How Amazon plans to disrupt health care
Amazon is partnering with Warren Buffett's Berkshire Hathaway and JPMorgan Chase, the nation's largest bank, to disrupt the health insurance business.
The companies announced Tuesday that they are partnering on ways to address health care for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.
The three companies said in a joint release that they will bring their scale and expertise to an independent company that is free from profit-making incentives and constraints. The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable cost.
By combining three of the biggest companies in the world, with more than a million employees in total, the new venture will be able to directly negotiate better deals with sellers of prescription drugs, lab tests, and medical devices. The combined economic might could also give the companies more power over coverage decisions.
“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. 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,” said Berkshire Hathaway Chairman and CEO, Warren Buffett.
According to the companies, by bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.
“The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Jeff Bezos, Amazon founder and CEO. “Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”
The effort announced Tuesday is in its early planning stages, with the initial formation of the company jointly spearheaded by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase & Co.; and Beth Galetti, a Senior Vice President at Amazon.
“Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co.. “The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” he added.