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Amazon, Berkshire Hathaway and JPMorgan Chase Want To Change Healthcare

Amazon, Berkshire Hathaway and JPMorgan Chase Want To Change Healthcare

Not all of these moves made a ton of sense at the time - until Tuesday when it announced a partnership with Berkshire Hathaway and J.P. Morgan Chase to improve health care for employees of the three companies in the United States.

The negative effect the announced collaboration is having on healthcare stocks is just the latest example of the outsized influence both Amazon and Berkshire can have on industries they explore. Leerink analyst David Larsen previously wrote that "it's a matter of when, not if" that Amazon will move into drugs. Or it could be a system that bypasses insurance companies altogether and contracts directly with doctors and hospitals for better deals.

The business community finally came to realize that the reason costs were climbing and prices for treatments and services were so opaque is that consumers have been increasingly shielded from the direct cost of care by third-party payers.

Details were scarce, but the respected companies said they're determined to use their innovative technologies, influence and deep pockets to create a model that reins in costs and simplifies an otherwise byzantine system. The new collaboration could pressure profits for middlemen in the U.S. health-care supply chain.

The formal announcement yesterday that Amazon is joining forces with Berkshire Hathaway and JP Morgan Chase to collaborate on a healthcare company did not quell years of speculation about the digital retail giant's medical ambitions.

It is unclear whether company workers outside the U.S. will be able to sign up to the venture. It will be free from the need to deliver a profit.

The three business giants have said they will collaborate to search for a mechanism to supply their USA employees with healthcare at a lower cost and in a more transparent fashion.

Combs will help lead the new entity, along with JPMorgan managing director Marvelle Berchtold and Amazon Senior Vice President Beth Galetti, the companies said. "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".

Health care costs for companies routinely rise faster than inflation and eat up bigger portions of their budgets.

Buffett, worth an estimated $93bn, said the ballooning costs of USA healthcare "act as a hungry tapeworm on the American economy".

The new company will aim to tackle the heath care insurance options for the employees of the three companies. The decision to make the project public and official was a recent decision which has created more questions than answers for the time being, Faber said.

Jamie Dimon, Chairman and CEO of JPMorgan Chase picked up on the transparency theme in particular, adding weight to existing calls from other players for reform of the U.S. healthcare market.

He and others added that even if companies aren't collecting - or sharing - medical records, there are a number of other ways a patient's habits and history could be used to glean important information about their health. Lobby for new legislation to overhaul the industry? And it has been blamed for the decline of department stores, toy stores and bookstores.

Most recently it has upended the grocery sector, spending US$14 billion a year ago for Whole Foods Market Inc.

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