Amazon Inc., Berkshire Hathaway Inc. and JP Morgan Chase & co. announced Tuesday plans to start a company aimed to cut healthcare costs for of their employees with a combined estimate of 1.1 million.
The new company, still unnamed, is a not-for-profit venture geared towards technology solutions. Shares in US healthcare companies fell shortly after the announcement.
JP Morgan Chase, led by Jamie Dimon is the largest U.S. bank. Berkshire Hathaway, led by Warren Buffet is one of the largest public companies in the U.S. Amazon, led by Jeff Bezos, has dominated the retail industry in recent years.
Eventually, the new company will slash costs of products and services by negotiating directly with healthcare providers and drugmakers, eliminating the “middle man” of insurance companies, pharmacies and case managers.
Healthcare spending is rising faster than inflation in the U.S.
“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway Chairman and CEO Buffett. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”
With corporate America spending nearly $160 million dollars on healthcare benefits for employees annually, companies in healthcare benefit the most from inflation.
Healthcare companies have come up with ways to cut costs and retain profit margin, such as CVS buying health insurer Aetna for $69 billion dollars to save money for employers.
The three companies have yet to announce the CEO of the new company and stated the deal is still in the early stages.
-Allen A Garzone II, Garzone Real Estate, Inc, Boston Real Estate Agent