Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co. will form a company to cut health costs for hundreds of thousands of their employees, setting up a major challenge to an inefficient US healthcare system, Reuters reports, citing the three companies.
The new, not-for-profit venture will initially focus on technology for “simplified, high-quality and transparent healthcare” for their more than 500,000 US employees, the companies said. They did not elaborate on their strategy, but said they are searching for a chief executive.
Healthcare industry experts say the new entity could eventually negotiate directly with drugmakers, doctors and hospitals and use their vast databases to get a better handle on the costs of those services.
That could undercut the industry’s “middlemen”, from health insurers to pharmacies.
“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway chairman and CEO Warren Buffett. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”
US healthcare spending has been increasing annually faster than inflation, and in 2017 accounted for 18 percent of the economy. Corporations sponsor health benefits for more than 160 million Americans.
The new initiative grew out of conversations that Buffett, Amazon founder and chairman Jeff Bezos and JPMorgan chairman and CEO Jamie Dimon have held over the years and gained momentum in recent months, according to a person involved with the consortium but who was not authorized to speak publicly.
The three CEOs plan for their companies to be the only clients of the joint venture, the person said. However, they intend to share the strategies and technology they ultimately develop to reduce costs for the economy and the government.
Investors in the sector expect Amazon will become a major disruptor of healthcare, just as it has done in the retail industry, fueled by media reports in recent months that the company was considering entering the pharmacy business.
Teaming up with JPMorgan, the biggest US bank, and Berkshire, the third-largest public company globally and an insurance provider, offers new opportunities to shake up the industry, analysts said.
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