(Reuters) - Amazon.com Inc, Berkshire Hathaway and JPMorgan Chase & Co will form a healthcare company aimed at cutting costs for their U.S. employees, they said on Tuesday, sending shares in the broad healthcare sector sharply lower.
The company will not aim to make a profit and initially focus on technology to provide what they called “simplified, high-quality and transparent healthcare” for their more than 500,000 U.S. employees.
“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway (
BRKa.N) Chairman and Chief Executive Officer Warren Buffett. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”
The announcement comes as investors in the healthcare sector worry that technology and retailing behemoth Amazon (
AMZN.O) could become a healthcare competitor and eat away at sector profits, just as it has done in retailing.
Amazon has been looking at the pharmacy business and pharmacy distribution, according to numerous media reports and Wall Street analysts. It is unclear if the company has plans beyond this initiative.
U.S. healthcare spending increases each year faster than inflation, and in 2017 accounted for 18 percent of the U.S. economy. Corporations, which sponsor healthcare plans for more than 160 million Americans, and the U.S. government are trying to cut those costs.
