New York/Bengaluru: Well-regarded surgeon and author Atul Gawande, a critic of his industry`s medical practices, has been tapped to lead the healthcare company Amazon.com Inc, Berkshire Hathaway Inc and JPMorgan Chase & Co hope will slash costs.
The Boston-based venture will target the cost of serving the companies` employees and will operate free from profit-making incentives, the three companies, which employ more than 1 million people, said in a joint statement.
Amazon, Berkshire and JPMorgan announced the venture in January, rattling shares of the healthcare supply chain, including CVS Health Corp and Express Scripts, among others.
Amazon and its partners say they will use big-data analysis and other high-tech tools to improve care and cut wasteful spending.
Gawande practices general and endocrine surgery at Brigham and Women`s Hospital and is a professor at the Harvard T.H. Chan School of Public Health and Harvard Medical School.
In his 2014 book "Being Mortal: Medicine and What Matters in the End," Gawande argued against prolonging a poor quality of life for the elderly and terminally ill, saying healthcare institutions often deprive people of independence and quality of life in their latter years.
JPMorgan CEO Jamie Dimon has said he wants the joint venture to deal with the "extraordinary" spending on end-of-life care when such interventions may not help.
Berkshire Chairman and CEO Warren Buffett, who is working on the venture with Dimon and Amazon`s Jeff Bezos, said all the candidates for the job felt they could deliver better healthcare and contain rising costs.
"Jamie, Jeff and I are confident that we have found in Atul the leader who will get this important job done," Buffett said in a statement. Gawande starts July 9.
Buffett has described U.S. healthcare costs as a "tapeworm" on American businesses, hurting their ability to compete with rivals in other countries. Last month, he said the goal is to challenge the entire healthcare industry, not individual segments.
While there is no guarantee the venture will succeed in lowering costs, Buffett said it was well-positioned to try.
"The resistance will be unbelievable, and if we fail, at least we tried," Buffett said last month.
Amazon`s size and reputation as a disruptor prompted investors to sell shares of companies that might be hurt by the venture.
"The choice suggests that the (Amazon, Berkshire, JPMorgan) coalition is looking not at the drug value chain in isolation, but more broadly at the overall healthcare system across payers and providers of care delivery," Leerink Partners LLC analyst Ana Gupte said in a note.
Several large American employers are getting more deeply involved in managing their workers` health instead of looking to insurers to do it. Cisco, for instance, last year began offering its employees a plan it negotiated directly with nearby Stanford Health medical system.