Amazon + Berkshire Hathaway + JP Morgan = Total Disruption?!

The title may be slightly exaggerated, but in case you didn’t hear, Amazon, Berkshire Hathaway, and JPMorgan are going to create a healthcare company!!! There had been whispers that Amazon was thinking about entering the pharma business, which would no doubt cause panic among pharma companies. The recent mergers among pharma companies and hospital systems show that everybody was bracing for Amazon’s entrance into the pharma business. But I guarantee you that nobody saw this mega merger coming.

Berkshire Hathaway is the third largest public company in the world. Oh, and Warren Buffett is the CEO of the company, so NBD. JPMorgan is the largest bank in the United States. Amazon is Amazon. For the rest of the article, I’ll be referring to these three companies as “the big three.”

There haven’t been any detailed specifics about the merger, but one of the main reasons why the big three merger is happening is because of the high costs of healthcare. I suspect that the federal government’s recent inability to pass any significant healthcare reform to address these costs is another reason. The big three hope that this merger will help their employees find healthcare.

I italicize employees because this merger is specifically for the people who work for these three companies. That’s why I don’t think that this merger will majorly disrupt the healthcare industry, but if this merger is successful, then I think many of the healthcare companies will have something to worry about.

What I expect the big three to do is to self-insure, which means that they’re going to take on all of the risks. They will most likely allocate a specific number of funds just for healthcare usage for their employees. That means that they will have to be pretty accurate when it comes to predicting the healthcare usage of their employees. Insurance companies won’t like this because, by self-insuring, the big three will be effectively cutting out these insurance companies because they used to be the middleman.

I wouldn’t be surprised if the big three introduced A.I. for their employees. Inefficiency has long haunted the healthcare industry, and if technology can eliminate these inefficiencies, then I wouldn’t be surprised if they introduced digital health. Especially with Apple moving into the EMR business, I don’t think that Amazon, Berkshire Hathaway, and JPMorgan will want to be left behind. You can read about my opinions on using data in healthcare down below in my post about data ethics.

I hope that the big three will focus on empowering primary care doctors, as the healthcare industry doesn’t give them much power, which is part of the reason there are such high costs in healthcare because we focus on medicating instead of treating the underlying cause.  

It’ll be interesting to see how the big three merger turns out and whether it is successful. Whether it succeeds or not, I think we can expect to see a new movement of businesses taking the healthcare problem into their own hands because they are frustrated with the government’s inability to pass any healthcare reform. I mean states are beginning to create safe injection sites, especially those suffering from the opioid crisis because they are tired of waiting for the federal government to give them money for the crisis. We discussed this in my Politics of Healthcare class today, and the problem when you have the free market start to create their own healthcare companies you will see someone people get left out and those are typically the low-income people. When the government provides healthcare, it does its best to include those low-income people, and so we have to keep in mind the social justice impact when we have these type of mergers. 

Another important note to mention is that on the day of the announcement, shares of big healthcare companies plummeted. If the stocks of groups such as UnitedHealth Group and Anthem go down just by the announcement of the big three merger, then imagine the disruption the actual merger will have on the stock market.

I’m not sure when this big three company will emerge, but I’ll be blogging about it when it happens.

Also, let me know in the comments what you think about this big three merger!