Amazon, the giant, global online retailer, is to partner with Warren Buffett’s Berkshire Hathaway and Jamie Dimon’s JPMorgan Chase in a bid to provide economical healthcare to the three companies’ employees, it was revealed yesterday.
In a joint statement published on Berkshire Hathaway’s Business Wire news website, the three companies said they are planning to “partner on ways to address healthcare for their US employees, with the aim of improving employee satisfaction and reducing costs”.
Within hours of the announcement, which hit Wall Street at 7am on Tuesday, billions of dollars were wiped from the value of the US healthcare industry’s largest companies, an indication, observers said, of the threat to these businesses such a joint venture was seen to represent.
The companies didn’t immediately say whether their non-US employees would also benefit from their new healthcare scheme, although all three maintain overseas operations.
Although Berkshire Hathaway owns the auto insurer Geico and is a major player in the insurance and re-insurance business, it is not, for now, a player in the health insurance industry.
Published reports on Wednesday, including in the Financial Times, noted that there had been speculation for “months” that Amazon was planning to enter the healthcare industry, weighing on the share prices of health insurers, drugmakers, wholesalers and pharmacy benefits managers.
In the statement, the companies said that they planned to “bring their scale and complementary expertise” to what they said would be a long-term effort that they intended to pursue “through an independent company that is free from profit-making incentives and constraints”.
“The initial focus of the new company will be on technology solutions that will provide US employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost,” the statement added.
“Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society
today. By bringing together three of the world’s leading organisations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.
Berkshire Hathaway chairman and chief executive Warren Buffett has been a persistent critic of the US healthcare system and last year told The New York Times that the healthcare costs were a more serious threat to American businesses than the tax system, of which he is also critical. In yesterday’s statement, he likened the “ballooning costs of healthcare” to a “hungry tapeworm” devouring the American economy, and added: “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.”
Jeff Bezos, founder and CEO of Amazon, acknowledged that the US healthcare system was complex, and that the three companies were entering into their healthcare joint venture “open-eyed about the degree of difficulty” they would face.
“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,” he added.
“Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”
Chairman and CEO of JPMorgan Chase & Co Jamie Dimon, meanwhile, called attention to the need for “transparency, knowledge and control” on the part of employees, when it came to managing their own healthcare.
‘Early planning stages’
In their statement, Amazon, Berkshire Hathaway and JPMorgan Chase said their healthcare plan was still in its “early planning stages”. They said the groundwork is currently being laid jointly by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a managing director of JPMorgan Chase; and Beth Galetti, a senior vice president at Amazon.
Further details about the scheme’s management team, headquarters location and key operational details, they added, would be announced in due course.