The goal: Providing lower-cost, higher-quality healthcare to their employees.
“The three companies provided few details about the new entity, other than saying it would initially focus on technology to provide simplified, high-quality health care for their employees and their families, and at a reasonable cost,” write Nick Wingfield, Katie Thomas and Reed Abelson at The New York Times. “They said the initiative, which is in the early planning stages, would be a long-term effort ‘free from profit-making incentives and constraints.’”
The Times notes that the three companies are among the country’s most influential: Amazon is the largest online retailer in the U.S., while JPMorgan Chase is the largest bank. Berkshire Hathaway is the holding company led by Warren Buffett, the billionaire investor and philanthropist.
“The ballooning costs of healthcare act as a hungry tapeworm on the American economy. 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,” said Buffett in a statement.
'The ballooning costs of healthcare act as a hungry tapeworm on the American economy.' -Warren Buffett
What Will the Company Look Like?
Specifics are hard to come by at this point in the planning process, but management will initially include Berkshire Hathaway investment officer Todd Combs, JPMorgan Chase managing director Marvelle Sullivan Berchtold and Amazon senior vice president Beth Galetti.
According to the press release, the “longer-term management team, headquarters location and key operational details will be communicated in due course.”
Stock prices for major health insurers like Anthem, Humana and UnitedHealth Group tumbled on Tuesday after the announcement. But investor concern about traditional health insurance companies might not be the only effect on the market. If the venture is a success, other employers may follow suit, developing their own healthcare organizations.
Per USA Today:
These three “iconic” companies collaborating will attract “a lot of attention and it already has,” said Gary Young, director of the Center for Health Policy and Healthcare Research at Northeastern University. “It signals a certain frustration with the status quo and the existing health care system,” he said.
Technology and data will likely play a big part in the companies’ attempts to improve health care, Young said. “It’s not going to just be a new health insurance company. They are going to try to find ways to extract value in ways other health plans and providers haven’t been able to do so. … Whatever models that these companies come up with may be adopted by other employer coalitions.”
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