- January 30, 2018 (BigThink.com)
Jeff Bezos, Amazon; Jamie Dimon, JPMorgan; Warren Buffett, Berkshire Hathaway (Getty)
Amazon, Berkshire Hathaway, and JPMorgan Chase announced on Tuesday plans to create an independent company that would provide innovative healthcare services to their U.S. employees.
“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway Chairman and CEO, Warren Buffett, in a joint press release. “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 proposed company would be “free from profit-making incentives and constraints,” and plans to focus first on developing technology that would provide “simplified, high-quality and transparent healthcare at a reasonable cost.”
That “reasonable cost” line will likely resonate with Americans. The U.S. spends about twice as much per-capita on healthcare as other developed countries. In 2016, healthcare spending accounted for about 18 percent of the U.S. GDP. That’s more than double the share it held in 1980.
Rising healthcare costs can be attributed, in part, to inefficiencies in the system: requiring patients to see a doctor to get prescriptions filled, time-consuming administrative tasks, and a lack of serious price competitionbetween hospitals. This new venture could begin to change that.
“This is the start of a restructuring of the healthcare industry. This could be the catalyst for something bigger,” said Chuck Self, chief investment officer with iSectors, to CNN. “It’s part of the Amazon-ization of the nation, but it’s now clearly more than just Amazon.”
The markets seem to agree. Stocks of major healthcare companies took a big hit on the morning of the announcement, including a more than 4-percent dip by CVS and Walgreens.
It’s yet unclear when or how the new company will go about providing services to employees, or whether it will be able to compete seriously with the larger, more established providers who have the major advantage of scale. Still, the industry will surely keep close tabs on the new venture of the three behemoth companies, all of whom have a track record bringing innovation to their respective sectors.
“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,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase.