“What is bitcoin? I don’t understand how fake money works.”
These were the words of my 9-year-old last week.
Let me try to help him, and you, out.
Bitcoin is not fake money. It’s digital, or virtual, currency, created in 2009 by an unknown person using the alias Satoshi Nakamoto. It’s used for online transactions — some legitimate (Microsoft, Overstock), and some not legitimate (ransomware, dark web purchases).
It’s also traded online, which has made it very, very valuable. In fact, bitcoins do not have a set value. Their value is based solely on global exchanges and depends on how it’s bought and sold online.
As of mid-February, one bitcoin was trading online for $9,575.
Because of the skyrocketing value of bitcoin, the more forward thinking of employers may want to pay employees in bitcoins instead of dollars. Moreover, your employees may want to accept payment of their wages in these valuable bitcoins.
Tread very carefully, however.
The IRS treats bitcoin and other virtual or cryptocurrencies as property, not as currency.
Because the IRS treats bitcoin as property, it’s very likely that the DOL will not consider it “cash” or a “negotiable instrument” (i.e., a paycheck) for purposes of wage payments.
Thus, if you are not properly paying your employees under the FLSA, you have failed to pay them a minimum wage (a big FLSA no-no), no matter how valuable the bitcoins you’re providing may be.
is not correlated to hours worked, production achieved, or efficiency attained
its value will count as part of an employee’s regular rate, and must therefore be factored into non-exempt employees’ overtime calculations.
I applaud any employer that looks to get creative with how it compensates its employees or rewards performance. In this case, however, a little bit of discretion will go a long way toward wage-hour compliance and avoiding an expensive FLSA mistake.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
Raef Lawson worked as a restaurant delivery driver for online food delivery service Grubhub for four months in late 2015 and early 2016. He claimed that the company misclassified him as an independent contractor and owed him overtime for hours he worked over 40 in any workweek.
Last week, in Lawson v. Grubhub [pdf], a California federal judge granted the gig-employer a huge victory by ruling that Lawson and all other similarly situated drivers are independent contractors and not employees.
The court found that Grubhub lacked the necessary control over the driver’s work for him to be considered an employee.
In California (as in Ohio, most other states, and under current federal law) the test to determine whether a worker is an employee or an independent contractor is whether the business has “the right to control the manner and means of accomplishing the result desired.”
The judge found that Grubhub did not exercise sufficient control, as it:
Exercised little control over how Lawson made his deliveries, not interfering with his choice of vehicle;
Didn’t control his appearance, require him to wear a special uniform, or meet any appearance standards;
Lacked required training or orientation;
Imposed no limits in passengers in the vehicles during working hours;
Didn’t control, whether, and for how long, a driver works;
Allowed drivers to cancel their shifts at any time without penalty or consequences; and
Prepared no performance evaluations.
And while one cannot understate the significance for employers of the first federal court opinion to hold that a gig worker is an independent contractor and not an employee, perhaps the most important aspect of the opinion is Magistrate Judge Jacqueline Scott Corley’s call to legislative arms to address this issue:
[W]hether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition. If Mr. Lawson is an employee, he has rights to minimum wage, overtime, expense reimbursement and workers compensation benefits. If he is not, he gets none. With the advent of the gig economy, and the creation of a low wage workforce performing low skill but highly flexible episodic jobs, the legislature may want to address this stark dichotomy. In the meantime the Court must answer the question one way or the other.
In other words, the gig economy is not going away and will only increase in importance. As the number of gig workers increases, what will our government do to protect their pay, their benefits, their safety and their civil rights? Because if they are independent contractors, they enjoy almost no protections under the current state of the law.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
The Bureau of Labor Statistics reports that today’s mobile workforce is changing jobs nearly a dozen times.
For 35- to 44-year-olds, a little over a third take jobs that last less than a year. It doesn’t allow for a lot of time to sock away money in a 401(k) account and as a result, many workers are cashing out what little they have.
It’s a serious problem because too often people don’t realize the whopping penalties or the consequences they face when wiping out retirement savings, said Spencer Williams, president and CEO of financial consulting group Retirement Clearinghouse.
“We need to stop the cash-out syndrome,” Williams said.
It doesn’t seem like companies should care whether a worker leaving a job decides to cash out the money they saved in a 401(k) plan, but studies have shown that people who don’t have enough saved for retirement wind up staying on the job longer and are more stressed about their finances, said Keith Overly, executive director for the state of Ohio Deferred Compensation plan.
Williams added that employers should be asking new hires whether they have a 401(k) from their old job and should try to help with the paperwork that goes into doing the transfer.
“We are all better off if there is not that kind of leakage,” Overly said. “Having a healthy [retirement balance] can be one of the most important benefits for an employee and an employer.”
About 14.8 million, or 22 percent, of active and contributing defined-contribution participants will change jobs each year, according to research from the Employee Benefit Research Institute. Of those job changers, Retirement Clearinghouse reports about 41 percent of these people will cash out of their 401(k).
“Someone with a $15,000 balance doesn’t want to do the work,” to roll the balance over to another retirement savings account, Williams said.
It was important for people to realize the problem, so to bring awareness, Retirement Clearinghouse created the National Retirement Savings Cash Out Clock. It is similar to the national debt clock that ticks away in New York City, but this one is online and focuses on year-to-date cash out and leakage rates from 401(k)s. By the end of 2017, it is expected to hit $68 billion.
If a worker decides to cash out, employers are required to keep 20 percent of the full amount to pay income tax. If the worker is under 59 ½ years old, they pay an extra 10 percent withdrawal penalty as well. According to American Century Investments Cash Out Calculator, a 29-year-old cashing out a $25,000 account would walk away with $18,000. Had they kept it in a 401(k) returning about 7 percent a year on investments, the calculator shows that money would grow to $285,599 at age 65.
“This can be a big problem for people,” Overly said. Retirement plans “aren’t supposed to be used like bank accounts.”
Surprisingly, only 37 percent of cash outs were for economic emergencies, according to a 2015 survey by Boston Research Technologies. Williams added that often people cash out simply because it was the easier route for the person at the time.
“The best choices are not always the easiest choices,” he said.
Overly said participants in his plan need to talk to management when cashing out. That provides an opportunity to make sure the person is aware of what they are doing.
“In some cases there may be some valid reasons, but your retirement plan should be your last resort,” Overly said.
Williams suggested companies should make it easier for new employees to roll over accounts from their old job to their new one. Retirement Clearinghouse is working with the Labor Department to make 401(k) plans automatically portable to a new employer. This way, 401(k) accounts would automatically follow a worker to a new job and get rolled into that company’s plan.
For the most part, rollovers are allowed today, but the process isn’t automatic or easy. In addition, it normally requires a good bit of paperwork for the participant, Williams said.
“By law, it is portable but in practice, people are left to do this on their own. This has lead to a severe amount of cash outs,” Williams said. “We’re never going to stop all of this, but implementing a program to help employees bring the money with them should help.”
Patty Kujawa is a writer in the Milwaukee area. Comment below or email editors@workforce.com.
The policy-making body of the American Bar Association has adopted a formal resolution that urges legal employers to prohibit, prevent, and promptly redress sexual harassment and retaliation claims.
Moreover, to make sure that law-firm leaders are paying close enough attention, Resolution 302 [pdf] also urges that firms adopt measures to ensure that the heads of law firms are informed of the financial settlements of such claims.
The resolution contains the following key measures:
Inclusion of “gender,” “gender identity,” and “sexual orientation” in the definition of “sex.”
Encouragement all employers to disseminate a clear statement that all harassment, including harassment based on sex, will not be tolerated.
Confirmation that the harassment policy applies to conduct by anyone at work, or at or in connection with any work related function.
Creation of regular and effective training programs.
Provision of alternative methods for reporting violations of the policy, including at least one anonymous method.
Communication, at the start of employment, of the process to report harassment to a government agency.
Investigation of all complaints in a prompt, competent, fair, thorough, and objective manner, to include a report to the complainant at the end of the investigation.
Implementation of corrective actions to prevent and correct unlawful harassment or retaliation in the workplace, to include the restoration of lost wages or bonuses to the complainant, and disciplinary action up to and including termination of the accused.
Prohibition of retaliation against complainants and witnesses.
I quibble with some of these. For example, I typically do not think it’s a good idea to provide the investigatory report as part of the closure of the investigation. I also do not include the EEOC’s phone number and URL in harassment policies I draft.
Broadly speaking, however, I’m proud that my profession is doing something positive to shift the narrative from, “#MeToo I’ve been harassed,” to “#MeToo I’m doing something about it.”
So ask yourself, what are you doing? Are you part of the harassment solution or part of the harassment problem?
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
Biometric privacy lawsuits could be on the rise soon among employers.
You can hardly pick up a smartphone these days without reading about — and experiencing — how biometric authentication technology is changing our lives and businesses.
Finger and facial recognition have become so commonplace that you might not think twice before asking your employees to authenticate their time using similar technologies, especially because traditional punchcard systems can be inefficient and vulnerable to fraud or abuse.
But a recent spike in litigation illustrates the legal risks to introducing biometric authentication devices and practices to your business. More than 50 companies are now defending class-action lawsuits under the Illinois Biometric Information Privacy Act, or BIPA, which provides rules for the disclosure, retention and protection of biometric data, and permits any person aggrieved by a violation to recover $1,000 for each negligent violation and $5,000 for each intentional violation.
Texas and Washington have passed similar laws, and New York has a labor law governing the collection of biometric information, but unlike BIPA they do not create an individual right to sue.
BIPA governs “biometric identifiers” and “biometric information.” Biometric identifier means “a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry.” Biometric information means “any information … based on an individual’s biometric identifier used to identify an individual.”
To comply with BIPA, companies that collect or possess biometric identifiers or information must satisfy six statutory provisions.
Written policy. Companies must have a policy, “made available to the public,” that describes their retention schedule and guidelines for permanently destroying the biometric data it handles. Importantly, the policy must provide for the destruction of a person’s biometrics at the earlier of (a) when the company’s initial purpose for collecting that information has been satisfied; or (b) within three years of the person’s last interaction with the company.
Written notice. Companies must provide written notice to each person whose biometrics it handles, stating (a) that it is collecting/storing their biometrics; and (b) the specific purpose and length of term for the collection, storage and use.
Written release. Companies must obtain a “written release” from each person whose biometrics will be handled.
Consent to disclose. Companies that disclose biometrics to third parties must, in most circumstances, obtain consent to do so.
Companies must store, transmit and protect the biometrics it handles in a manner that is both reasonable and commensurate with the protection it affords similarly confidential and sensitive information.
Do not use biometrics for profit. Companies must never sell, lease, trade or “otherwise profit from” the biometrics it handles.
Courts Interpreting BIPA
Though BIPA was enacted in 2008, it was not the subject of litigation until the past few years, and the most dramatic uptick in filings occurred in late 2017. The majority of those actions involve the same basic factual situation: a current or former employee is suing because they scanned their finger to clock in and out of work.
But the most important BIPA case so far, decided Dec. 21, has a slightly different context. In Rosenbach v. Six Flags, the plaintiff, Stacy Rosenbach, sued Six Flags Entertainment Corp. and Great America LLC under BIPA for scanning her son’s fingerprints to verify his identity as a season pass holder. The Illinois Appellate Court ruled that a plaintiff “must allege some actual harm” to sue under BIPA, adding that “[i]f a person alleges only a technical violation of [BIPA] without alleging any injury or adverse effect, then he or she is not aggrieved and may not recover[.]”
The Illinois Appellate Court’s ruling makes sense. First, looking to BIPA’s language, only a “person aggrieved” is permitted to sue, strongly indicating that a plaintiff must allege an actual injury. Second, from a practical perspective, the vast majority of plaintiffs acknowledge voluntarily scanning their own fingers. Even so, this decision is poised to have far-reaching implications, and it seems likely that the authoritative interpretation of “person aggrieved” will ultimately come from a future decision of the Illinois Supreme Court.
With all this in mind, what can you do to minimize the risk and expense that biometric privacy class actions pose to your business?
First, determine whether any biometric privacy laws apply to your business. This may require consulting with an attorney familiar with biometric privacy laws and professionals who understand your underlying technologies. Even if your business does not collect biometric data from Illinois, Washington, Texas or New York residents, consider whether it might in the future or whether similar laws may be adopted in applicable jurisdictions (Michigan and Connecticut are considering similar laws). Second, if biometric privacy laws apply, understand the requirements and get into compliance. Regardless of whether you have been sued, you will need to determine whether your existing policies and practices satisfy some or all of the biometric privacy legal requirements. For those policies and practices that are noncompliant, you will need to design and implement new ones. Finally, if you have been sued, then in addition to assessing and remediating compliance issues, your attorney will need to consider employing certain strategies inherent in these cases with the potential to reduce litigation costs and increase your chance of success.
The recent spate of BIPA lawsuits represents a coordinated effort by the plaintiff’s bar to catch corporate legal departments off guard. Nevertheless, it is less likely an anomaly than a sign of things to come as biometric technologies continue to pervade our personal and business lives. Companies would do well to assess their technological and legal options and vulnerabilities now and to maintain vigilance over this emerging field in the future.
Anna S. Knight is administrative managing partner and Patrick J. Castle is an attorney with Shook, Hardy & Bacon in Chicago. Comment below or email editors@workforce.com.
I drove to New Orleans with my sister and her pit bull in December. Fourteen hours on the road from Chicago, so a lot of our time was occupied by podcasts. I can’t get one of them out of my head after reading about one of the big health-care related developments in the news recently.
I’m talking about a rule that medical professionals can opt out of performing certain procedures for moral or religious reasons. Many people have written about this. (See Here, here and here.) Religion and morality aside, to me this story says more about the ethics of medicine. To what degree should professionals get to choose who they treat?
I won’t go into the focus of other articles. After all, much has been written on this already. What the development did remind me of was a podcast that my sister introduced me to on our road trip, RadioLab’s “Playing God.”
This episode explored the concept of triage — the process of determining the priority of patients’ treatments based on the severity of their condition — in a very specific scenario. When Hurricane Katrina hit New Orleans in 2005, Memorial Hospital had too many patients and limited resources. They had to come up with a system to decide who got care and who did not. Essentially, these everyday medical professionals had to decide who lived and who died.
It also explored what one town did to establish triage rules just in case they’d be necessary at some point in time. A group of researchers wanted to come up with rules so that medical professionals did not have to create their own system on the spot in an emergency. They could just stick with the chosen triage plan instead and spend their time treating people instead of compromising with each other on a system and wasting valuable time.
Ringo the dog on the road to New Orleans. Photo by Andie Burjek
They came up with a system in collaboration with the public through something like a grim, futuristic town hall meeting. They gave these people the scenario: a deadly flu hits the American public. There’s a limited amount of vaccines available. The also gave these people guidelines for how they can choose who gets care and who doesn’t. You can only base the decision on medical factors and not issues of race, religion, gender, nationality, citizenship status, criminal record, etc.
For example, the people who are most likely to survive would be selected to get the vaccine (leaving behind the sickest). Or, choose the people who have the most years to live if they survive (leaving behind the sickest and the oldest). Each with comes with its own set of problems but also has its own set of pros.
No solution would be perfect, but a solution based on medical factors rather than non-medical factors was the best option.
My takeaway: my first reaction was that people who have committed violent crimes like murder, domestic abuse or assault should not be able to get care in this scenario. I adamantly believed that, and then the more I thought about it, the more I realized that I could never be a medical professional. Because why should I let morality get in the way of giving people medical care? Isn’t that the point of the Hippocratic oath, that it comes down to medical factors and you don’t let your own personal beliefs get in the way of treating a patient?
Because many people justify their bigotry against gender and sexual minorities in religious terms, this new division is quite alarming news for LGBTQ people. The creation of this division appears to open the door for medical providers to, for example, refuse to provide gender confirmation treatment for trans people, or refuse to treat children with same-sex parents.
One attendee at the ceremony announcing this new division was Sara Hellwege, a nurse-midwife who sued in 2014 after being denied a job at a Florida health center. The reason she didn’t get the job? She admitted that she would refuse to prescribe birth control pills because of her religious beliefs—and prescribing birth control pills was part of the job she applied for.
She had no business seeking the position in the first place.
David Gorski, a surgeon and editor of the website Science-Based Medicine, expressed the views of many medical providers, myself included, when he tweeted that “physicians who refuse to treat certain patients based on their religious beliefs are in the wrong profession and should never have become doctors in the first place.”
“Doctors are people; people love and hate, and have biases and blind spots,” Zackary Berger told me. Berger is an internal medicine physician in Baltimore and treasurer of Clinicians for Progressive Care. “On the other hand, as professionals and as members of the US health care system, doctors must treat everyone no matter who they are.”
MORE HEALTH AND WELLNESS GEMS
I’m trying out this section where I share wellness-related stories caught my attention in the past week. There’s so much to write about in this space that it’s impossible to do a deep dive on every topic. Hope this helps you learn a little more about what’s going on in the wellness world!
Bold Collaboration: While the Amazon-Berkshire-JPMorgan health care company collaboration is the most ambitious employer effort to date to control health care expenses, Zack Cooper, an economist at Yale School of Public Health, was quoted as saying it’s “a bit arrogant to think that three big firms are going to come in and re-invent health care,” according to a Chicago Tribune article.
The three companies’ joint venture brings up some data privacy concerns. Amazon already has access to a lot of people’s data. What happens if they get access to health care data? There’s “a constant tension between the pros of predictive health care data and the challenges,” according to the Washington Post.
Stand Up-Sit Down: There’s a lot of hoopla in the wellness world about the health benefits of standing desks. But the research on this topic is still very young. Research should acknowledge that there could be downsides to prolonged standing, according to the Los Angeles Times. “We talk a lot about the need to avoid sitting for too long, and I think the interpretation of that for some people is, ‘OK, let’s just stand. But the solution is not just to stand all those hours,’ ” said one researcher.
Getting Schooled: Providing child-care benefits to educators can be good for school districts, according to Education Week. Teaching is “actually not as family-friendly a position as one might imagine,” said one source, noting the lack of flexibility in many teachers’ schedules.
Andie Burjek is a Workforce associate editor. Comment below or email editors@workforce.com.
The fourth nominee for the worst employer of 2018 is the Humane Society of the United States, which last month voted to retain its CEO despite an internal investigation that identified and corroborated three complains of sexual harassment against him.
The internal investigation, which was conducted by Washington law firm Morgan Lewis last month, detailed the stories of three women who said Pacelle harassed them, with complaints dating to 2005.
The nonprofit group also offered settlements to three other workers who said they were dismissed or demoted after speaking up about Pacelle’s alleged sexual misconduct, according to a memo describing the law firm’s findings. …
The Humane Society investigation interviewed 33 witnesses, including Pacelle, outlining complaints from a former intern who said Pacelle kissed her against her will in 2005; a former employee who said he asked to masturbate in front of her and offered her oral sex in a hotel room in 2006; and a former employee who said he stopped by her office late one night in 2012 and asked her to salsa dance with him.
If you’re curious, Politico outlines all of the sordid allegations. Under the force of public pressure and the threats of many high-dollar donors, Pacelle has since resigned.
If you value your CEO more than the rights of your employees to be free from harassment, you might be the worst employer of 2018.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
Last night, my Philadelphia Eagles won the Super Bowl.
Today, the FMLA turns 25.
Over the past 25 years, it is estimated that employees have used the Family Medical and Leave Act over 200 million times to take job-protected, unpaid time off work to address their own serious medical condition or care for a family member.
And yet, in those 25 years, Congress has only amended the law once, to provide for military family leave.
There is still so much more to accomplish in regards to time off for the American worker, by expanding the FMLA to cover:
Workers in businesses with fewer than 50 employees
Paid leave
Workers who need time to care for adult children, domestic partners, siblings, grandparents, grandchildren and other close family members
Workers who need time to attend a child’s school meetings or other important activities for their children
Workers who need time to address the effects of domestic violence, stalking, or sexual assault
I can hear the employer complaints now.
“The FMLA is already hard enough to manage.”
All I’m suggesting is adding categories of leave, which should not greatly add to your administrative burden.
“Employees will abuse the system and take advantage.”
That’s not an FMLA issue. That’s an employee management issue. Yes, some employees will abuse, and they should be fired. But, the risk of abuse is not a reason to offer protections to employees.
So today, I call on Congress and the White House to do more to protect the sanctity of the family by looking at reasonable expansions to the FMLA to offer greater protections to workers who need time off from work, and job protections, for things like family care, domestic violence and sexual assault, and children’s activities.
No employee should be forced to choose between their own health and their job, or the health of a loved one and their job, or going to see their child perform in a school play and their job.
Employees are entitled to have personal lives and jobs. It never should be an either/or proposition.
Oh, and back to the Super Bowl. Don’t fret employers. I’m not proposing that the FMLA protects Super Bowl Monday. Well, at least not in cities other than Philly today.
Jon Hyman is a partner at Meyers, Roman, Friedberg & Lewis in Cleveland. Comment below or email editors@workforce.com. Follow Hyman’s blog at Workforce.com/PracticalEmployer.
For seven years, Raymond Severson worked as a fabricator of retail display fixtures, a physically demanding job, for Heartland Woodcraft Inc.
At the end of a 12-week leave under the FMLA to deal with back pain Severson underwent surgery, which required that he take an additional two to three months off from his job to recover. Heartland denied Severson’s request for additional leave and terminated his employment but invited him to reapply once cleared for work.
Instead of reapplying, Severson sued Heartland under the ADA for denying him the accommodation of three-months leave — beyond the 12 weeks of FMLA required leave — and terminating his employment. While it is the EEOC’s position “that compliance with the FMLA does not necessarily meet an employer’s obligation under the ADA,” the 7th Circuit Court held in Severson v. Heartland Woodcraft Inc. that Heartland did not violate the ADA by denying Severson additional time off after he exhausted his FMLA leave. Severson v. Heartland Woodcraft, Inc., 872 F.3d 476 (7th Cir. 2017)
Impact: An employer in Illinois, Wisconsin or Indiana that is subject to the FMLA and has a clear and consistent policy to provide no more than the 12 weeks of FMLA leave may not be required to provide additional long term or indefinite leave as an accommodation under the ADA.
Heather A. Jackson and Rachel L. Schaller are attorneys in the Employment Law Practice Group at Taft Stettinius & Hollister LLP, which has offices throughout the Midwest. Comment below or email editors@workforce.com.
The CEOs of Amazon, Berkshire Hathaway and JPMorgan Chase & Co. are partnering as an independent company to address health care for their American employees and their families.
Jeff Bezos of Amazon, Warren Buffett of Berkshire Hathaway and JPMorgan Chase’s Jamie Dimon’s as-yet unnamed company will initially focus on using technology solutions to provide workers “simplified, high-quality and transparent health care at a reasonable cost,” according to a press release from the three participating companies.
Amazon, Berkshire Hathaway and JPMorgan Chase have combined more than 950,000 employees worldwide, according to a report on NPR.
“The ballooning costs of health care act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable,” said Buffett, chairman and CEO of Berkshire Hathaway, according to the release. “Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.”
Each company has different assets and strengths — Amazon in consumer marketing and logistics, Berkshire Hathaway in insurance and JPMorgan Chase in finance — that complement each other, said Jeff Levin-Scherz, national co-leader of the health management practice of Willis Towers Watson. They are positioned well to address health care problems.
Health care costs in the U.S. are dramatically higher than they are in other developed countries, and much of this results from high unit costs rather than high utilization rates, said Levin-Scherz.
“In the U.S. we actually don’t use more prescriptions, have more office visits, have more hospitalizations than other developed countries. We actually have fewer of these, but each one costs a lot,” he said.
He added that many health care markets are local and that what drives high unit prices in one city or region can be very different than what drives unit prices in another.
“It’s not like designing a single product will necessarily address these issues. It will take a substantial amount of research first, and it will take some substantial amount of resources probably in many geographies to have the kind of impact [Amazon, Berkshire Hathaway an JPMorgan Chase] are saying they’ll like to have,” he said.
Many other challenges have been driving dysfunction in the health care system for years, said Frank Easley, senior vice president and health care practice leader at Aon Hewitt in Austin, Texas. For example, the health care industry lacks interoperability — the ability for different technologies to communicate and exchange data.
“There’s not a lot of quick and easy answers,” Easley said. “But [these companies] are coming into this with a long-term focus and an understanding of the difficulty involved, and we fully support any organizations willing to push for a better health and lower costs.”
So far, each company has named one executive to work on the collaboration, and they have not yet decided operational details including a headquarters or the management team, according to CNN. The efforts of this company are still in an early stage.
“While it’s too early to tell exactly how Amazon, Berkshire and JPMorgan are going to pursue their stated goals, and while the announcement specified that — initially at least — this is about solving for their own specific challenges, this certainly has the attention of the industry and has the potential to be transformative,” said Easley.
This is just the latest example of large organizations looking to evolve the health care ecosystem, similar to other industry announcements like CVS/Aetna, UHC/Davita and Advocate/Aurora, he added.
“We have always encouraged companies to take an active role to mitigate cost while improving quality and health outcomes, and we will continue to encourage organizations to take bolder steps to leverage their collective strengths to create change,” he said.
Crystal Fret, vice president of human resources at Continental Realty Corp. in Baltimore, is optimistic about this development too, but skeptical as well. It’s unclear whether this new company will function like an associated health plan made up of large employers, she said. If so, that might encourage other large employers to take on a similar strategy but not impact small or mid-sized employers as much.
“If the organization is successful in improving the use of technology to deliver better, more transparent and cost-effective health care to members, then this could create pressure on the rest of the marketplace to improve its health care delivery systems and platforms,” she added.
Andie Burjek is a Workforce associate editor. Comment below or email editors@workforce.com.
