Initial reaction is positive to word that Berkshire Hathaway, JPMorgan and Amazon plan to create a company dedicated to offering a broad array of health care services for their employees, emphasizing top-quality care over profit-making.
But health care industry-watchers also are anxious for more details, as the companies’ Jan. 30 announcement was notably light on details.
“The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent health care at a reasonable cost,” the companies said.
Added Berkshire Hathaway CEO Warren Buffet in a statement: “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. 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.”
Said Amazon chief Jeff Bezos: “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.”
In an earlier move, Amazon attempted to acquire Aetna before CVS announced last year it would purchase it for $87 billion. Meantime, Berkshire Hathaway already owns Geico, one of the nation’s fastest growing insurers.
"The sky's the limit on where they could possibly go with this," said Brian Marcotte, CEO of the National Business Group on Health, a nonprofit that represents large employers, in a written statement. "We're always supportive of disruptive innovation, and health care certainly is in need of it."
Mark Manigan, an attorney and member of the health law practice group at Roseland-based Brach Eichler said in an email: “In light of the amount of money spent in healthcare, we are seeing all kinds of disruptive investment in the space. This particular play is interesting not only due to its potential scale, but because it’s an attempt to remove the middle men between the employer/patient and the care givers.”
Observed David Kass, finance professor at the University of Maryland's Robert H. Smith School of Business: “I think there are opportunities to reduce the prices and price increases of pharmaceuticals in this country. It is quite glaring how much lower prices are for specific pharmaceuticals in other countries. There is enormous potential for cost savings…The partnership could be transformative for the wider corporate world. It will certainly be in the interest of other corporations to observe what is happening here.”