Amazon, Berkshire Hathaway and JPMorgan Venture into Health Care Industry

Three of the world’s leading companies — Amazon, Berkshire Hathaway and JPMorgan — are teaming up to take on the health care industry.

Amazon announced on Tuesday, Jan. 30, that it would be partnering with Berkshire Hathaway and JPMorgan on an initiative to create an independent health care company for its employees with the hopes of improving employee satisfaction and reducing costs, according to a release from Berkshire Hathaway.

The new independent company is said to be “free from profit-making incentives and constraints,” according to Berkshire Hathaway. “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 alliance was established as a result of the nation’s current health care system and the increasing costs of medical treatment. “The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Jeff Bezos, Amazon’s founder and chief executive. “Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”

While the companies have not explicitly detailed their plans, they have stated that they will be using technology to bring down health care costs for employees.

Even before Tuesday’s announcement, there have been signs that Amazon is preparing to enter the health care market. Earlier this month, the company posted a job for an “experienced HIPAA professional.” The company is also said to be exploring plans of entering into the pharmacy supply chain market as a drug distributor.

According to Mickey Chadna, vice president of Moody’s Investor Service, the new venture could create “further competitive pressure” for pharmacy giants like Walgreens and CVS. “In light of the announcement,” Chadna said, “the potential merger of CVS and Aetna is even more compelling as a more coordinated approach to medical care is necessary to lower the overall health care costs for consumers.”

Health care professionals and strategists are still inquiring about the potential of this plan. “Whether and how this initiative will benefit employees directly,” said Benjamin Gomes-Casseres, a professor of strategy at Brandeis University International Business School, “and whether solutions the company develops will scale and be a model that could be used by other employers remains uncertain.”