E-retailer Amazon is getting into the healthcare sector through a joint venture.
The new firm, aimed to reduce costs for their U.S. employees, will be promoted jointly by Amazon, JP Morgan and Berkshire Hathaway.
The firms said that the independent firm would be “free from profit-making incentives and constraints”.
Providing of care to staff at a “reasonable cost” to their employees if the aims of the move, the companies said.
However, there is widespread conjecture that the healthcare sector would be ultimately disrupted by Amazon as had bene the case with the retail sector.
Together, more than 500,000 people are employed in the three companies which are the three largest private employers in the US.
Providing of “simplified, high-quality and transparent healthcare” would be based on techcnology, the three companies said.
“Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, chairman and chief executive of JPMorgan Chase.
“The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our US employees, their families and, potentially, all Americans.”
“Investors have continually asked what unexpected development might spoil the strong investor sentiment towards managed care.
“Unfortunately, this seems tailor-made to fit the bill,” BMO Capital Markets analyst Matt Borsch said.
Beth Galetti, a senior vice president at Amazon, Marvelle Sullivan Berchtold, a managing director of JPMorgan Chase and Todd Combs, an investment officer of Berkshire Hathaway would initially head the new venture.
Operational details of the company and the longer-term management team planning is yet to be done.
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Amazon founder and chief executive Jeff Bezos.
“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.”
The costs for health insurance in the U.S, could see a rise of at least 25 per cent in 2018 and potentially double the current amount by the year 2026, predicted the US Congressional Budget Office (CBO).
(Adapted from BBC.com)