The three captains of industry who just joined together to change American health care have always been close. Two decades ago, Jamie Dimon almost joined Jeff Bezos at Amazon before deciding to run Bank One instead. Both considered joining each other’s boards, but did not because of potential conflicts.
And all three are customers of each other.
But the initiative that was announced Tuesday turned from a casual conversation into a real effort after Berkshire Hathaway‘s Todd Combs joined J.P. Morgan Chase’s board in September 2016, sources familiar with the situation said. That meant there was an insider to pull the group together in a formal way.
Talks about forming this partnership, which will be “free from profit-making incentives,” really began to pick up in pace over the last two to three months, according to sources. It was during this period when the decision was made to actually form a new company and share all health-care data with this entity.
Combs, an investment manager for Berkshire, is one of the leads on the new project along with J.P. Morgan’s Marvelle Sullivan Berchtold and Amazon’s Beth Galetti.
The three will soon start a search for a CEO of the company, sources said. The companies were driven to release the news before the search formally began on fear it may be leaked beforehand. A headquarters for the new company and other operational details will be announced in “due course,” according to a press release.
This should not be seen as a move to blow apart the health-care industry, the sources said, but rather a move to lower costs for companies like J.P. Morgan, which spends around $1.25 billion on medical benefits annually.
The group believes this initiative will one day help J.P. Morgan to lower that cost by up to 20 percent, the sources said.
Still, some Wall Street analysts who are advocating buying the tanking health insurer stocks after the news may be acting too quickly to dismiss the impact of this effort.
While there wasn’t a concrete plan released for the new entity (the press release vaguely mentioned something about targeting technology solutions first), we know now that the company will have a CEO and a very real goal of lowering health-care costs for corporate America by a fifth.
It’s not exactly great news for the sector when the three biggest names in business decide to go after your bottom line.
To be sure, as speculation swirls about where this plan will take Dimon and Bezos, two disruptive forces of their respective industries, the sources were clear that the two don’t see the relationship between the two companies going deeper elsewhere.