new and old laws positioned against this effort may be problematic.

Once the government goes after one part of Amazon, the effort could spread more broadly to the overall business. So just bringing this service to market, given how many resources will be focused on stopping it, could be impossible.

Wrapping Up: Living on the Bleeding Edge

There are many billionaires who live on the bleeding edge. Massively used, not that concerned with profits, but aggressively pushing expansion, they are one blunder away from disaster. Elon Musk, Richard Branson and Jeff Bezos all have been playing this high-stakes game of musical chairs -- each pushing the envelope in terms of investment, expansion and risk.

Bezos has stepped away from this risk a bit, as Amazon's current stunning financials showcase. Offsetting this somewhat is pressure from the LGBT community that resulted from Amazon including among possible locations for its new headquarters many that were viewed as anti-LGBT. (Amazon has been supportive of LGBT issues in the past.)

Moving into healthcare is just Amazon's latest aggressive move, but it could be a move too far. It already has been having customer care issues, it is at odds with the current administration, and it will face a ton of opposition because of the needed disruption it would cause.

Potentially, Amazon could fix healthcare -- but it also could kill a bunch of people accidentally in the process. It is that latter outcome that has me very concerned.

Rob Enderle's Product of the Week

I have been a huge fan of the modular computer concept -- the idea that you could have some kind of core technology that you could accessorize, turning it into something else.

The first time I saw this concept was at an IBM ThinkPad Advisory Council Meeting in the late 1990s, and it is interesting that the Motorola Moto Z now is owned by the same company that now owns ThinkPad -- Lenovo.

I think the Moto Z concept is better idea than the iPhone X concept -- not only for users but also for Apple. One big reason is that it's a ton cheaper at around US$750. (I found refurbished versions for as little as $322 on Amazon.)

This is because the Moto Z has a much stronger accessories opportunity, allowing users to customize their phones better and giving the manufacturer a stronger revenue opportunity after the phone is sold.

Moto Z2 Force
Moto Z2 Force

The Moto Z Force should outperform the new iPhone X. It has a stronger processor and none of that questionable battery- or modem-crippling software that Apple uses. It also has a screen that should be more resistant to breaking, and the broader choice of accessories the Moto line is famous for. Further, it too has a brilliant AMOLED display.

Accessories that generally attach to the back of the phone include a 360-degree camera, Polaroid-like printer, Alexa-powered smart speaker, gamepad, sound booster, JBL Speaker, several power packs, wireless charging, Hasselblad lens zoom camera back, and a projector (so you can watch Netflix on your wall).

Given this is the best modular computer I have ever tested, the Moto Z2 Force is my product of the week.

Rob Enderle has been an ECT News Network columnist since 2003. His areas of interest include AI, autonomous driving, drones, personal technology, emerging technology, regulation, litigation, M&E, and technology in politics. He has undergrad degrees in merchandising and manpower management, and an MBA in human resources, marketing and computer science. He is also a certified management accountant. Enderle currently is president and principal analyst of the Enderle Group, a consultancy that serves the technology industry. He formerly served as a senior research fellow at Giga Information Group and Forrester. Email Rob.

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What should be done about UFOs?
World governments should cooperate to address a potential planetary threat.
The DoD should investigate -- they could signal a hostile nation's tech advances.
The government should reveal what it already knows.
The government probably has good reasons for secrecy and should be trusted on this.
Wealthy corporate space-age visionaries should take the lead.
Nothing. Studying UFOs is a waste of resources.
Keep the stories coming. People love conspiracy theories, and it's fun to speculate.
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