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3 Giants — Berkshire, Amazon, JPMorgan— to Form Joint Employee Health Venture
Amazon, Berkshire Hathaway and JPMorgan Chase & Co. are partnering to create an independent healthcare company for their U.S. employees that will be focused on improving employee satisfaction and reducing costs.
The new venture will be “free from profit-making incentives and constraints” and will initially emphasize technology solutions that will “provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost,” the companies aid.
By coming together, the group says it hopes to draw on its combined capabilities and resources to take a fresh approach to healthcare.
“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 effort is 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. The longer-term management team, headquarters location and key operational details are still being determined.
The three big companies are not the first to try to tackle healthcare.
The Amazon-Berkshire-JPMorgan news comes after the announcement last month by CVS Corp. that it will acquire health insurer Aetna for $67.5 billion in an effort to create a new health care concept. CVS wants to transform its 10,000 stores into health clinics where consumers can receive medical care, have their insurance handled, obtain their prescription drugs, all while buying deodorant and candy.
There has been speculation for years that Amazon has an interest in getting into the pharmacy business. Shares of various U.S. health care stocks dropped after the announcement, with pharmacy benefit managers Express Scripts Holding Co. and CVS Health Corp., declining in early trading, as did health insurers.
There are plenty of companies trying to change healthcare through technology.
AT&T and Verizon have imagined a network of medical devices and services to improve how medical care is delivered. The telecoms are still working on it.
Numerous firms, including Google parent company Alphabet Inc., are developing wearable devices with sensors that monitor health conditions. There are apps that share a user’s health data with doctors. Various startups have apps to help people lose weight and connect with support groups, coaches or doctors.
Others startups including Medopad, BeneveolentAI and Babylon Health Care, and are exploring the use of artificial intelligence in health care.
More and more employers are experimenting with telemedicine. Bank of America has a telenursing program for employees that includes a dedicated 24/7 reporting line that allows workers to speak to a registered nurse and directly report a claim.
Aetna has been developing apps for Apple smartphones that help consumers remember to take their medicines, order a prescription refill, or contact a doctor. Insureds can also use Apple’s Wallet feature to pay bills.
American International Group, one of the world’s largest workers’ compensation insurers, is an investor in Human Condition Safety (HCS), a technology startup company developing wearable devices, analytics and systems for use at worksites to prevent accidents.
China’s Ping An Insurance has a mobile app, called Good Doctor, that provides users with a medical diagnosis in minutes and also provides health tips, workout tracking and sales of supplements.
Swiss Re is among insurers investing in research into using technology to drive healthier and less risky behaviors. In one recent study, the insurer’s researchers discovered that Twitter data was a more reliable predictor of heart disease than all standard health and socioeconomic measures combined.
In a recent survey by Mercer, employers predicted that health benefit cost per employee will rise by 4.3 percent on average in 2018 after they make planned changes such as raising deductibles or switching carriers. Over the past five years, Mercer’s surveys have found that the average annual increase has been about 3 percent; an increase of 4.3 percent would be the highest since 2011, when cost rose 6.1 percent.
- Some Question CVS-Aetna Remodeling of Health Care
- CVS to Pay $67.5B for Aetna to Create Giant Health Firm with ‘10,000 New Front Doors’
- Express Scripts Not Looking But Open to Deal with an Insurer, Amazon
- What CVS-Aetna Deal Could Mean for Pharmacy Benefit Managers
- Workplace Wellness Programs Are an Exercise in Futility, Latest Research Finds
- How Technology Is Changing Workers’ Compensation
- Previous Telecom Efforts Flopped But Google, Apple See Future for Telemedicine
- Employers Expect Above-Average Rise in Cost of Employee Benefits in 2018: Mercer Survey