Amazon’s Galetti, Berkshire Hathaway’s investment officer Todd Combs and J.P. Morgan Chase’s managing director Marvelle Sullivan Berchtold are now seeking a management team to lead the new company and a headquarters location.
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An evaluation from The Commonwealth Fund published in 2017 ranked America last in “health care system performance” compared to other countries evaluated in the study-such as France, Sweden, the United Kingdom, Australia and the Netherlands.
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. While the organization will be overseen by the three companies, it is meant to operate independently and be free from any profit-making incentives.
Berkshire Hathaway chairman and chief executive Warren Buffett has been a persistent critic of the USA healthcare system and previous year told The New York Times that the healthcare costs were a more serious threat to American businesses than the tax system, of which he is also critical.
With the Amazon-Berkshire Hathaway-JP Morgan partnership, the three companies have stated they are seeking to improve customer satisfaction and lower the costs related to healthcare for their employees. “We actually have fewer of these, but each one costs a lot”, he said. “These guys talk all the time”.
Amazon’s entry into the health market has been perceived as imminent, even though the company had announced nothing publicly. For example, the health care industry lacks interoperability – the ability for different technologies to communicate and exchange data. Several of the biggest losers on a down day for the market Tuesday were health care companies.
While they did not mention the changes that must happen in the delivery sector, implied is the assumption that doctors and hospitals will adapt to this new world, holding down their costs, making prices more transparent and innovating in their physical and electronic delivery of care. Information is not readily available. “It’s certainly a positive they’re focused on it”.
“They’re going to be using their own spending and resources as a laboratory”. “I mean, Berkshire Hathaway has a pretty big insurance arm”, he says. The companies said they would initially focus on using technology to simplify care but did not elaborate on how they meant to do that or bring down costs.
Jeff Bezos, founder and chief executive officer at Amazon, said in the release that the three companies are taking on the challenge with a clear view of how hard it will be. Employers are up for trying nearly anything to control rising health care costs, which have been consuming bigger portions of their budgets for years and burdening their employees.
“The U.S. health care system is unsustainable in terms of its costs, and the entire debate by political leaders – whether it is Democrats or Republicans – has focused on repairing and replacing Obamacare and the ideological differences”, said John Sculley, who formerly led Apple and Pepsi-Cola.
Investors in the sector expect Amazon will become a major disruptor of health care, 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. Shares of pharmacy benefits managers CVS and ExpressScripts, as well as insurance giants UnitedHealth and Aetna, fell following the news.
“The sky’s the limit on where they could possibly go with this”, said Brian Marcotte, CEO of the National Business Group on Health, another nonprofit that represents large employers.
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Further details about the scheme’s management team, headquarters location and key operational details, they added, would be announced in due course.
