In a move that might explain why Amazon has been quietly acquiring pharmacy licenses (not to mention hitting daily all time highs) the e-commerce giant – along with Warren Buffett’s Berkshire Hathaway and JP Morgan Chase & Co. – announced on Tuesday morning that they would partner to form a new health-care venture.
As stated in the press release, “Amazon, Berkshire Hathaway and JPMorgan Chase & Co. announced today that they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs. The three companies, which 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 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.”
“The ballooning costs of health care act as a hungry tapeworm on the American economy,” Buffett said in the statement on Tuesday. “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.”
In their release, the trio said they are working toward building an independent company focused on technology solutions “that will provide [their] US employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.” They will pursue this end through an independent company that would be free from profit making and other constraints.
They cited the “ballooning costs of health care” as the inspiration for their decision.
Here’s more from the press release:
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 organizations 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.
“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 Berkshire Hathaway Chairman and CEO, Warren Buffett.
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,”said Jeff Bezos, Amazon founder and CEO. “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,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “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,” he added.
The longer-term management team, headquarters location and key operational details will be communicated in due course, the companies said. According to the release, the project is still in its early planning stages, with the initial formation of the company jointly spearheaded 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.
UnitedHealth, Anthem and their managed-care peers ticked lower in premarket trading on the news, as did a handful of pharmacy names, including CVS (-3.1%) and Walgreens Boots Alliance (-2%).
Insurance and pharma shares plunge on news that Amazon, Berkshire Hathaway and JPM are forming new healthcare company. pic.twitter.com/lFV08QXVLU
— Nabila Ahmed (@MsNabilaAhmed) January 30, 2018
While the plan is still in its early stages, analysts said the effort will be “complex, challenging and thorny and that will take time to bear fruit,” Leerink analyst Ana Gupte writes in note. Furthermore, Gupte added that it is unclear if this means Amazon will accelerate its entry into the pharmacy supply chain.
Health-care spending was estimated to account for about 18% of the US economy last year, far more than in other developed nations.
This article appeared at ZeroHedge.com at: https://www.zerohedge.com/news/2018-01-30/amazon-berkshire-and-jp-morgan-form-healthcare-company