Amazon, Berkshire Hathaway and JP Morgan to set up healthcare firm

Amazon, Berkshire Hathaway and JP Morgan to set up healthcare firm Inc, Berkshire Hathaway Inc and JPMorgan Chase & Co said yesterday they will form a company to cut health costs for hundreds of thousands of their employees, setting up a major challenge to an inefficient USA healthcare system.

The effort is in the early planning stages, the three companies said.

"The ballooning costs of (health care) act as a hungry tapeworm on the American economy", said Buffett, the head of Berkshire Hathaway, in a prepared statement.

"When large and successful companies come together in this way, it's potentially disruptive", says Frank Easley, senior vice president of Aon's health and benefits group, about the Amazon, Berkshire and JPMorgan partnership. But we also do not accept it as inevitable. "The solution will reportedly be 'free from profit-making incentives and constraints".

Though details are sketchy, a top executive from each partner will initially lead the effort, which is meant to use technology solutions to simplify the healthcare system and, more broadly, increase transparency and ultimately, cut costs. "The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our USA employees, their families and, potentially, all Americans".

(CNN) - Can three titans of modern industry bend health care away from its ruinous path of disorganization and waste, toward the kind of efficiencies these men regularly achieve in their core businesses? Nearly all companies in the health field were in retreat Tuesday.

Health care spending accounts for an ever-larger share of the economy.

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The possibility of an "Amazon effect" of better technology and lower prices sweeping through the employer-sponsored health insurance market, which covers about 160 million Americans, generated plenty of buzz and speculation.

Benefits experts quoted by The Associated Press speculated the new company could create a virtual marketplace that makes shopping for health care as easy as buying a shirt on Amazon.

While the technology giant and its coalition kept mum on the details of their new venture, the leaders said more information would be made available in the coming months. In the past five years, premiums for family insurance plans arranged by employers are up 19 percent, according to a recent study by the Kaiser Family Foundation and the Health Research & Education Trust.

Health-care spending was estimated to account for about 18 per cent of the U.S. economy previous year, far more than in other developed nations.

It is interesting to note that one of the largest USA reinsurance companies, Gen Re, is at the core of Berkshire Hathaway's empire. Amazon's entry into the health market has been perceived as imminent, even though the company had announced nothing publicly.

It has been watched very closely on Wall Street, which has seen Amazon disrupt numerous industries ranging from book stores to clothing chains. By doing so, Amazon, Berkshire and JPMorgan could gain more control over their spending and save money pharmacy-benefit managers now consume, he said. In a survey of physicians' perspectives published past year in the journal PLOS One, the average estimate was that 20 per cent of medical care was unneeded, including about a quarter of tests, a fifth of prescriptions and more than one in 10 medical procedures.