Walmart, Not Amazon, May Turn Out To Be The Real Health Care Disruptor

https://www.investors.com/news/walmart-humana-amazon-disrupt-health-care/

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Every Amazon (AMZN) flirtation toward the health care industry has sent hearts racing on Wall Street. Yet Amazon appears to be having commitment issues, and others have leapt while Jeff Bezos hesitated. Now comes a possible Walmart (WMT)-Humana (HUM) merger. A Walmart acquisition of the insurer could fundamentally reshape health care delivery in ways that Amazon may have trouble matching.

A Walmart-Humana deal could potentially transform the health care market for seniors, a demographic that is critical for both companies.

Walmart already operates about 4,500 in-store pharmacies and 2,900 vision centers, but a Humana deal would likely accelerate its efforts in developing in-store clinics. The clinics haven’t been a knockout success, but Walmart has been learning, wrote Tracy Watts, U.S. health reform leader at Mercer, in a blog post. “This partnership could foster new ways to bring people what they want and need,” she wrote, highlighting health care access in rural areas.

CVS Health (CVS), which is in the process of acquiring Aetna (AET), is planning to revamp its drugstores to provide more health services. Walmart has greater financial wherewithal to execute the strategy and its supercenters may be a more natural fit for health services.

Strategic Merits For Walmart-Humana

A Walmart-Humana tie-up has strategic merits for the retail giant, wrote Stifel analyst Mark Astrachan. He expects it would drive greater store traffic and produce health care cost savings, helping the discounter to keep investing to fend off Amazon.

Savings would come from closer ties to Humana, the largest remaining independent pharmacy benefits manager. That would help to reduce drug prices for Walmart’s 1.5 million U.S. employees, Astrachan wrote.

Humana recently purchased a major stake in the home health care business of Kindred Healthcare, a natural fit for Walmart’s home delivery business.

Still, there would be challenges. Piper Jaffray analyst Sarah James sees hurdles to staffing up clinics amid a nursing shortage that’s pushing up wages. She also questioned how attractive a merger would be for Humana. Humana has an enviable Medicare position while Walmart has a smaller store base compared to CVS Health and Walgreens Boots Alliance (WBA).

Still, Humana shares rose 4.4% on the stock market today, even as the Dow Jones, S&P 500 index and Nasdaq composite all lost about 2% or more. Meanwhile, shares of Walmart lost 3.8% and Amazon skidded 5.2%.

Amazon Threat Spurs Action

So far Amazon’s disruptive impact on health care has been all about what others are doing. Since reports last summer that Amazon might enter the retail prescription industry, the shockwaves have set in motion one deal after another. First it was CVS buying Aetna and beginning to offer same-day delivery in major markets, and next-day nationwide. Albertsons grabbed the Rite Aid (RAD) stores not bought by Walgreens. Last month, Cigna (CI) announced the purchase of Express Scripts (ESRX), the largest of the pharmacy benefit managers.

Options to enter the prescription drug business have narrowed for Amazon but haven’t been closed off entirely. One potential avenue would be acquiring Walgreens.

In January, Amazon announced a health care venture with JPMorgan Chase (JPM) and Berkshire Hathaway (BRKB). Health care stocks tumbled amid fear that Amazon would use the same formula that slayed book sellers and department stores. The scariest part: The companies say they have no intent to earn a profit from the effort. Yet they also confessed to a lack of any coherent plan for putting still-to-be-formed cost-saving ideas to work.

 

 

Global M&A activity hits record high on mega US health care deals

https://www.cnbc.com/2018/04/04/global-ma-activity-hits-record-high-on-mega-us-health-care-deals.html

A CVS Pharmacy store is seen in the Manhattan borough of New York City, New York, U.S., November 30, 2017.

 

  • In the first three months of 2018, there were 3,774 deals globally, totaling $890.7 billion.
  • So far this year, there have been $393.9 billion invested in U.S. companies.
  • Domestic activity was also particularly strong in China.

Merger and acquisition (M&A) activity across the world has hit a seventeen-year-record high in the first quarter of 2018, according to a report by research firm Mergermarket.

In the first three months of 2018, there were 3,774 deals globally, totaling $890.7 billion, it said Wednesday. This was the strongest start to the year since 2001, when Mergermarket began recording the data, and represents an 18 percent increase in value compared to the first quarter of 2017.

“The extraordinary surge in dealmaking seen at the end of 2017 has carried through into 2018,” Jonathan Klonowski, research editor at Mergermarket said in the quarterly report, citing pressure from shareholders and a search for innovation as the main drivers.

“Amazon’s move into pharmaceuticals appears to have been a catalyst for dealmaking in health care-related areas with the CVS/Aetna deal announced in December and the Cigna/Express Scripts transaction this quarter,” he added.

Amazon announced a partnership with J.P. Morgan and Berkshire Hathaway’s Warren Buffett in January to reduce health costs for U.S. employees. The move has sparked fears that the retail giant could enter and compete with traditional health care businesses. As result, the sector has consolidated to fight possible future competition from Amazon.

Cigna bought Express Scripts in a $54 billion cash-and-stock deal in early March. CVS also approved the acquisition of Aetna for about $69 billion in cash and stock last month.

Such deals have been particularly relevant in the U.S., where M&A activity during the first quarter of the year represented 44.2 percent of the total global share.

So far this year, there have been $393.9 billion invested in U.S. companies, according to the report. This represented a 26.1 percent increase from the same period a year ago. “Domestic dealmaking has been a key factor registering 952 deals worth $330.8 billion,” the report said.

But it’s not only U.S. companies that seem to be consolidating in their own market. Domestic activity was also particularly strong in China, where firms spent $68.7 billion — this was the highest first quarter on record.

“Domestic M&A accounts for 85.2 percent of Chinese acquisitions in Q1 (first quarter) 2018, a significant increase from the 61.6 percent and 71.3 percent seen during 2016 and 2017,” Mergermarket said.

Some Jobs Are Best Left to the Nonprofits

https://www.bloomberg.com/view/articles/2018-02-01/some-jobs-are-best-left-to-the-nonprofits?utm_campaign=KHN:%20Daily%20Health%20Policy%20Report&utm_source=hs_email&utm_medium=email&utm_content=60406871&_hsenc=p2ANqtz–p6LLq3KGruyf8cxGYEWvzT4LzONfY0U7Nn1r39Ijl9mJf2I9nxEjZ1SABngM4CXcNNOxmf9vg_kjpMkg1MO_G4W_Lrg&_hsmi=60406871

Health care might be one of them. Amazon, Berkshire Hathaway and JPMorgan certainly hope so.

Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co. are publicly traded, profit-oriented corporations. 1 So it is interesting that when they announced their new joint health-care venture this week they made a point of saying it would be “an independent company that is free from profit-making incentives and constraints.”

Interesting but maybe not all that surprising: Around the world, health, life and property insurance, as well as various other financial services, have long been provided by nonprofit organizations, mostly in the form of customer-owned mutuals. From the 1960s through 2000s, wave after wave of conversions turned many of these entities — especially in the U.S. and U.K. — into shareholder-owned for-profit corporations. But since the global financial crisis, the idea that corporations out to maximize shareholder returns might not always be the best at managing financial and other risks has undergone something of a revival.

Just to be clear: It looks like this new Amazon-Berkshire-JPMorgan entity will be owned by the three companies, not the employees it serves. That is, it won’t technically be a mutual. But the three companies’ apparent belief that the for-profit-insurer-dominated private health-care market in the U.S. isn’t cutting it — and that “profit-making incentives” are at odds with improving health-care delivery and cutting costs — got me thinking about the strengths and weaknesses of mutuals and other nonprofits relative to conventional corporations.

Mutuals that are owned by and distribute excess cash to their customers have been around for centuries, in many cases predating their for-profit counterparts. Some of the first insurance companies were organized in the 1600s and 1700s in the Netherlands and U.K. as customer-owned cooperatives, and the mutual organizational form has remained prominent in life and property insurance ever since. The 1800s saw an explosion of mutual activity, with fraternal organizations, trade associations, labor unions, social reformers and philanthropists starting co-operative lenders, health-care providers, pension funds, groceries, farming enterprises and even factories. This continued into the 20th century, although in Europe these mutual organizations were often co-opted or supplanted by government social insurance programs. 2

In the U.S., mutuals and nonprofits with mutual-like characteristics have continued to play major roles in insurance, money management, health care and other fields — including outdoor gear, which is top of mind at the moment because I recently spent a bunch of money at customer-owned Recreational Equipment Inc. But these mutuals and co-ops have just spent several decades on the defensive, with “demutualizations” in which mutual customers are given shares in newly created for-profit corporations transforming sector after sector.

I think this trend started with mutual funds, sort of. The first mutual fund, Massachusetts Investors Trust, was founded in 1924 as a true-blue customer-owned nonprofit. Most of the funds that followed in its footsteps were controlled by for-profit investment advisers, but for decades after the 1929 stock-market crash, those advisers acted more like cautious trustees than risk-taking profit-maximizers. Things changed during the booming stock market of the 1960s, with fund advisers getting much more aggressive in their investing and marketing, and in some cases acquiring competitors. In 1969, Massachusetts Investors Trust threw in the towel, demutualizing and transforming itself into Massachusetts Financial Services, which is now a subsidiary of Canada’s Sun Life Financial Inc. Mutual funds themselves are all still technically mutual, but the business (with one huge exception that I’ll get to in a moment) really isn’t.

Savings and loans demutualized in a more formal fashion in the 1980s, after the Garn-St. Germain Depository Institutions Act of 1982, in an attempt to attract new capital into the struggling industry, made it much easier for customer-owned S&Ls to convert to shareholder-owned corporations. (Credit unions remain the banking industry’s mutual holdout in the U.S.) Then life insurers began a great demutualization wave in the 1990s, with many of the industry’s biggest names — MetLife Inc., Prudential Financial Inc., John Hancock — switching from customer-owned to publicly traded. The Blue Cross and Blue Shield Association of mutual health insurers began allowing its members to switch to for-profit in 1994. And with Sweden, of all places, leading the way in 1987, stock exchanges began demutualizing as well.

For exchanges, it’s pretty easy to make the case for demutualization. With technological change, deregulation and internationalization transforming their business landscape, single-country, member-owned mutuals were in no position to compete. Publicly traded exchanges could raise capital, merge across national lines and take other steps that wouldn’t have been practical under a mutual structure.

Access to capital and increased flexibility have been offered up as leading reasons for demutualization in other industries as well. Also, in an influential pair of 1983 papers, finance scholars Eugene Fama and Michael Jensen argued that mutuals and other nonprofits lacked some of the control mechanisms — the threats of hostile takeover and shareholder activism, mainly — that kept managers of publicly traded corporations from taking advantage of owners. Empirical research since then has shown demutualized companies to be more efficient and achieve higher returns on capitalthan their mutual peers.

But that’s not the end of the story. It’s not entirely coincidental that the mass demutualization of the savings and loan industry in the 1980s was followed by an industrywide meltdown that cost taxpayers more than $100 billion. And remember Northern Rock, the U.K. institution that suffered a bank run in 2007 that was an early harbinger of the financial crisis? It had demutualized in 1997. On the whole, mutual financial institutions seem to have held up better during the financial crisis than their for-profit competitors. Mutual executives have fewer incentives to take risks, and that can sometimes be a good thing. There’s also evidence that mutual executives do more than just pay lip service to their customer-owned status. Mutual auto insurers in the U.S. — especially those such as Amica Mutual and USAA that pay regular dividends to customers — pay out a higher percentage of their premiums in claims than for-profits, according to one recent study. Mutual insurers perennially top for-profits in customer satisfaction rankings, and credit unions perennially top banks (although the banks have been catching up lately).

All in all, then, it seems that mutuals are, if not necessarily better than investor-owned for-profit corporations, pretty nice to have around. During and after the financial crisis, consumers seemed to take notice of this, with mutuals’ share of the global insurance market jumping from 23.6 percent in 2007 to 27.8 percent in 2013, according to the International Cooperative and Mutual Insurance Federation. That share has since sagged backed to 26.8 percent, though. Mutuals’ advantages may be less apparent when times are good.

Also, while there are multiple forces pushing mutuals to demutualize — not least the possibility of stock-market riches for their executives — there’s very little pushing in the opposite direction. The only major conversion to mutual status that I can think of in the U.S. over the past half century was Vanguard Group Inc., which arose in 1974 out of a power struggle at for-profit mutual fund adviser Wellington Management during which ousted president John C. Bogle talked the board members of Wellington’s mutual funds into seizing effective control of the whole operation. That was a rare case where mutualization seemed to help a top executive’s career prospects (although in the long run it probably resulted in Bogle making a lot less money than if he had simply gotten a job at another mutual fund company).

Starting new mutuals isn’t easy, either: The health-insurance co-ops created by the Affordable Care Act were undeniably a bust, although there’s disagreement over whether inadequate support or design flaws doomed them. And New York’s Freelancers Union, another relatively recent addition to the mutual landscape, got out of the health insurance business in 2014 after ACA rules made it impractical.

Once up and running, though, mutuals can be formidable competitors — as everyone else in the mutual fund industry can attest after decades of rapid growth at low-fee index-fund innovator Vanguard. Health care in the U.S. could sure use some low-fee innovation. Maybe, just maybe, Amazon, Berkshire and JPMorgan will find a nonprofit, mutual-ish way to get there. There are precedents: Nonprofit investment giant TIAA was founded by steel magnate Andrew Carnegie; the mostly nonprofit Kaiser Permanente health-care system was the doing of another industrialist, Henry J. Kaiser. For modern magnates Jeff Bezos, Warren Buffett and Jamie Dimon, creating something like that — or something better — would make for a pretty nice legacy.

 

Can Amazon do to health care what it did to books?

http://money.cnn.com/2018/02/01/news/economy/amazon-health-care/index.html

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First books. Then groceries. Now health care?

Amazon shook up the health care world on Tuesday, announcing it was partnering with fellow heavy hitters Berkshire Hathaway (BRKA) and JPMorgan Chase (JPM) to address soaring costs.

Amazon (AMZN), which has advanced light years from its origins as an online bookseller, has had a dramatic impact on many of the industries it’s touched. When it moved into cloud services and streaming shows, it left rivals scrambling to catch up. Last year, it bought Whole Foods, shaking up the grocery space.

The company is now one of the most valuable in the U.S. and its founder, Jeff Bezos, one of the richest people in the world.

But Bezos and his peers, Warren Buffett and Jamie Dimon, are taking on one of the nation’s thorniest challenges. Making health care more affordable has bested savvy business leaders in many industries. The announcement was met with cautious optimism and lots of skepticism.

Related: Jeff Bezos, Warren Buffett and Jamie Dimon want to fix health care

Not much is known about the threesome’s venture — a yet-to-be-named company that will give the firms’ U.S. employees and their families a better option on health insurance and will not be motivated by profit. Experts, are betting that the firm will eventually expand its services to other companies if the effort proves successful.

Health care costs have soared for both employers and their workers over the past decade. Premiums have jumped nearly 50% for family coverage since 2008 and more than tripled since 1999. Meanwhile, employees are shouldering more of the cost when they actually get medical care because their deductibles and co-pays are going up.

Amazon, however, is a master at wringing out inefficiencies in the supply chain. This could prove particularly useful in the health care arena, which is known for its bloat.

“One thing we know for sure is there’s a lot of overhead costs in health care,” said Frederick Isasi, executive director of FamiliesUSA, a health care advocacy group.

While many employers have tried to tackle health insurance costs in the past, they often didn’t have the bandwidth or resources to devote to the issue, Isasi said. The new venture, however, will be focused on its mission and will have the financial backing of three strong firms.

Some of the ways Amazon could use its know-how to make a dent in prices: Negotiate rates directly with health care providers and drug manufacturers, use technology to ease consumers’ ability to make appointments or consult with doctors outside of the office and improve access to price and quality information about physicians, procedures and prescriptions to allow consumers to shop around, Isasi said.

Amazon could also improve Americans’ interaction with their insurance companies and providers, which all-too-often involves ancient technologies such as faxing, said Bob Kocher, a partner who specializes in health care information technology at Venrock, a venture capital firm. After all, Amazon invented one-click ordering on its retail site. It could develop a similar process for paying medical bills, even grouping invoices for doctors, facilities and labs for care that takes place in a hospital, for instance.

And Amazon could make it easier for patients and providers to access their medical records, which would also reduce costs. The new venture could store all that information in the cloud, said Michael Pachter, managing director for equity research at Wedbush Securities.

That way “everything is all together in one place,” he said.

 

Expert Advice For The Corporate Titans Taking On Health Care

Expert Advice For The Corporate Titans Taking On Health Care

An announcement Tuesday by three of the nation’s corporate titans — Amazon, Berkshire Hathaway and JPMorgan Chase & Co. — that they are joining forces to address the high costs of employee health care has stirred the health policy pot. It immediately sent shock waves through the health sector of the stock market and reinvigorated talk about health care technology, value and quality.

Though details regarding the undertaking are thin, the companies said in a release that their partnership’s intent is to improve employee satisfaction and hold down costs by bringing “their scale and complementary expertise to this long-term effort.”

They plan to create an independent company, “free from profit-making incentives and constraints,” to focus on “technology solutions.”

Berkshire Hathaway CEO Warren Buffett described health care costs as “a hungry tapeworm on the American economy,” and Amazon founder and CEO Jeff Bezos said the partnership was “open-eyed about the degree of difficulty” ahead. Jamie Dimon, chairman and CEO of JPMorgan, said the results could benefit the employees of these companies and possibly all Americans

But what does all of this mean and how can it be successful when so many other initiatives have fallen short? KHN asked a variety of health policy experts their thoughts on this venture, and what advice they would offer these CEOs as they go forward. Some of the advice has been edited for clarity and length.


Tom Miller, resident fellow, American Enterprise Institute (Courtesy of Tom Miller)

Tom Miller, resident fellow, American Enterprise Institute:

“It’s great that someone theoretically with resources would try to build a better mousetrap. But it’s been difficult to do, and part of it is regulatory and competitive barriers are well-constructed in the health care sphere, which tend to make it less receptive or subject to competitive pressures.

“I welcome any new capital trying to disrupt health care. … The incumbents are comfortable and could use disruption. If Amazon has an idea, and is willing to put some money behind it, that’s wonderful. What they are willing to do other than fly low-cost providers for home visits in drones — I don’t know. They’d probably have to miniaturize them, wouldn’t they?”


Stan Dorn, senior fellow, Families USA (Courtesy of Stan Dorn)

Stan Dorn, senior fellow, Families USA:

“Number one, look at prices. America doesn’t use more health care than European countries, but we pay a lot more and that’s because of prices more than anything else. Look at hospital prices and prescription drug prices. I would also say, look to eliminate middlemen operating in darkness. I’m thinking in particular of pharmacy benefit managers. Often, the supply chain is hidden and complex and every step along the way the middlemen are taking their share, and it winds up costing a huge amount of money.”


Bob Kocher, partner, Venrock (Courtesy of Bob Kocher)

Bob Kocher, partner, Venrock:

“It has been said that health care is complicated. One thing that is not complicated is that the way to save money is to focus on the sickest patients. And that’s the only thing that has proven to work in great primary care. I hope Amazon realizes this early and does not think that [its smart digital assistant] Alexa and apps are going to make us healthier and save any money.

“It would sure be nice if they invest in a ‘post-CPT-ICD-10-and-many-bills-per-visit’ world where we know prices, can easily know what is known about quality and experience, and have same-day service.”


Tracy Watts, senior partner, Mercer (Courtesy of Tracy Watts)

Tracy Watts, senior partner, Mercer:

“Everyone thinks millennials want to do everything on their phones. But that’s not necessarily the case.

“[There was a recent] survey about this — specifically, millennials are the most interested in new health care offerings, but it wasn’t as much high-tech as it is convenience they are interested in — same-day appointments with a family doctor, guaranteed appointments with specialists, home visits, a wider array of services available at retail clinics. That was kind of an ‘aha’ — this kind of convenience and high-touch experience is what they’re looking for. And when you think of ‘health care of the future,’ that’s not what comes to mind.”


John Rother, president and CEO, National Coalition on Health Care (Courtesy of John Rother)

John Rother, president and CEO, National Coalition on Health Care:

“Health care is complex and expensive, so the aim should always be simplicity and affordability. Three keys to success: manage chronic conditions recognizing the life context of the patient, emphasize primary care-based medical homes and aggressively negotiate prescription drug costs.”


Suzanne Delbanco, executive director, Catalyst for Payment Reform (Courtesy of Suzanne Delbanco)

Suzanne Delbanco, executive director, Catalyst for Payment Reform:

“The biggest driver of health care costs is prices. Those are being driven up by health care providers who have consolidated and will continue to consolidate and amass more market power.

“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. What would be really innovative would be to build some provider systems from the ground up where they can truly get a handle on the actual costs and eliminate the market power that drives the prices up, and they can have control over their prices.”


Brian Marcotte, president and CEO, National Business Group on Health (Courtesy of Brian Marcotte)

Brian Marcotte, president and CEO, National Business Group on Health:

“They recognize this is [a] long-term play to get involved in this. I’d have to say, this industry is ripe for disruption.

“I think we know technology will continue to play an increasing role in how consumers access and receive health care. We’ve also learned most consumers do not touch the health care delivery system with enough frequency to ever be a sophisticated consumer. What’s intriguing about this partnership is Amazon for many consumers has become part of their day-to-day world, part of their routine. It’s intriguing to consider the possibilities of integrating health care into consumer routine.

“And I think that therein lies the opportunity. Employers offer a lot of resources to their employees to help them maximize their experience, and their No. 1 challenge is engagement.”


Joseph Antos, health economist, American Enterprise Institute (Courtesy of Joseph Antos)

Joseph Antos, health economist, American Enterprise Institute:

“My first suggestion is to look at what other employers have done (some unsuccessfully) and consider how to adapt those ideas for the three companies and more broadly. Change incentives for providers. Change incentives for consumers. Work on ways to reduce the effects of market consolidation. The bottom line: Don’t keep doing what we are doing now. I don’t see that these three companies have enough presence in health markets to pull this off anytime soon, but perhaps this should be viewed as the private-sector version of the Affordable Care Act’s Innovation Center— except, this time, there may be some new ideas to test.”


Ceci Connolly, president and CEO, Alliance of Community Health Plans (Courtesy of Ceci Connolly)

Ceci Connolly, president and CEO, Alliance of Community Health Plans:

“We know that 5 percent of any population consumes 50 percent of the health care dollar. I would encourage this group to focus on how to better serve those individuals who need help managing multiple chronic conditions.”


David Lansky, CEO, Pacific Business Group on Health (Courtesy of David Lansky)

David Lansky, CEO, Pacific Business Group on Health:

“The incumbent providers of services to our members are not doing as much as we need done for affordability and quality. So, we are pleased to see them go down this path. We don’t know what piece of the puzzle they will tackle.

“We know well-intended efforts over the years haven’t added up to material impact on cost and quality. I would suspect they are looking at doing something broader, more disruptive than initiatives we have tried before.

“I think across the board they have the opportunity to set high standards for the health system in whatever platform they use. These companies have a history of raising the bar. Potentially, it could be a help to all of us.”

A new health care behemoth? Not so fast.

Illustration: Rebecca Zisser / Axios 

Let’s all take a big, collective chill pill on this vague new health care venture from Amazon, Berkshire Hathaway and JPMorgan Chase. Could it revolutionize health care? Sure. Will it? Let my colleague Bob Herman walk you through the many reasons to take a deep breath.

We don’t know what they’re even trying to do. The companies said they will come up with “technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable cost.” That’s as much detail as they offered.

  • At least initially, they’re only focused on their own employees, not the system as a whole.

Other big companies have tried something similar.

  • How will this new entity be different from the numerous other employer coalitions that try to band together for better deals?
  • Amazon and JPMorgan are already part of the National Business Group on Health. One of Berkshire Hathaway CEO Warren Buffett’s companies, BNSF Railway, is part of the Health Transformation Alliance. Neither has done a whole lot.
  • Will this end up like another Kaiser Permanente, a health insurance system that uses its own closed system of hospitals and doctors? Kaiser Permanente, after all, started out as a workers’ comp program for shipyard and construction workers.

Go deeper: We’re barely scratching the surface of unanswered questions here. Bob has many more for you to ponder at Axios.com.

Side note: If Amazon is worried about the cost of health benefits, it could save itself some headaches by placing its coveted HQ2 in Toronto, CityLab notes. Canada has single-payer health care — which Buffett has endorsed.

Amazon, JPMorgan and Berkshire Hathaway launch new healthcare company: 6 things to know

https://www.beckershospitalreview.com/finance/amazon-jpmorgan-and-berkshire-hathaway-to-launch-healthcare-company-6-things-to-know.html

Amazon, JPMorgan and Berkshire Hathaway are starting a healthcare company, aiming to lower costs

 

Amazon, Berkshire Hathaway and JPMorgan Chase & Co. are launching a new company aimed at cutting healthcare costs for their U.S. employees.

Here are six things to know about the partnership.

1. In addition to reducing healthcare costs, the companies are aiming to improve employee satisfaction through the new venture. Amazon, Berkshire Hathaway and JPMorgan are hoping the sheer size of each company and their complementary areas of expertise will help them tackle these issues.

2. “Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, chairman and CEO of JPMorgan. “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.”

3. The companies said the project, which is in the early planning stage, will initially focus on technology solutions.

4. “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.”

5. The new venture will be 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.

6. “The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway Chairman and CEO Warren Buffett. “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.”

http://www.latimes.com/business/la-fi-amazon-health-care-20180130-story.html?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BRZTkPL5nRHWNg6UD3hefBQ%3D%3D