The CEOs of Amazon, Berkshire Hathaway and JPMorgan Chase & Co. are partnering as an independent company to address health care for their American employees and their families.
Jeff Bezos of Amazon, Warren Buffett of Berkshire Hathaway and JPMorgan Chase’s Jamie Dimon’s as-yet unnamed company will initially focus on using technology solutions to provide workers “simplified, high-quality and transparent health care at a reasonable cost,” according to a press release from the three participating companies.
Amazon, Berkshire Hathaway and JPMorgan Chase have combined more than 950,000 employees worldwide, according to a report on NPR.
“The ballooning costs of health care 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,” said Buffett, chairman and CEO of Berkshire Hathaway, according to the release. “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.”
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Each company has different assets and strengths — Amazon in consumer marketing and logistics, Berkshire Hathaway in insurance and JPMorgan Chase in finance — that complement each other, said Jeff Levin-Scherz, national co-leader of the health management practice of Willis Towers Watson. They are positioned well to address health care problems.
Health care costs in the U.S. are dramatically higher than they are in other developed countries, and much of this results from high unit costs rather than high utilization rates, said Levin-Scherz.
“In the U.S. we actually don’t use more prescriptions, have more office visits, have more hospitalizations than other developed countries. We actually have fewer of these, but each one costs a lot,” he said.
He added that many health care markets are local and that what drives high unit prices in one city or region can be very different than what drives unit prices in another.
“It’s not like designing a single product will necessarily address these issues. It will take a substantial amount of research first, and it will take some substantial amount of resources probably in many geographies to have the kind of impact [Amazon, Berkshire Hathaway an JPMorgan Chase] are saying they’ll like to have,” he said.
Many other challenges have been driving dysfunction in the health care system for years, said Frank Easley, senior vice president and health care practice leader at Aon Hewitt in Austin, Texas. For example, the health care industry lacks interoperability — the ability for different technologies to communicate and exchange data.
“There’s not a lot of quick and easy answers,” Easley said. “But [these companies] are coming into this with a long-term focus and an understanding of the difficulty involved, and we fully support any organizations willing to push for a better health and lower costs.”
So far, each company has named one executive to work on the collaboration, and they have not yet decided operational details including a headquarters or the management team, according to CNN. The efforts of this company are still in an early stage.
“While it’s too early to tell exactly how Amazon, Berkshire and JPMorgan are going to pursue their stated goals, and while the announcement specified that — initially at least — this is about solving for their own specific challenges, this certainly has the attention of the industry and has the potential to be transformative,” said Easley.
This is just the latest example of large organizations looking to evolve the health care ecosystem, similar to other industry announcements like CVS/Aetna, UHC/Davita and Advocate/Aurora, he added.
“We have always encouraged companies to take an active role to mitigate cost while improving quality and health outcomes, and we will continue to encourage organizations to take bolder steps to leverage their collective strengths to create change,” he said.
Crystal Fret, vice president of human resources at Continental Realty Corp. in Baltimore, is optimistic about this development too, but skeptical as well. It’s unclear whether this new company will function like an associated health plan made up of large employers, she said. If so, that might encourage other large employers to take on a similar strategy but not impact small or mid-sized employers as much.
“If the organization is successful in improving the use of technology to deliver better, more transparent and cost-effective health care to members, then this could create pressure on the rest of the marketplace to improve its health care delivery systems and platforms,” she added.
Andie Burjek is an associate editor. Comment below or email email@example.com.Filed under: Talent EconomyTagged with: affordable health care, Amazon, Berkshire Hathaway, health care, health insurance, JPMorgan Chase