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Another Industry Amazon’d

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By Published On: January 31, 20180 Comments

It seems Amazon isn’t content with ruling just retail. The company has now thrown the healthcare sector in the US into disarray following its latest corporate announcement.

On Tuesday, e-commerce giant Amazon Inc. announced it will partner with Berkshire Hathaway and JPMorgan Chase & Co to form a company to cut health costs for hundreds of thousands of its US employees. The market response has been instantaneous and unforgiving, with shares in US healthcare companies falling across the board, wiping out billions of dollars of market value.

The move by three of the best-known business leaders in the US – Amazon’s Jeff Bezos, Berkshire’s Warren Buffett and JPMorgan’s Jamie Dimon – will challenge the world’s most expensive healthcare system, where escalating costs have hurt corporate profits.

It’s the latest example of how Amazon has such enormous influence and power that it can tap into a variety of industries, seemingly with a moment’s notice. In consideration of this, there’s nothing to suggest that other industries won’t be Amazon’d anytime soon. Amazon has done it before and there’s nothing stopping it from doing it again.

Take for instance its deal to purchase Whole Foods Market last year, sending shockwaves throughout the grocery industry globally. In addition, it disrupted the sporting goods industry when Nike announced it would begin selling on Amazon.

In its latest move, it’s understood the new, not-for-profit healthcare venture will initially focus on technology for “simplified, high-quality and transparent healthcare” for their 500,000 plus US employees. The companies, however, did not elaborate on their strategy but have confirmed they are searching for a chief executive officer for the new firm.

The new entity could eventually negotiate directly with drugmakers, doctors and hospitals, according to healthcare industry experts, and use their extensive databases to more efficiently handle the costs of those services.

This, in turn, could undercut the industry’s middlemen, from pharmacies to health insurers and benefits managers. “The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway 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.”

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