The new company will focus on "technological solutions" that will seek to provide simplified and transparent health care for the three companies' US employees and their families at lower costs.
Amazon's Jeff Bezos said on Tuesday (30 January) that he, Buffet and JPMorgan would attempt to make healthcare better for hundreds of thousands of their employees and perhaps, eventually, the country.
In pre-market trading on Wall Street, stock prices in pharmacy benefit managers and insurance companies - entities most likely to be affected by the new non-profit player in the space - dropped as much as five percent.
"The ballooning costs of healthcare act as a hungry tapeworm on the Americaneconomy", Berkshire Hathaway's chairman and CEO, Warren Buffett, said in the statement. Amazon is the world's largest online retailer; Berkshire Hathaway is a holding company led by the billionaire investor WarrenBuffett; and JPMorgan Chase is the largest bank in the United States. It will initially focus on technological solutions to provide employees and their families with health care "at a reasonable cost". The creation of the new entity highlights the growing frustration with rising healthcare costs among USA employers.
Home care companies have been keeping a watchful eye on Amazon (NYSE: AMZN), looking for how the company might disrupt the health care system as a whole and their business models in particular. Amazon is the dominant online retailer in the USA and JPMorgan is one of the nation's leading financial firms. The announcement concedes the operation is "in its early planning stages" right now. Amazon in the past few years has poured billions of dollars into building up its Amazon Prime streaming platform and Amazon Studios film and TV production unit. The three industry behemoths will create a separate company to handle the affair in a long-term effort free from profit-making worries. The three companies employ a combined 1.2 million workers, and Bloomberg reports they have a combined market capitalization of $1.6 trillion.
In the email, obtained by CNBC, Amazon's HR boss Beth Galetti wrote that the new partnership will take a "considerable amount of time" to come to fruition, and that "nothing is changing" to Amazon's current health-care offering to employees.
"Our people want transparency, knowledge and control when it comes to managing their healthcare", said Jamie Dimon, chairman-CEO of JPMorgan Chase. Bezos said success would require "a beginner's mind".