The e-commerce giant is partnering with Berkshire Hathaway and JPMorgan Chase to create a new company that aims to reduce healthcare costs for their U.S. employees, the firms said in a joint statement.
Amazon.com Inc. is reportedly eyeing the hospital supply industry as its next disruption target.
The e-commerce giant recently partnered with investment firms Berkshire Hathaway and JPMorgan Chase & Co. to create “an independent company that is free from profit-making incentives and constraints,” the three firms said in a joint statement.
The newly formed entity will aim to reduce healthcare costs and improve satisfaction for their own employees by focusing initially on “technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.”
“The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers,” Berkshire Hathaway Chairman and CEO Warren Buffett said of the partnership. “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.”
“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Jeff Bezos, founder and CEO of Amazon. “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,” added 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.”
According to a report from the Wall Street Journal, one of the first moves in this arena by Amazon will be an effort to parlay its relatively new medical products business into becoming a major supplier to U.S. hospitals and outpatient clinics.
Amazon has met with hospital executives on several occasions to discuss its plans, and would look to create a “marketplace model” for hospitals and other facilities to purchase a wide range of supplies, which if successful, would compete directly with large, established distributors like Cardinal Health and McKesson Corp.
Over the past year, Amazon has acquired more than 10 wholesale pharmacy licenses, which are required to sell medical equipment to licensed professionals, from state pharmaceutical boards in Alabama, Arizona, Connecticut, Idaho, Louisiana, Michigan, Nevada, New Hampshire, New Jersey, North Dakota, Oregon and Tennessee.
The company is reportedly doing a pilot test at a large Midwestern hospital system, wherein officials are attempting to ascertain whether they can use Amazon Business, which already sells a limited selection of medical supplies, for all of the ordering necessary for the system’s approximately 150 outpatient facilities.
According to the WSJ report, the pilot program has been customized for the hospital system’s specific supply needs, allowing purchasing managers to compare prices negotiated with its traditional distributors against those on the Amazon Business marketplace.
“Our goal is to be something new,” Chris Holt, the leader of global healthcare at Amazon Business, told WSJ, adding that the company has been “actively building out new capabilities and features” in an effort to simplify purchasing.
Meanwhile, Amazon recently confirmed reports that the company is laying off hundreds of corporate employees at it’s Seattle, Wash. headquarters and hundreds more in its global operations at a time when it is growing employment seemingly exponentially in other areas.
“As part of our annual planning process, we are making head count adjustments across the company – small reductions in a couple of places and aggressive hiring in many others,” an Amazon spokesman told the Seattle Times, which first reported the cuts. “For affected employees, we work to find roles in the areas where we are hiring.”
Amazon eyes hospital supply chains
