Online retailer Amazon, Warren Buffett’s Berkshire Hathaway and JPMorgan Chase & Co. said Tuesday that they will form an “independent company” to improve healthcare and lower costs for their hundreds of thousands of U.S. employees.
They said the initial focus will be on “technology solutions” that will provide U.S. employees and their families with “simplified, high-quality and transparent healthcare at a reasonable cost.” The statement didn’t disclose many details about the venture, saying it was in the “early planning stages,” with executives acknowledging healthcare’s many complexities.
The three giants did say their company will be different in that it will be “free from profit-making,” and it is sure to shake up at least the purchasing aspect of healthcare, potentially becoming a savvier shopper for their workers. These days, employee healthcare costs have been rising 5% a year for most larger companies.
Amazon’s entry into the healthcare space has been rumored for months, with many observers speculating the e-commerce giant might expand into retail pharmacy and battle the likes of CVS Health and Walgreens Boots Alliance. But that business is highly complex and requires relationships with providers of medical care. There was no mention of pharmacies, drugs or prescriptions in Tuesday morning’s announcement.
Amazon.com AMZN +1.49%, Berkshire Hathaway BRK.B +0% and JPMorgan Chase JPM -0.94% said they plan to “bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints.” The companies added, “The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.
Buffett, the Berkshire Hathaway chairman and CEO, 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.”
Amazon founder Jeff Bezos admitted the effort to enter the healthcare business will be a challenge.
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” Bezos said in a statement. “Hard as it might be, reducing healthcare’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.
“Our people want transparency, knowledge and control when it comes to managing their healthcare,” Dimon said in the statement. “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.”