Amazon, Berkshire, JPMorgan partner to cut healthcare costs

Amazon.com Inc Berkshire Hathaway Inc and JPMorgan Chase & Co have said they will form a company to cut health costs for their employees, setting up a major challenge to the US healthcare system.

The new, not-for-profit venture will initially focus on technology for “simplified, high-quality and transparent healthcare” for their more than 500,000 US employees, the companies said. They did not explain their strategy, but said they are looking to recruit a chief executive officer.

Healthcare industry experts say the new entity could eventually negotiate directly with drugmakers, doctors and hospitals and use their vast databases to get a better handle on the costs of those services.

That could undercut the industry’s “middlemen,” from health insurers to pharmacies and benefits managers.

US healthcare spending has been increasing annually faster than inflation, and in 2017 accounted for 18 percent of the economy, according to a Reuters report. Corporations sponsor health benefits for more than 160 million Americans.

Health insurers that provide benefit management or health plans to Amazon, JPMorgan and Berkshire could be among the hardest hit.