Three US giants tie up to rein in health expenses

Amazon Berkshire and JP Morgan to form new healthcare company

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E-commerce titan Amazon, business conglomerate Berkshire Hathaway, and mega-bank JPMorgan Chase announced on Tuesday that they will collaborate to offer their USA -based employees solutions for better and more affordable health care.

While details are hard to come by right now, it's already clear the move could have massive implications for how Americans access medical treatment down the road. In quite a few cases, it would make sense to relocate an employee or family member to save on the hospital costs.

Details of the collaboration have been vague, but center around leveraging technology to drive down healthcare costs for their US employees.

It's a tribute to American business people that they are getting their act together to develop insurance coverage for the employees. The new health care company will be independent and not constrained by profit-making incentives, according to the release.

"Amazon is well known for its intuitive customer interfaces, use of advanced analytics, and its negotiating power with suppliers in the e-commerce space", he explained. The group has grown to nearly 40 members.

And, mind you, this is all within the context of employers providing benefits to their employees on an administrative-services-only basis, in which they pay the benefits plus a small fee to the insurance company for administering the plan. There also are individual efforts.

EBN: Will other industry giants form similar healthcare delivery systems? Our group does not come to this problem with answers.

"There are a lot of companies, or arguably nearly all companies, in healthcare that benefit from cost inflation running as high as it has been for many years", ISI Evercore analyst Michael Newshal said.


"The initial plan for the new entity will be on partnering with and/or acquiring various consumer-orientated health care technology capabilities (i.e. a venture capital strategy) and eventually using them to influence and incentivize health care cost-reducing behavior", he said, basing his speculation on the executives picked to shepherd the new company along.

The collaboration will likely pressure profits for middlemen in the healthcare supply chain.

The combined count of USA employees for Amazon, Berkshire, and Chase is 1.2 million, according to reports.

"This type of transparency has yet to live up to its promise", said Stehr. (Neurobionics is the field focused on developing implants for the brain and spinal cord.) Such a system could make it dramatically easier for the average American to understand what's wrong with their body and how to fix it. Many people advocate for single-payer systems, which is government-run universal healthcare. The goal of Amazon, Berkshire and JPMorgan is to increase employee satisfaction and reduce costs. While tele-health networks increasingly are being used to provide remote care, from psychiatry to dermatology, not all such services yet are reimbursed or covered by insurance. If and when the model is copied by other employers, look for even bigger cost cuts.

Some benefits insiders, however, express doubts that the three behemoths will spur a widespread industry disruption.

Three of corporate America's heaviest hitters turned heads this week after joining forces on healthcare - but what exactly they plan to do is anyone's guess.

The announcement comes amid rampant rumors and anticipation that Amazon could disrupt health care as it has in other industries, particularly in the business of selling prescription drugs. "So if this initiative is just about how health costs are paid for, and does not promote ways to improve health itself, the impact will be minimal".

All these things would be part of an effort by employers in general to control rising healthcare costs. But the US health care system is inferior to those of other rich countries on a number of technical parameters, too: For example, it has more hospital admissions for preventable diseases and more medical and lab errors than comparable countries.

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