When three giants of their respective industries strike an alliance around US healthcare, the world – and markets – take notice.
And when one of those companies is Amazon, the word disruption almost automatically enters the conversation.
Timeline for Comment wire
So when news hit the wires that Amazon, Berkshire Hathaway, and JP Morgan Chase are entering a healthcare-related partnership to benefit their employees and lower their cost structure, speculation went into high gear, and the conjecture started.
The companies provided minimal detail about the independent company they are jointly forming to carry out this effort beyond the fact that it will initially focus on technology solutions designed to “provide US employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost”.
With healthcare comprising approximately 18 percent of the US GDP, virtually every employer in the United States is grappling with cost and management issues.
Thus it was little surprise when theories went immediately to exactly how the companies would re-engineer US healthcare. Would it become a mega distributor of healthcare services?
Could the fledgling company reinvent the way consumers and businesses pay for medical care? Would it revolutionise the entire healthcare model as Americans – and potentially the world — know it?
Insurance company stocks slid in the immediate aftermath of the announcement.
JP Morgan Chase CEO Jamie Dimon reassured his company’s insurance clients that the aim of the tie-up is to support the triumvirate’s employees, not compete with insurance payers.
Still, questions swirled about how ripple effects from the alliance could potentially affect the broader market.
Each company brings something beyond scale and vast resources to the healthcare table. Multi-national holding company Berkshire Hathaway has big investments in insurance, though not specifically healthcare-related.
JP Morgan Chase has proven to be a formidable financial player in times of crisis. But it is really Amazon and its technological savvy that conjures up phrases like game changer.
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With a unique talent for commercialising services and changing delivery models, Amazon seems primed to play a role in healthcare.
That is almost assured with its investments in food distribution and its work in areas like artificial intelligence and analytics.
However, this particular partnership may not be the ultimate vehicle for dramatic change.
Instead it may more closely parallel similar alliances that tap the collective bargaining (and buying) power of multiple businesses to decrease healthcare costs and improve efficiencies.
Cooperatives like the National Business Group on Health, which has more than 400 members and was founded in 1974, have been around for years and has hardly revolutionised healthcare delivery for the broader market.
But as with anything else involving Amazon, never underestimate the company’s power to surprise.