Berkshire Hathaway, Amazon, JP Morgan Chase to create nonprofit health care venture

Amazon, Berkshire Hathaway and JP Morgan Chase join forces to tackle employees' health-care costs

The industry awoke on Tuesday to the news that Amazon.com was joining Berkshire Hathaway and JPMorgan Chase to form a new healthcare business, an attempt by three of the world's best-known companies to contain the spiralling cost of keeping their U.S. workers healthy.

Insurers, health systems and others, including Blue Cross Blue Shield of Nebraska and CHI Health, have launched price estimators meant to help consumers shop for care. The alliance will apply only to their employees, but observers say whatever successes the companies have could become models for other businesses.

A press release issued jointly by the three companies stated that the two primary goals of the venture, which will notably be "free from profit-making incentives and constraints", are to improve employee satisfaction and reduce costs.

"The huge spending on health care is like a hunger for the United States economy, but because we do not take this as something inevitable, we chose to unite the efforts of the best management teams in the country", said the CEO of Berkshire Hathaway, Warren Buffett.

'Our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans, ' Jamie Dimon, the President and CEO of JPMorgan Chase, said.

Due largely to Amazon's highly successful past forays into other industries - like cloud computing and private label products, for example - healthcare stocks plunged on the news. Maybe someday there will be politicians courageous enough to start rebuilding USA health care from scratch, with less bureaucracy, fewer intermediaries, less protectionism, more efficiency and fairer prices.

And he's a longtime critic of the health care system. If Amazon has an idea, and is willing to put some money behind it, that's wonderful.

They must compensate their specialists in a method other than fee-for-service to discourage costly, excessive, and risky procedures. "They'd probably have to miniaturize them, wouldn't they?" That could undercut the industry's "middlemen", from health insurers to pharmacies and benefits managers.

CHI's Wojtalewicz said such calculations are complicated. "The problem may be that consumers are reluctant - or too inexperienced - to shop for services they rarely use (e.g. colonoscopy), and many are reluctant to go with a lower priced option when quality is hard to observe". The companies outlined few concrete steps in their announcement, and making big changes to the entrenched, inefficient U.S. health system will likely prove more complicated than Mr Jeff Bezos and Mr Warren Buffett imagine, some health experts say. That was kind of an "aha" - this kind of convenience and high-touch experience is what they're looking for.

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"Health care is complex and expensive, so the aim should always be simplicity and affordability". In quite a few cases, it would make sense to relocate an employee or family member to save on the hospital costs.

Since these companies are all led by bright innovators, they will probably ultimately arrive at the same conclusion: that technology alone will not lead to high quality, low cost care.

"It sounds like they [the companies] are limiting the use of health plans, but if they're going to get into that business, they're going to come up with the same challenges health plans face".

Wonder what they're going to do about drug prices.

"They recognize this is [a] long-term play to get involved in this". Go forth and disrupt, we say.

We also talked Thursday about President Trump's talk in the State of the Union about lowering drug prices. It's intriguing to consider the possibilities of integrating health care into consumer routine.

I think it's an exciting potential dynamic in the marketplace. Altogether, the three companies have one million workers, a good sample to work with. Change incentives for providers. Common stock of the company is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B. "I would encourage this group to focus on how to better serve those individuals who need help managing multiple chronic conditions". He is also an advocate of more, not less, competition. So, we are pleased to see them go down this path. Maybe they'll solve one piece of the puzzle. Doctors in the USA are massively overpaid compared with most of their OECD peers.

"Our nation's healthcare costs are essentially twice as much per person vs. most other developed nations", Dimon said.

The worst thing the joint venture could do is try to use its bargaining power to bring down costs within the existing system. "Potentially, it could be a help to all of us". He imagines a "next-generation 23andMe" diagnostic tool (referencing the DNA testing company) that would deliver a comprehensive "data capture of your health and well-being, nutrition, neurobionics" directly to consumers. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

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