Amazon Is Building Its Own Healthcare Company, With The Help Of Berkshire & JPMorgan

In some market shaking news, e-commerce giant Amazon.com (NASDAQ:AMZN) announced that they are partnering with Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) BRK.A and JPMorgan Chase (NYSE:JPM) to build a healthcare company in order to cut costs for their U.S. employees and improve worker satisfaction.

As a result, shares of health sector companies are sliding in intraday trading. Insurance players like Anthem (NYSE:ANTM) , Cigna (NYSE:CI) , Aetna (NYSE:AET) , and Humana (NYSE:HUM) are all down between 2.5%-5.5%, while pharmacy giants CVS Health (NYSE:CVS) , Walgreens Boots Alliance (NASDAQ:WBA), and Rite Aid (NYSE:RAD) each dipped around 5%. Pharmacy benefits manager Express Scripts (NASDAQ:ESRX) is down nearly 6% as well.

The goal of the partnership is to create a company with the sole intention of providing healthcare for its workforce, and the future entity will not aim to make a profit, but instead focus on the technology that will provide “simplified, high-quality and transparent healthcare.”

Amazon, Berkshire, and JPMorgan said that the kind of healthcare to be provided to employees will be long-term, and that they hope to bypass the frustration associated with securing healthcare from a third-party provider who is ultimately concerned with their own bottom line.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Chairman and CEO Buffett. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

Amazon founder Jeff Bezos said that “Hard as [forming a new healthcare company] might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort,” while JPMorgan’s chief executive Jamie Dimon said the ultimate goal is to “create solutions that benefit our U.S. employees, their families and, potentially, all Americans.”

There have been rumors of an Amazon entry into the pharmacy business for a while now—that so-called Amazon Effect—so this announcement is not entirely a surprise. The healthcare company is still in the “early planning” stages, though there is a temporary management team in place with leaders from each organization.

Don’t Even Think About Buying Bitcoin Until You Read This

The most popular cryptocurrency skyrocketed last year, giving some investors the chance to bank 20X returns or even more. Those gains, however, came with serious volatility and risk. Bitcoin sank 25% or more 3 times in 2017.

Zacks’ has just released a new Special Report to help readers capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 4 crypto-related stocks now >>