Project Management and the Joint Healthcare Venture

One major story in the news at the moment is the joint venture of Amazon, Berkshire Hathaway, and JP Morgan Chase to provide health care for their employees.  Their venture can be analyzed through the lens of project management.  Project management, which is a systemized, phased approach to defining, organizing, planning, monitoring, and controlling projects.  A project is an interrelated set of activities with a definite starting and ending point, which results in a unique outcome for a specific allocation of resources, while a collection of projects is called a program.

 

The joint healthcare project is a result of the high costs of providing health care along with inefficiencies and time lags in the coverage.  The cost of healthcare grew 4.3% in 2016 to 3.3 trillion and accounts for 18% of the nation’s GDP (WSJ).  All three of these companies make up a major part of the market and their efforts in the field may serve as an example for companies to follow afterward.  Together they employ one million people, a major part of the workforce, with Amazon planning to employ 100,000 more through the opening of their new headquarters.

 

It is still somewhat unclear as to how these companies will go about improving efficiency in healthcare.  While they have large amounts of data to analyze consumer choices and can gain understanding of the health care industry, they will need to create a plan for program and project management.  While JP Morgan has sent a small strategy team to collaborate with teams in Amazon and Berkshire Hathaway, in the future they will likely need to devote a larger team and more resources to this project.

 

Project management involves multiple steps, the first of which is defining the scope and objectives of a project.  While the companies have mainly addressed this point, they need to be more specific about their objectives, especially in regards to what improvements they hope to make.  For example, it is unclear whether they will try to improve costs through technology or by reducing the middlemen role in healthcare.

Next they will need to select a project manager and team.  While there are already teams in place designed to tackle this project, it is likely more specified roles will need to be designated with facilitators, communicators, and decision makers.  Todd Combs, an investment officer at Berkshire Hathaway, Marvelle Sullivan Berchtold, a managing director of JPMorgan and Beth Galetti, a senior vice president at Amazon, are overseeing the joint program formation at the moment.

 

The last step will be to recognize an organizational structure.  The three types of structures are:

  • Functional: The project is housed in a specific department or functional area, presumably the one with the most interest in the project.
  • Pure Project: The team members work exclusively for the project manager on a particular project.
  • Matrix: The matrix structure is a compromise between the functional and pure project structures.

It is likely that the three companies will utilize a matrix structure because it allows for the most flexibility.  This way each area can have control over their particular aspects of the healthcare project while there will still be a project manager to oversee the entire project.

 

 

 

 

https://www.wsj.com/articles/amazon-berkshire-hathaway-jpmorgan-to-partner-on-health-care-1517315659?mod=searchresults&page=1&pos=14

https://www.wsj.com/articles/jpmorgan-to-banking-clients-joint-health-care-venture-is-no-threat-1517745601?mod=searchresults&page=1&pos=2

https://www.nytimes.com/2018/01/30/technology/amazon-berkshire-hathaway-jpmorgan-health-care.html

One thought on “Project Management and the Joint Healthcare Venture

  • February 7, 2018 at 9:56 pm
    Permalink

    Katherine,

    The United States is one of the wealthiest countries that spends the most on healthcare compared to any other country. Currently, healthcare is a hot debate topic with the main issue being the cost of healthcare. It does not surprise me that three Fortune 500 companies; Amazon, Berkshire Hathaway, and JP Morgan Chase, are creating a joint venture with the aim of reducing the cost of healthcare. Companies are always looking for ways to save money and cut costs. Healthcare is one of the largest costs for a company.
    These three Fortune 500 companies have their work cut out for them. As pointed out in the video attached, it is difficult to change the US healthcare system as a result of it being designed around healthcare being a tax-free benefit companies that can give their employees healthcare. These companies want to start a new company in order to fix the inefficiencies and time lags in healthcare coverage. If these companies successfully launch their healthcare company, it will change how the healthcare system works in the US while most likely have effects in other countries.

    As you pointed out in your post, the companies have begun the steps of project management. However, it appears to me that the companies are still in the early phases of this process since there are no specifics outlined. The companies seem to have a general plan for their joint healthcare program. I think in order for these companies to be successful in managing this program; they need to clearly define how they are attempting to reduce the cost of healthcare. In addition, they are going to need to assign specific roles for the members of the project team and management, Each member involved knows specifically what they are responsible for. I believe it appears to the general public that these three companies only have a general plan for their joint healthcare program. , However, I think they have the specific plan detailed and outlined for internal use only as these companies are forming a new venture. This leaves the public wondering how exactly Amazon, Berkshire Hathaway, and JP Morgan Chase are going to transform healthcare and how are they going to approach the healthcare sector.

    Here is an article (https://hbr.org/2018/02/what-could-amazons-approach-to-health-care-look-like) that shows an idea on how Amazon could approach healthcare based on the approaches Amazon has used to reinvent how services are delivered to customers. The article mentions that healthcare requires a deep understanding of knowledge of health, medicine, and insurance which may be a challenge for Amazon. However, Amazon could be successful if they focus their attention on the operational execution including data analysis and customer service. Therefore, Amazon could focus their attention to following the steps of managing a project -defining, organizing, planning, monitoring, and controlling.

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