It’s a stronghold of insider Washington, a place where billionaires and former presidents mingle in black-tie splendor.
Jeff Bezos, Warren Buffett and Jamie Dimon were there, of course. But few in the invitation-only crowd last Saturday at the annual Alfalfa Club gala could have guessed that the men were quietly closing in on what could be the answer to a question that divides the nation: How do we fix American health care?
Their appearance together at the Capital Hilton capped years of discussions, according to a person with knowledge of the talks. When they saw one another at social gatherings or industry conferences, the conversation inevitably steered toward their shared frustration over the impact of medical expenses on their companies’ bottom lines.
On Tuesday, Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co. announced a joint venture designed to do something about the problem they’d been chewing over for so long. They took the unusual step of issuing a mission statement -- use technology to fix health care for their combined 1 million workers, and possibly all Americans -- before even finding someone to head the effort. That search, aided by the free publicity of the announcement itself, has just begun, the person said.
After settling on a leader and deciding where the joint venture will be based, the initial focus will be on software solutions to provide U.S. employees and their families with simple, high-quality and transparent health care at reasonable costs. Echoing a critique of Silicon Valley itself, the enterprise will be free from the need to turn a profit, the companies said.
The conversations between the billionaires might never have reached this stage had it not been for Todd Combs, the Berkshire investment officer who is one of the three executives tasked with helping create the endeavor. Combs, 47, was instrumental in getting the project to this phase, the person familiar with the situation said.
A former hedge-fund manager who has been handed increased responsibilities at Berkshire Hathaway, Combs has been a JPMorgan board member since 2016. He also knows Bezos.
While the companies shared the limelight in the announcement, it was Amazon that captured imaginations, and stirred up concerns, with its first step into the health-care sector after months of speculation that the behemoth might make an entry. The shares of health-care stocks from Express Scripts Holding Co. to CVS Health Corp. sank on the news.
While details are scant, the Amazon-Berkshire-JPMorgan collaboration will likely pressure profits for middlemen in the health-care supply chain. Potential ways to bring down costs include providing more transparency in prices for doctor visits and lab tests, and by enabling direct purchasing of some medical items, the person said.
The risk for incumbents is that Amazon, “as a consumer oriented company, can develop a more customer-friendly experience as health care today is difficult to manage,” said Kevin Fischbeck, a Bank of America Corp. analyst.