Amazon, Berkshire Hathaway and JPMorgan Chase forming new health care venture
The online retailer announced Tuesday it's joining forces with
Details were scarce, but the companies said they plan to pair technology with their influence and deep pockets to create a model that reins in costs.
"The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty," Amazon founder and CEO
"Hard as it might be, reducing health care'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," Bezos said.
Buffett's company, which owns GEICO, adds insurance expertise to the mix.
"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," the billionaire said in a statement.
"The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our
The companies admitted their effort is in the "early planning stages." They did not announce a headquarters location.
"They've got the horsepower to become a player,"
Kaplan, who helps negotiate health plans for large employers, said innovations could revolutionize problem areas such as expensive, non-essential trips to hospital ERs and doctor offices.
"Does someone who's successfully managing high blood pressure really need to go four times a year to their provider to get their prescriptions filled? Can't we use technology and test from home on devices that sync to your phone and go to your provider? The technology is out there, but the traditional carriers haven't figure out how to get traction," Kaplan said.
Amazon's retail expertise could also be a game changer for prescription drug pricing, he said.
"Drugs are a big piece of this, and there are some margins there. They could cut out the wholesalers and middle men and still have some profit," Kaplan said.
Amazon has circled the health care field before, but the Tuesday announcement sent shock waves through the sector.
Shares of
Amazon,
"Obviously they have tremendous clout and potential market power, just in terms of the sheer number of their employees and dependents. They might be able to exercise some serious bargaining power," Columbia Business School Professor
"But what they're planning to do in terms of entering the health care market more generally, it's a big question mark. They provided very few details," he said. "I would expect there to be some learning curve before they have an impact."
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