Sunday, 18 November, 2018

Amazon, Berkshire, JPMorgan in healthcare partnership

Nellie Chapman | 30 January, 2018, 19:10

"The ballooning costs of health care act as a hungry tapeworm on the American economy", Berkshire Chief Executive Warren Buffett said in prepared remarks.

"Our group does not come to this problem with answers", Buffett, the world's third-richest person, said in a statement.

The three companies announced Tuesday they are teaming up to explore "ways to address healthcare for their US employees, with the aim of improving employee satisfaction and reducing costs", according to a news release about the venture.

"Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today", said Amazon.com founder Jeff Bezos in a statement.

The effort is in its early planning stages, the companies said.

The healthcare company is still in the planning stages and now in the hands of Berkshire Hathaway investment officer Todd Combs, JPMorgan Managing Director Marvelle Sullivan Berchtold, and Amazon SVP Beth Galetti.

The companies did not specify how many people would benefit under the new program, but together they employ at least a million workers nationwide, and it could impact far more if Berkshire Hathaway's subsidiaries are included.

The announcement comes after pharmacy chain CVS in December bought health insurance company Aetna for $69 billion, a merger that perhaps makes more sense in light of this Amazon news.

The joint effort will look to find a more efficient and transparent way to provide health care services to their employees and families, the companies said.

But he cautioned that success will require "a long-term orientation".

Plans for a longer-term management team and how the company will operate have yet to be decided.

The companies will create an independent firm "free from profit-making incentives and constraints" that will initially focus on technology solutions to provide employees and their families with healthcare "at a reasonable cost".

Health care costs for companies routinely rise faster than inflation and eat up bigger portions of their budgets.

Because the new venture is barely underway, it's unclear what kinds of strategies might be used to rein in health care costs. Insurers such Cigna and Dow member UnitedHealth Group lost more than four percent, pharmacy chain CVS Health tumbled almost five percent and pharmaceutical giants Merck and Pfizer both lost about one percent.