Published: Tue, January 30, 2018
Finance | By Loren Pratt

Amazon, JPMorgan, and Berkshire are creating a healthcare company

Amazon is diving into health care, teaming up with Warren Buffett's Berkshire Hathaway and the NY bank JPMorgan Chase, to create a company that helps their USA employees find quality care "at a reasonable cost".

The companies are still in the "early planning stages" of this effort.

A corporate America dream team - Amazon, Berkshire Hathaway and JPMorgan Chase & Co. - are combining efforts to improve health care for their USA employees.

A longer-term management team, headquarters location and operational details of the new company will be announced later, the companies said.

The businesses said the new venture's initial focus would be on technology that provides "simplified, high-quality and transparent" care.

Growing health care costs "act as a hungry tapeworm on the American economy", said Berkshire Hathaway CEO and chairman Warren Buffett in a statement.

"Our group does not come to this problem with answers", Buffett, the world's third-richest person, said in a statement.

"The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty", said Bezos.

The health-care industry has been nervously eyeing the prospect of competition from Amazon for months.

Todd Combs, an investment officer at Berkshire Hathaway, Marvelle Sullivan Berchtold, a managing director of JPMorgan and Beth Galetti, a senior vice president at Amazon, are overseeing the company's formation.

The company has said it is adding 100,000 full-time jobs in the USA through mid-2018, most in warehouses, and it is adding 50,000 corporate jobs over 10 to 15 years at its planned second North American headquarters. Berkshire has among its companies, health care liability insurer MedPro Group.

Health care costs for companies routinely rise faster than inflation and eat up bigger portions of their budgets. US spending on health care rose from 13% of GDP in 2000 to 18% in 2015.

The rising costs of health care have dragged on USA companies, big and small, and employees are increasingly feeling that pain. "The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our USA employees, their families and, potentially, all Americans", he added.

Shares of established health insurers such as UnitedHealth, Anthem, Aetna and Cigna opened sharply lower Tuesday following the announcement, as did shares of Humana, a hospital operator, drugstore retailers CVS and Walgreens and prescription service Express Script. Shares of Amazon opened slightly lower, while JPMorgan and Berkshire Hathaway were unchanged. (ESRX.O) dropped 7.2 per cent in early US trading Tuesday, while rival CVS Health Corp.

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