Amazon, Berkshire Hathaway, JPMorgan Chase to form health care company
NEW YORK — Amazon, Berkshire Hathaway and JPMorgan Chase & Co. plan to form an independent, nonprofit health care company to provide their employees better and more affordable health care.
While details remain sparse, the Amazon-Berkshire Hathaway-JPMorgan Chase health care company is considered a long-term effort that will focus initially on developing technology solutions to improve the quality and reduce the costs of health care for the participants’ employees.
“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Berkshire Hathaway chairman and chief executive officer Warren Buffett 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.”
The project is in its early planning stages. The formation of the independent company is being led by Beth Galetti, a senior vice president at Amazon; Todd Combs, an investment officer of Berkshire Hathaway; and Marvell Sullivan Berchtold, a managing director at JPMorgan Chase. The longer-term management team, headquarters location and other key operational details will be revealed at a later time.
The three companies acknowledge that improving the dysfunctional U.S. health care system is an enormous challenge, but hope to draw on their scale, collective experience and combined expertise to create a fresh approach.
“The health care system is complex, and we enter into this challenge open eyed about the degree of difficulty,” said Jeff Bezos, founder and chief executive officer of Amazon. “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.”
While the planned venture’s stated goal is to improve health care for the participants’ employees, its ultimate ambition is clearly greater: to disrupt the existing system. “Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” said Jamie Dimon, chairman and CEO of JPMorgan Chase.
The announcement of the venture sent a tremor through the health care sector of the stock market, as share prices of such major players as CVS Health, Express Scripts Holding Co., UnitedHealth Group and Anthem Inc. all took a hit. A major foray by Amazon into health care has been anticipated for some time, with rumors swirling that it will move into the prescription drug distribution business, a specter that has put pressure on the stock prices of pharmacy benefits managers and drug wholesalers in recent months.
This is not the first effort by private companies to work around the inefficiency and spiraling costs of U.S. health care. The Health Transformation Alliance (HTA) was established in 2016 with 20 initial member companies (now more than 40, representing 6 million lives) partnering to share data and hold down costs of providing health care benefits to workers. Among the original members are American Express, Coca-Cola Co., IBM Corp., Macy’s Inc., Shell Oil Co. and Verizon Communications Inc., among others.