Amazon, Berkshire Hathaway, JPMorgan Team Up to Reduce Costs for Employees

Amazon, Berkshire, JPMorgan in healthcare partnership

Amazon plans to tackle the health care industry, partnering with Warren Buffett's Berkshire Hathaway and JPMorgan Chase to launch a company that will help their US employees find quality coverage "at a reasonable cost".

The details are scarce. While the specifics of the new company are still in the planning stages, the initial focus will be on technology solutions that provide "simplified, high-quality and transparent healthcare at a reasonable cost". Those goals are hard to argue with yet have proven difficult to achieve.

"New entrants with fresh approaches like these may be just the prescription our ailing health care system needs", Brian Marcotte, CEO of the National Business Group on Health in Washington, D.C., told SHRM Online. Well, that's the part we're going to try to puzzle out with the curator of NPR's shot - Scott - Shots blog, Scott Hensley, who's here. Please check your email for a welcome confirmation.

INSKEEP: I'm glad you mentioned their employees.

On business news channel CNBC soon after the announcement, Brent Saunders, CEO of Botox maker Allergan, gave his back-of-the-envelope analysis.

Amazon, Berkshire Hathaway and JPMorgan Chase & Co. have formed a healthcare joint venture that aims to cut costs, boost transparency and provide an overall better experience for their employees. He also said that the country was getting "more and more out of whack with the rest of the world" regarding the healthcare system.

Solving America's severely flawed health care system is a big task, and it's no coincidence that leaders of some of the biggest corporate giants are making it their undertaking.

Nobody would dispute that assessment. The new collaboration could pressure profits for middlemen in the United States health-care supply chain.

The three backers of the new company foresee striking deals for employee discounts with service providers like medical testing facilities, the person added. "I mean, Berkshire Hathaway has a pretty big insurance arm", he says.

Amazon, which mostly sold books when it was founded more than 20 years ago, has radically changed the ways in which people buy diapers, toys or paper towels. Reducing costs is CVS Health's job, or at least that's how it markets pharmacy benefits management (PBM) services that contributed 71% of total revenue in the latest reported quarter. What if the app helped them book appointments with doctors and nurse practitioners, too? Maybe a little, but probably not a lot.

Large corporations have often taken an active role in their employees' health care. But once fully launched will be jointly led by Todd Combs, an investment officer of Berkshire Hathaway, Marvelle Sillivan Berchtold, a managing director at JPMorgan Chase, and Beth Galetti, a senior vice president at Amazon.

It also stressed that the goal of the initiative is to improve health care "for all of our USA employees", while reducing costs. It has happened many times before, in fact.

"There are a lot of companies, or arguably nearly all companies, in healthcare that benefit from cost inflation running as high as it has been for many years", ISI Evercore analyst Michael Newshal said.

"We've been talking with clients about this for a few years now", Herschman said.

Still, the skepticism is strong, especially when the particulars haven't even been sketched out by the companies.

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