Everything about Amazon's announcement is counter-intuitive, yet within 12 months we could see new solutions in market

After years of eager anticipation / dread (depending on where one sits) Amazon has made a big public announcement about its intentions in healthcare:

A not-for-profit JV employer-based model with 2 finance firms

The world’s 3rd largest retailer, whose first principle is to “obsess over the customer” (spoiler alert - in healthcare it’s the consumer) is disrupting healthcare by launching… an employer-based model? When the very construct of employment is eroding due to the gig economy...

• Time to Market: While Berkshire Hathaway’s 60+ companies purchase employee benefits independently and thus are unlikely to employ solutions en masse for the 2019 benefit year, it’s absolutely feasible for NewCo to launch solutions at scale for 1/1/2019 benefits cycle given the M&A capabilities, vendor solutions and internal expertise of the JV. 
• Shifting from defined benefit to defined contribution, akin to the Pension-to-401k Plan, would correct a significant market distortion.

Three of the most successful, financially savvy, for-profit CEOs have gotten together to create a paradigm shift in the efficiency of the healthcare value chain by unleashing technology. Why would they create a not-for-profit?

"It's bad enough that the most important [person] in finance, the most important [person] in retail and the best investor alive are teaming up to tackle the problems of our health care system, but even worse for the industry, they're doing it for free" "Mad Money” host Jim Cramer

And how about a JV, which is typically employed to tap into capabilities one’s firm doesn’t possess? Bain & Co research found that the value of JVs grew at twice the rate of M&A deals. But why BH and JPM?

• The combined scale of employees is large but not large enough, and while the deep expertise and market leadership of BH and JPM may be unequivocal, their differentiated contributions to the JV are unclear. 
• Berkshire Hathaway is in the health reinsurance business – a critical function
• Will Andy Slavitt be the CEO?

Of course, notwithstanding this announcement, Amazon has numerous initiatives underway in various divisions, including: AWS selling into the health sector; 1492, which focuses on hardware and software including EMR and telemedicine; selling medical supplies and equipment; selling doctor-prescribed genetic tests DTC on Amazon.com; and a unit working toward selling pharmaceuticals. 

As many have noted, with its logistics expertise, Amazon is well positioned to disrupt the pharmacy distribution space. And a well-timed consumer poll found 48% would be comfortable using Amazon for prescription drug delivery. $1 in $5 goes to middlemen, and it’s the fastest-growing cost segment within healthcare.

This could get the new JV close to a 20% cost reduction right off the bat. Indeed, initial reports indicate that members of Health Transformation Alliance, a group of 46 large employers, expects to save ~15% in prescription costs year-over-year via CVS and OptumRx.

So what are experts saying about industry stakeholders?

Notably, several sources cite Alphabet as perhaps the most active American consumer tech giant in health and biotech.

One additional repercussion we could see coming out of the Amazon announcement: healthcare companies, investors and recruiters placing a premium on finance acumen and experience.

Historically, industry leadership has over-indexed to Clinicians & Scientific Research. The past 5+ years have been about Tech and DTC expertise - and that will certainly continue. Finance-turned-operators are certainly getting a boost in reputation with the Amazon JV being struck between 3 of the most respected financial minds alive in the US today, and the strong position of UNH-Optum, where both current CEO David Wichmann and previous CEO Stephen Hemsley are CFO-turned-CEOs.

My colleague Graham McNally said it well: We know one company (or JV) big, small, disruptive, or transformative, cannot fix our system alone... but it certainly can influence and accelerate. Here's hoping for more of that...