A bank, a holding company, and an online retailer walk into an industry…
At first blush, the idea of JP Morgan, Berkshire Hathaway, and Amazon teaming up to tackle healthcare sounds, at the very least, like a bad joke.
But this is no laughing matter.
Here’s why. Amazon, Berkshire, and JP Morgan are among the largest employers in the US, with over 1 million employees on their combined payrolls. Together, the three have a market cap of $1.6 trillion, or to put that another way, they’re worth roughly a third of the total spending on healthcare in the US.
If Jamie Dimon, Warren Buffet or Jeff Bezos alone announced that they were throwing their hat into the healthcare ring, that would be big news. Combined, it’s a declaration of war.
In today’s press release they make it clear that they will be using their combined power to tackle the biggest complaints about the United State’s current healthcare system - cost and quality stating that “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”.
Even if you ignore the technical prowess and disruptive power of Amazon, simply forming a group that advocates collectively for this many employees yields a bargaining power only one other company in the US can muster; Walmart.
Yes, you say, we’ve been here before. The last few years are littered with the carcasses of bright-eyed tech darlings who’ve waltzed into healthcare, confident all the industry needs is a jolt of Silicon Valley inspired ingenuity (I’m looking at you, Microsoft Health Vault and Google Health).
And while you’re right to be skeptical – after all, there’s a lot more to rising healthcare costs than poor technology choices – today’s announcement is not an isolated case.
Amazon, JP Morgan, and Berkshire Hathaway’s as yet unnamed venture comes just days after Apple announced they were getting into health records on the iPhone, and just a few weeks since the CVS-Aetna deal was announced and Alphabet spin off Sidewalk Labs debuted Cityblock Health.
Make no mistake; in 2018 the incumbent healthcare industry is being attacked from all sides and from every tactical angle.
If nothing else, Bezos, Dimon, and Buffett combining to take on healthcare, and the ensuing media storm, further underlines several growing trends:
1. The failure of the existing healthcare industry, collectively, to tackle rising costs (through innovation or otherwise) is becoming clearer to corporate America and the general public by the day
2. The amount of money that awaits whoever or whatever consortium of companies that can crack the healthcare nut is immense, and the market now believes the time is right for disruption
3. Large and established companies outside the healthcare industry are growing in confidence that they can tackle healthcare, and they’re backing that confidence up with serious money and serious brain power. This isn't the first leap by outsiders into healthcare and it certainly won't be the last
Announcing the joint venture, in today’s press release, Jeff Bezos is quoted as saying: “Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”
What better group than Amazon, JP Morgan, and Berkshire Hathaway to bring the experts, the outsider perspective, and the capital to go long on this initiative and truly make a dent in the rising costs of healthcare.