Amazon paid the NFL $1 billion dollars a year for over a decade for the rights to show the weekly Thursday night game exclusively on the Amazon Prime streaming service.
Sports-related money talk is officially ‘crazy land’ these days. $250 million contracts for dudes who wear shorts to work are a dime a dozen. 18-year-olds who have not played a minute yet for their college get more in name/image/likeness deals from a booster than the kid with the engineering degree will make in a year.
But the Amazon/NFL deal is interesting as we think about how value-based care will shift the dynamics in healthcare. I love me some random parallel metaphors.
So, if you don’t get enough football on Saturday, Sunday and Monday and just have to have more on Thursday night, you now have to sign up for Amazon Prime. The service costs about $140 a year and the company reported its ‘biggest three hours of US prime signups ever’ during its first game last week.
Clearly, that was part of the plan in Amazon’s fight against Netflix and Hulu and Disney and everyone else who has a streaming service, which seems to be everyone except you and me.
But that is not the biggest play for Amazon. Not saying a $140 times a few million folks doesn’t add up to real money, even for Amazon.
Here is the real juice, though. The average customer on the Amazon mothership buys about $500 a year worth of stuff that comes in cardboard boxes. Prime members, however, spend four times as much. Free shipping is catnip.
Spend money for streaming content…get more people to sign up for Prime…sell them more stuff.
Let’s connect the analogy with an example.
Let’s say there is a large primary care group in your market that is all in on taking full global risk with Medicare Advantage. They are focused, wired, and dialed in to make money by better managing the care for this group, reducing unnecessary costs, and getting to keep the surplus they generate. That is the secret sauce of their economic engine.
And let’s say you are a decent sized surgical group (pick a specialty, most will do) that has a couple of ASCs, which are your real profit machines.
What if the primary care group approached you and asked you to take 95% of the normal Medicare rate in exchange for getting a priority position for their referrals into your specialty? You might think about any incremental volume increase against the 5% haircut. Maybe you like it, maybe you don’t.
But what if they said, ‘Whoever helps us make more money on our Medicare Advantage side also gets all of our commercial referrals as well. And yes, please use your ASC instead of the hospital because that also lowers our Medicare cost.’ No brainer taking the discount on their Medicare patients because now they are feeding you more of what you want.
These are the types of deals that are coming.