Tidal Wave or Ripple? Amazon, JPMorgan, and Berkshire Hathaway take on Health Care



When business news breaks, it can have minor or massive effects on related industries. That impact is usually seen rather quickly on the surface and further expressed as the event plays out over the course of time.

A male doctor examining a sick boy child with his mother at surgery or hospital

Amazon, Berkshire Hathaway and JPMorgan Chase & Co. have announced they are joining forces to create a new healthcare option for their U.S. employees. If you question the impact of that news, check the stock market. Shares of Amazon and JPMorgan were off in morning trading. Berkshire showed a gain.

Shares for healthcare companies did not fare as well. After the announcement, shares fell. CVS, UnitedHealth, and Aetna fell 3%. Cigna dropped 5%. And Express Scripts saw a 10% fall.

Of course, the question the HR Community is collectively asking itself is: what is the impact of the news on HR departments? Unfortunately, there isn't an answer. At least… not yet. There simply isn't enough information available on the new company to create a theory. In fact, the announcement made didn't provide much in terms of detail surrounding the entity.

Here's what was announced:

  • The new company, which is still in the planning phase, will reduce healthcare costs for U.S. employees of the three companies
  • The initial focus will be on technology solutions that will provide simplified, high-quality and transparent healthcare at a reasonable cost.
  • Initial formation is being led by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon.

CEOs of the three companies hope the sheer size of their venture will bring enough attention and resources to make the possibility reasonable and feasible.

Warren Buffett

"The ballooning costs of healthcare 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 Berkshire Hathaway Chairman and CEO, Warren Buffett.

Jeff Bezos

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

Jamie Dimon

"Our people want transparency, knowledge and control when it comes to managing their healthcare," said Jamie Dimon, Chairman and CEO of JPMorgan Chase. "The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans," he added.

The full press release can be seen below:

Amazon (NASDAQ: AMZN), Berkshire Hathaway (NYSE: BRK.A, BRK.B) and JPMorgan Chase & Co. (NYSE: JPM) announced today that they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs. The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints. 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 healthcare at a reasonable cost.

Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today. By bringing together three of the world's leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.

"The ballooning costs of healthcare 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 Berkshire Hathaway Chairman and CEO, Warren Buffett.

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

"Our people want transparency, knowledge and control when it comes to managing their healthcare," said Jamie Dimon, Chairman and CEO of JPMorgan Chase. "The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans," he added.

The effort announced today is in its early planning stages, with the initial formation of the company jointly spearheaded by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon. The longer-term management team, headquarters location and key operational details will be communicated in due course.