Amazon, JPMorgan, Berkshire team up to tackle health care

Alicia Cross
February 1, 2018

Amazon's potential entry into the pharmacy business is also reverberating. As the world's largest online retailer and a cloud computing behemoth, Amazon will bring its technology and scale to bear-first with US employees and their families at the three participating companies and then the healthcare market in general, ultimately acting as an industry disruptor to benefit all Americans. In a statement from the three, they will also build a company, "that is free from profit-making incentives and constraints", according to a report from Bloomberg. "Our goal is to create solutions that benefit our USA employees, their families and, potentially, all Americans", Bezos stated.

"The health care system is complex, and we enter into this challenge open-eyed about the degree of hard", Bezos said in the statement.

This isn't a surprise, some said, since Amazon has made small moves in the health care industry in the last couple of years - between a number of health care hires and applying for a wholesale pharmacy license.

One thing is clear: these are not companies known for narrow ambitions.

So far, it's unclear if the announcement from Amazon means that it is indeed planning to accelerate its entry into the pharmacy supply chain, "though the quest for transparency, which is lacking now in drug pricing and also in broader healthcare delivery in America, would point to a more transformative effort by the new entity", Leerink Partners analyst Ana Gupte said in a research note. With about 151 million non-elderly people, employer-sponsored coverage is the largest part of the USA health insurance market.

The search for ways to hold down health-care costs in the U.S.is intense.

Each company put forward an executive to lead the new effort, which they said is in early planning stages.

"The ballooning costs of health care act as a hungry tapeworm on the American economy", Berkshire Hathaway brk-b chairman and CEO Warren Buffett said in a statement.

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"When large and successful companies come together in this way, it's potentially disruptive", says Frank Easley, senior vice president of Aon's health and benefits group, about the Amazon, Berkshire and JPMorgan partnership.

There's no doubt that healthcare costs in the USA have skyrocketed in recent years and as a direct result employee health insurance has also reached new heights.

Ptasienski believes that the partnership between the three companies is a data "gold mine" just waiting to be exploited. "My sense is, and I'm only speculating, is that they're looking at their own health care costs, and they're all large employers and they're saying, 'How do we manage this better?' " he said. "The collective resources of these three companies, emerging technologies and Amazon's customer obsession and supply-chain savvy gives me optimism that they will pursue a consumer-focused model that will transcend the fragmented, provider-centric delivery system that we have today".

Amazon.com, Berkshire Hathaway and JPMorgan Chase have formed a joint venture to provide healthcare to their employees.

This combination of photos from left shows Warren Buffett on September 19, 2017, in New York, Jeff Bezos, CEO of Amazon.com, on September 24, 2013, in Seattle and JP Morgan Chase Chairman and CEO Jamie Dimon on July 12, 2013, in New York.

Some industry analysts claim the high costs are due to patients receiving "too much" healthcare, insofar as irrelevant tests and prescriptions are used in order to mitigate unknowns. We are going to start to see more and more cutting out the insurers and doing self-insured health plans.

Rising healthcare costs in the United States, the only major world economy that does not provide universal medical coverage to its citizens, have been a perennial political issue. Shares of UnitedHealth Group were down 4 percent in midafternoon trading, while Anthem's were down 5.7 percent.

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