Jeff Bezos, Warren Buffet and Jamie Dimon think they can. They have announced that they are creating a new company to address health care costs for their U.S. employees. They think their solutions might work for other companies as well.
Their announcement recently sent shivers through people who are heavily invested in established health insurers and triggered a sell-off in their stocks.
Their particulars haven’t been published, but there are clues to what they might suggest based on their handling of their own businesses.
Buffett has Buffett’s Berkshire Hathaway; Bezos runs one of the country’s biggest retailers in Amazon; and Dimon heads JP Morgan Chase. Together, the three have a market worth of $1.62 trillion. They have used unique and daring methods to put themselves at the top of the earnings heap and are noted for inventive ways to meet challenges.
Buffet may have the most experience in the insurance world. Berkshire Hathaway owns several insurers, including GEICO. While that may not translate immediately into health insurance, Buffet at least knows how the market works. He is as long-time critic of America’s health care costs, calling them a “tapeworm” that harms the growth of the economy.
Dimon, as head of the largest U.S. bank in terms of both assets and deposits, also has an understanding of how money works. JP Morgan Chase got a big tax cut under the new national tax plan.
Bezos has cut a wide swath with his innovative approaches to online marketing. Now the richest man in the world, he has used some imaginative approaches to marketing, being willing to cut prices a little to attract customers. Amazon has built itself on that sort of thinking,
The trio said their project will focus on technology to provide simple, transparent care, avoiding the morass that complicates current health care and multiplies costs.
Though only time will tell if they are onto something good, some analysts who are familiar with their past performances say there is a good chance they can pull it off. Jeffries & Co. analyst Brian Tanquilut predicts that the new company will do such things as negotiating directly with health care providers such as hospitals and health care providers, bypassing the companies that act as middleman between patient and provider. That would reduce costs in medical and pharmaceutical chains, he said.
If nothing else the millionaire consortium on health care will shake up the industry and possibly induce new approaches in the market.