Healthcare built around you?

Bezonomics
How Amazon Is Changing Our Lives, and What the World's Companies Are Learning from It

Amazon Care

Atul Gawande departure from Haven, the alliance between Amazon, JP Morgan and Berkshire for developing health services for their workers has created uncertainty about what is really Amazon going to do.
Anyway, if you look at the web you can check what is already doing for their employees: Amazon Care. Here you'll find the FAQS. Up to now everybody was thinking about health goods and businesses that Amazon could provide (details in this report). Right now they have started a pilot of health system that may be developed anywhere. A platform business, that starts slowly with and app and a physicians group.
If you want to undestand what Amazon really means for the economy (and for healthcare) than a new book can provide you some answers: Bezonomics.

The global business world will eventually divide into two camps—those who adopt their own version of Bezonomics, and those who don’t. Alphabet, Facebook, Netflix, Alibaba, JD.com, and Tencent have built huge, powerful businesses based on their ability to collect and analyze data, and keep applying those learnings to make their businesses smarter and their offerings to customers more attractive. In their pursuit of AI-driven technologies such as voice and facial recognition, the Internet of Things, and robotics, they’re creating automated business models that will crush traditional businesses that fail to adapt to this new world. And the emergence of 5G technology, which will replace our current digital networks, will only widen the gap. Experts predict that this next generation of Internet connectivity will be as much as a hundred times faster than today’s web.

The impact that Bezonomics is having on society is just as profound. Some of the big tech companies are sowing discord with fake news, interfering with elections, and violating personal privacy. As Apple CEO Tim Cook put it: “If you’ve built a chaos factory, you can’t dodge responsibility for the chaos.” The global wealth gap has become so out of kilter that politicians in America and Europe have singled out Amazon and other big tech companies for blame. These wealth-creation machines have become so efficient at creating riches for their top employees and shareholders that they’re likely to engender more public outrage and become easy targets for regulators—perhaps in some cases even be broken up.

A must read. In my opinion, what really brings Bezonomics to healthcare is the largest expression of commercialism. In other words, healthcare built around excedent appropriation, not around the patient. If this is so (and Atul Gawande departure is a signal) then we all have to stand up against this model and create value and platforms based on professionalism.

On Amazon (anything but a river)

 Amazon Unbound. Jeff Bezos and the Invention of a Global Empire

Twenty years ago, everybody thought that Amazon was going to sell books. Now that they have entered into health arena, it's the time to read this timely book.

Tot esperant Amazon care

Direct: The Rise of the Middleman Economy and the Revolution Underway 

Als USA ha crescut el paper dels intermediaris al sector salut i el The Economist en mostra la situació:

Tant que tothom s'omple la boca dels beneficis de les farmacèutiques ara resulta que als USA, en són uns altres qui els han passat davant. Quan una economia gasta el 17% del PIB en salut i té aquests nivells de concentració de mercat, hi ha motius per preocupar-se. La qüestió del moment és si Amazon care, un intermediari més, serà el proper disruptor o els que hi ha ara li posaran prou barreres d'entrada.

La importància de la intermediació en els sectors econòmics és objecte d'anàlisi a un llibre recent, aquí deixo la referència:

The business of pandemics

 THE BUSINESS OF PANDEMICS. The COVID-19 Story

Contents:

Chapter 1. Business and Management Lessons Learned from COVID-19

Jaime Ribera, IESE, Spain

Chapter 2. Developing Big Data, Computer Models, and Simulations for Predicting Its Spread

Scott Nestler, University of Notre Dame and Harrison Schramm, Center for Strategic and Budgetary Assessment, USA

Chapter 3. Conducting Global Business Virtually

Erin Makarius and Debmalya Mukharjee, University of Akron, USA

Chapter 4. Global Economic Impact Resulting from COVID-19

Thomas Hanson, Butler University, USA

Chapter 5. Communicating About COVID-19: Dealing with Fear and Emotion

Vincent Covella and Randall Hyer, Center for Risk Communication, USA

Chapter 6. Media and Communications About COVID-19: A WHO Perspective

John Butler and Gabriella Stern, WHO, Switzerland

Chapter 7. Growing Organizational Capacities for Increased Online Learning, Working, and Health

Sharif Nijim, University of Notre Dame and Paul Grist, Amazon Web Services (AWS)

Chapter 8. Social Impact Resulting from COVID-19

Wei Sun, Howard University, and Andrew Critchfield, Independent Scholar

Chapter 9. Online Learning and Educational Innovations Due to COVID-19

Darleen Opfer and Laura Hamilton, RAND Corporation, USA

Chapter 10. The New Work from Home Environment

David Cook, University College London (UCL), UK

Chapter 11. Re-Opening Markets and Businesses that Have Been Shut or Severely Curtailed

Rod McSherry and Matthew Jackson, University of Texas at San Antonio, USA

Chapter 12. Crisis Decision Making Using Analytics and Intuition

Gloria Wren, Loyola University-Maryland; Jean-Charles Pomerol, Université de la Sorbonne, Paris; Fred Adam and Karen Neville, UCC, Ireland

Bezonomics

 Invent and Wander: The Collected Writings of Jeff Bezos

We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.

(1997, Shareholder letter) 

The Everything Store: Jeff Bezos and the Age of Amazon

Platforms as essential services

Essential Platforms

Competition in Digital Markets 

Imagine you own a company, and you see millions of potential customers for a new product. But there is a problem: all these customers live on the other side of a river and the only way to reach them leads over a privately owned bridge. The owner of that sole bridge either prevents you from passing altogether or charges excessive fees. Long story short, if that is the case, this product line and, potentially, your entire business are doomed.

 Digital platforms can behave in that manner because they do not face serious competition. The platforms’ monopoly power mainly stems from network effects—that means the participation of additional users almost exponentially increases the utility of the network and creates enormous market entry barriers for potential competitors. The characteristics of data and algorithms further foreclose the markets.

 Google, Amazon, Facebook, Apple, and others behave just like the railroads did 100 years ago. Instead of physical infrastructure, like bridges and tunnels, the digital platforms leverage network effects that shield them from effective competition. 

To define the suitable remedies and to open the digital economy for competition, we can learn from the past. In the early twentieth century, the railroads controlled critical infrastructure and excluded competitors from crucial markets. The railroad monopolies rested on enormous investments in physical infrastructure that could not be replicated.

After all these years, a clear message, while the regulator is still on vacation. 

 

 

 

On Amazon (anything but a river) (2)

 Fulfillment. Winning and Losing in One-Click America

Amazon (not the rainforest)

 Now that Jeff Bezos anounces that he is to step aside as CEO, a summary in one figure:

The history, in one book:

Multisided platforms as monopolists

MODERN MONOPOLIES: What It Takes to Dominate the 21st-Century Economy

Platform business is the hottest topic in organizational economics. Linear business  considered as a traditional value chain is exactly the opposite of the economics of platforms. Two years ago I explained in several posts the emergence of this model. In 2004 Tirole and Rochet defined the network externalities that emerged from multisided platforms. Nowadays it is the hottest topic and a new book explains the consequences.

The secret to tech companies’ success lies not in the tech, but in it’s business model. A platform, by definition, creates value by facilitating an exchange between two or more interdependent groups. So, rather than making things, they simply connect people. The book helps you understand what made these companies so successful, how to tell a good platform from the bad, and how you could build one too

And by definition, platforms are the new modern monopolies different from the ones we have known.

Although monopolies get a bad rap, they’re not always a bad thing. In the short term, modern monopolies are often a boon to consumers. They bring valuable new inventions to market, and, in the case of platforms, they build new communities and markets that would not exist otherwise. The downside comes much later, as the monopolist ages and starts to crowd out potential new competitors without delivering new value.

Today Amazon is the most valuable company in the world. That's it. Let's wait for the downside. It may be too late to react. Regulators should read today Jean Tirole and apply his recommendations.

PS. Go to the conclusion and you'll find this statement:

So where should you be looking to next? Well, there are a few industries where the three factors are starting to converge
The first industry is health care, which we’ve touched on at several points in this book. Here you have platforms connecting doctors and patients in new ways, like Doctor on Demand, Teladoc, and ZocDoc. However, these platforms are just going after the low-hanging fruit. There’s still a tremendous amount of waste and inefficiency in the healthcare sector, especially in the United States. And wherever there’s waste and inefficiency, there’s a platform opportunity. For instance, although they’re relatively popular with casual consumers, wearable health devices are just starting to make their way into formal health care. These devices offer tremendous potential for improving patient wellness. But in order for them to be useful, a platform will need to build a unified network of doctors and patients. Despite the recent entrance of Silicon Valley heavyweights Apple and Google, this market is still wide open.

PS. Four additional useful books on the same topic:

Evans and Schmalensee are the best authors on this subject and this is the recommended book for economists.

A historical perspective on platforms.

A book that connects platforms with other topics of interest.

A management perspective on platforms.

Precision medicine initivatives around the world

Human genomics projects and precision medicine

Governments and research funders in developed world have decided to support precision medicine with different initiatives. Its scope and strenght it is quite diverse. It is good to know what's going on, and this is explained in an article in Nature. A data driven medicine is raising with next generation sequencing (NGS) tools:

The tremendous amount of data that NGS technologies are producing and the difficulties to manage and analyze such quantity of data require the implementation of powerful data centers for storage and analysis. Nevertheless, recent improvements in cloud computing allow managing and analyzing these huge data amounts remotely. With this goal in mind, the main internet companies have taken positions to compete in this area of NGS (data storage and analysis).
As three main examples, Google Genomics, Microsoft Genomics and Amazon Web Services (AWS) Genomics In The Cloud allow researchers to store, process, explore, and share large and complex data sets. The idea behind is to provide userfriendly tools to the researchers.

But finally it is no only for researchers, there will be one day that will be applied by clinicians. The whole article worths to be read.

Lita Cabellut. Barcelona exhibition

Com les xarxes socials alimenten la ira i la frustració

 Capital and ressentiment: The totalizing power of social fragmentation

Són tres les idees que conté capital i ressentiment. Primer, que Internet i les plataformes, que configuren el capitalisme actual (des d'Amazon fins a Google), constitueixen l'última metamorfosi d'un règim financer que va ser instal·lat a partir dels anys seixanta. Aquí, la informació ha esdevingut una mercaderia i una font de creació de valor. La segona idea és que ha passat una fusió entre el poder financer i les noves tecnologies de la informació. Les borses i el sistema dInternet treballen en conjunt en més dun sentit. Això ha donat per resultat una fragmentació i polarització de l'opinió pública, que sembla estar sempre estirada per les notícies falses i la necessitat d'informar-se. Això ha comportat que el risc de pèrdua de la democràcia sigui immediat. La tercera idea, i la més inquietant de totes, afirma que perquè aquest nou sistema funcioni, les plataformes d'Internet necessiten la presència activa de tots nosaltres a la web. Un dels combustibles més grans de les nostres actuacions i de totes les dades que produïm per al capital és, precisament, el ressentiment. És a dir, el nou ordre econòmic, consolidat sobre els mercats financers i les plataformes d'internet, transforma fins a l'última fibra de la nostra subjectivitat i els sentiments per produir valor i enriquir-se.

Platforms, a business model (2)

A long long time ago Michael Porter wrote Competitive Strategy a book that has been used as the bible of strategy.

Porter’s model identifies five forces that affect the strategic position of a particular business: the threat of new entrants to the market, the threat of substitute products or services, the bargaining power of customers, the bargaining power of suppliers, and the intensity of competitive rivalry in the industry. The goal of strategy is to control these five forces in such a way as to build a moat around the business and thereby render it unassailable.
Thus, when a firm can erect barriers to entry, it can keep competitors out, and entrants with substitute products cannot storm the castle. When a firm can subjugate suppliers, competition among them weakens their bargaining power so the firm can keep its costs low. When a firm can subjugate buyers by keeping them relatively small, disunited, and powerless, the firm can keep its prices high.
In this model, the firm maximizes profits by avoiding ruinous competition for itself but encouraging it for everyone else in the value chain. Advantage is found in industry structures that create a protective moat—one that enables the firm to segment markets, differentiate products, control resources, avoid price wars, and defend its profit margins.
For decades, companies have studied the five forces model and used it to guide their decisions about which markets to enter and exit, what mergers or acquisitions to consider, what sorts of product innovation to pursue, and what supply chain strategies to employ.

Now platforms add a new perspective,

Enter platforms. Many of the insights embodied in the five forces, resource-based, and hypercompetition models remain valid, but two new realities are now shaking up the world of strategy.
First, firms that understand how platforms work can now intentionally manipulate network effects to remake markets, not just respond to them. The implicit assumption in traditional business strategy that competition is a zero-sum game is far less applicable in the world of platforms. Rather than re-dividing a pie of more-or-less static size, platform businesses often grow the pie (as, for example, Amazon has done by innovating new models, such as self-publishing and publishing on demand, within the traditional book industry) or create an alternative pie that taps new markets and sources of supply (as Airbnb and Uber have done alongside the traditional hotel and taxi industries). Actively managing network effects changes the shape of markets rather than taking them as fixed.
Second, platforms turn businesses inside out, moving managerial influence from inside to outside the firm’s boundaries. Thus, a firm no longer needs to seize every new opportunity on its own; instead, it can pursue only the best opportunities while helping ecosystem partners seize the others, with all partners sharing the value they jointly create.13
These two new realities add a dramatic layer of complexity to business competition. Platform strategy resembles traditional strategy much the way three-dimensional chess resembles the traditional game.14 Within the ecosystem, the lead firm negotiates dynamic tradeoffs involving competition at three levels: platform against platform, platform against partner, and partner against partner.

These are excerpts from the book "Platform revolution" a must read if you want to understand what's going on in value creation in a connected world. In chapter 12 you'll find some comments on health sector, very succint and general.

Diversity and differences in nature and society

Inequality in nature and society

If the title of an article is about "inequality", our brain starts thinking inmediately about equality, with some moral background. It's unavoidable. If the title is "diversity and differences", than we admit it as statement. I would suggest to have a look at this interesting article in PNAS that compares what happens in society and in nature, please forget any previous influence of values.

As a first illustration of the similarities of patterns in nature and society, consider the wealth distribution of the world’s richest individuals compared with the abundance distribution of the Amazon’s most common trees (Fig. 1 A and B). The patterns are almost indistinguishable from one another. For a more systematic comparison, we also analyzed the Gini indices of a wide range of natural communities and societies (Fig. 1 C and D). The Gini index is an indicator of inequality that ranges from 0 for entirely equal distributions to 1 for the most unequal situation. It is a more integrative indicator of inequality than the fraction that represents 50%, but the two are closely related in practice (SI Appendix, section 3). Surprisingly, Gini indices for our natural communities
are quite similar to the Gini indices for wealth distributions of 181 countries (data sources listed in SI Appendix, section 1).

This is only a statement that you can confirm.

 Our analysis suggests that even if all actors are equivalent, in the absence of counteracting forces, there is an intrinsic tendency for significant inequality to arise from multiplicative chance effects. Although the surprising similarity between inequality of species abundances and wealth may have the same roots on an abstract level, this does not imply that wealth inequality is “natural.” Indeed, in nature, the amount of resources held by individuals (e.g., territory size) is typically quite equal within a species.

Now the metaphor has been clarified. Differences in wealth does not imply that are "natural". Fortunately our country is less different now than before. We have moved from a Gini of 33 in 2013 to 31.4 in 2016, quite good. You'll not find this reflected in any newspaper -it seems that this statement does not sells issues-, though these are the official figures.