Amazon, Berkshire Hathaway, JP Morgan Chase Announce Plans for Health Care Initiative
JANUARY 30, 2018
Credit: Cerillion SkylineAmazon, Berkshire Hathaway, and JPMorgan Chase have announced plans to form an independent health care company, intending on providing service to their employees in the United States.
Little details have been released regarding the specifics, but the trio reportedly plans to focus in on technologically providing reasonable cost health care to their employees. The move is somewhat expected from Amazon, which has been hinted at as the next big player in the health care sector by experts and analysts.
“This move is 3 major players applying a start-up mindset to the entire healthcare ecosystem. Traditional health insurers are officially put on notice,” David Friend, MD, MBA, the chief transformation officer and managing director of The BDO Center for Healthcare Excellence & Innovation, said in a statement.
Amazon employs 541,900 people in the US, Berkshire Hathway employs 367,700, and JPMorgan Chase employs 243,355, with the 3 totaling more than 1.1 million, according to lists compiled by Fortune and Forbes.
The triad of companies said that, while the details have yet to be hammered out, the initiative will be long-term and “free from profit-making incentives and constraints.”
"The ballooning costs of healthcare act as a hungry tapeworm on the American economy," Warren Buffett, CEO of Berkshire, said in a statement. "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."
Jeff Bezos, the founder and CEO of Amazon, echoed Buffet’s sentiment in his own statement, noting that while the health care system is a complex challenge, it is one the triumvirate is willing to attempt to tackle. “Hard as it might be, reducing healthcare’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,” he said.
The move is yet another massive shakeup to health care, an example of the ongoing shifts in US health care. It comes right on the heels of another shakeup—CVS Health’s purchase of Aetna—which impacts the coverage of more than 110 million plan members of the 2 entities.
"The deal is not the beginning of a new trend but rather the quickening of the move from regulation to competition, and broader disruption to the industry," Friend told MD Magazine. "Consumers want value-based care, but traditional healthcare providers have not caught up to that. Amazon is the most consumer-friendly business on Earth and health care is probably the least consumer-friendly business. Consumers are now used to the 1-click solution provided by companies like Amazon, and collaborations like this have the potential to make the healthcare experience not only more convenient and user-friendly but also more effective and less costly."
According to a survey Friend and BDO conducted with NEJM Catalyst, 74% of health care organizations noted patient interest in value-based drug pricing, but 59% of health care organizations have not collaborated with drug manufacturers to track outcomes—and thus far have stated they have no plans of doing so.
How these shakeups will impact health care in the long-term is still somewhat up in the air, as tax law overhauls cause potential changes to Medicare and the future of the Affordable Care Act remains uncertain. Friend, however, believes this could be a trend in a positive direction.
"It’s likely that the companies would register their new health company as a benefit corporation, which is not required by its shareholders to turn a profit," he said. "So the company’s fiduciary duty would no longer be to maximize profits for its shareholders—it would now be to provide the best care for its members, at the best costs. If done right, this has the potential to change the entire economics of healthcare and ultimately provide better care to patients."
The effort to bring the 3 mammoth companies together was said to be spearheaded by the combined efforts of Todd Combs, an investment officer at Berkshire Hathaway; Marvelle Sullivan Berchtold, a managing director at JP Morgan Chase; and Beth Galetti, one of Amazon’s senior vice presidents.
“Our people want transparency, knowledge and control when it comes to managing their healthcare,” Jamie Dimon, the chairman and CEO of JPMorgan Chase, said. “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.”
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