YC: Requests for Startups

Eliminating middlemen in healthcare

In the spirit of Jeff Bezos’ “your margin is my opportunity”, we believe it’s possible to build a highly profitable business and make the system more efficient at the same time.

Didn't Amazon try this and is now shutting down part of its healthcare (pill selling) play?

Health Care is one field where nobody can seriously compete with state or state navked players, aka public health care or single payer.

Especially not VC backed start-ups...

What's the reason for this? Is this because of extensive regulation due to insurer/hospital lobbying and patient safety laws?

Patient and health care regulation, for good reasons, but basically the number of shoulders to spread individual risks across (aka insurance). The latter is much easier when backed, directly or indirectly, by nation state households and budgets. Nothing beats the ability of controlling your own currency.

There is plenty of space for VC backed start-ups to compete in healthcare. It would be foolish to go head-to-head with a company like HCA or UnitedHealth Group. But there is a lot of opportunity to sell them better software which improves the experience for everyone in the system. Or build better medical devices or improve efficiency in the drug development process or a zillion other niche areas.

Amazon partnered with Berkshire Hathaway and JP Morgan on that project. They had a built-in base of employees larger than the population of Wyoming. Still failed.

Someone needs to tackle Epic in the EMR space and overthrow their closed system.

They didn't go big enough: they should have become a payer/insurer. If they started with their ~1M US employees and then applied the flywheel to HC insurance, they could have essentially created a single-payer system by default.

Slightly scary to think about Amazon having a near monopoly on healthcare, but ask yourself whether our current reality is better or worse…

Y Combinator has already funded several Epic competitors in the EHR space including DrChrono, Medplum, and Akute Health. Always room for more. The requirements for an EHR that can work in any provider organization are so overwhelming that no startup could directly compete against Epic. But a startup could initially target a particular medical specialty or facility type that Epic doesn't support very well, then expand out from there.

https://www.ycombinator.com/companies/industry/healthcare-it

Epic is no longer a closed system. They now support a wide range of open standard APIs.

https://open.epic.com/

Amazon is already an insurer, and has been for years. They are self-insured for the health plans they offer to employees, and only rely on third-party payers for network management and claims administration. They could take that part in house but it's a low-margin business where they would have no particular advantage.

You mean they provide self-funded insurance, or are literally underwriting plans? It's quite common for companies to be self-funded/"self-insured," but rely on a large payer like Aetna to do all the work.

If they cut out the middleman, they could negotiate directly with providers and Pharma, lowering the "fully loaded" cost of their payroll. It would be a massive savings.

Once they did it for 1M people, the hard work would be over, and they could sell Amazon plans to the public.

They use Premea Blue cross for administration of the plan.

They created a joint venture with JP Morgan and Berkshire Hathaway several years ago called Havaen to try and fix insurance; however, it was shut down. https://hbr.org/2021/01/why-haven-healthcare-failed

There's no real underwriting per se. My understanding is that Amazon just pays claims as those come in. They rely on large payers to do all the network and formulary management including negotiating rates with providers. There's no reason to expect that Amazon could negotiate lower rates than Aetna, which already covers 22M lives.

In order to achieve any real savings, Amazon would have to build up a captive provider organization with practitioners as direct employees. Which all of the large payers are also increasingly doing. Basically the industry is consolidating and converging on the Kaiser Permanente business model. Eventually most US residents will obtain healthcare from a handful of huge nationwide "payvider" organizations.

There needs to be anti-trust action taken against Epic.

Yes, and Amazon could have jumped in. They already had providers via Care and One Medical. It would have been a small leap to buy whole hospital systems.