Berkshire, JPMorgan and Amazon have announced on Wednesday that Dr. Atul Gawande will be donning the role of CEO for their newly formed healthcare venture. Gawande will be joining the yet-to-be-named venture on July 9th. When Warren Buffett, Jeff Bezos and Jamie Dimon who are stalwarts in their own domain handpick somebody as CEO of the joint healthcare project, then that deserves special attention.
Amazon (AMZN), JPMorgan (JPM) and Berkshire Hathaway (BRK) announced earlier this year that they are forming a healthcare firm to help them reduce spiraling healthcare costs. The triumvirate that together employs 1.2 million also added that the new venture will be an independent one which would not be focusing on profits. Healthcare firm will be based in Boston, which is reputed for medical/biotech research.
Gawande is a well-known face in the healthcare sector who practices ethical leadership. He has been vociferous about healthcare related issues along with lowering costs, which would help in improved healthcare delivery across the country.
Gawande’s profile looks impeccable where he dons many hats of a surgeon, researcher, journalist and writer. He also will be taking over as Chairman of Ariadne Labs, a joint venture between Brigham and Women’s Hospital and Harvard which works on the patient safety and healthcare innovation. Lifebox is a non-profit firm focusing on making surgeries safer across the world where Gawande is Chairman.
This work will take time but must be done. The system is broken, and better is possible.
Despite Gawande’s appointment, there are still many questions looming about what plans does the new venture has or how it’s going to address the highly complex issues across the US healthcare landscape. On the flip side, critics are not sure about picking Gawande since his expertise has been more on the policy front and improving healthcare delivery and not on managing the business. However, the corporate giant trio seems to be unfazed by the concerns and has stated clearly that this is a long-term effort which will take years to yield results.
Gawande has an arduous task at hand. The US healthcare industry total spending is now over $3 trillion. There are inherent issues in the healthcare sector like preventable medical errors, infections and accidents which can be fixed, but till now there wasn’t sufficient progress made because of the complex nature of the system, which makes it extremely hard to pinpoint issues.
Kaiser Family Foundation in its 2017 report has stated that insurance premiums have jumped 55% over the last 10 years. It’s no brainer that employers are major providers of health insurance providing coverage to 150 million people.
To put things in perspective, Centers for Medicare and Medicaid Services (CMS) has stated that healthcare spending in US rose 4.6% in 2017 touching $3.5 trillion. It also added that total spending in 2026 is going to hit $5.7 trillion, representing nearly 5.5% spike in spending annually.
The increasing insurance costs and drug spending are touted to be the major drivers for rise in spending. Another concern which needs to be worth looking is the rise of uninsured over the next decade. According to CMS, insured rate is going to touch 89.3% by 2026, which is a drop of 1.8% from 2017 levels.
It would be interesting to see how Gawande addresses the issues which are prevalent for decades. He can either take the tough and long-time route of reinventing the wheel right from the scratch or join hands with other organizations which are like-minded and fix the existing system. Gawande has been given the go-ahead to choose a right team which would help him to move ahead in the long-term journey.