Dimon, Bezos, Buffett tap Harvard’s Gawande for health firm

(Bloomberg) – Atul Gawande, the surgeon and journalist who has written extensively about America’s failure to grapple with an inefficient healthcare system, has been named to head a new venture for Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co.

The new venture -- meant to help the companies get their healthcare costs down -- will be based in Boston and Gawande will start on July 9. It will be independent from the three firms, whose leaders formed the group as a way of grappling with what Berkshire Chief Executive Officer Warren Buffett called a “tapeworm” eating the U.S. economy.

“I have devoted my public health career to building scalable solutions for better healthcare delivery that are saving lives, reducing suffering, and eliminating wasteful spending both in the U.S. and across the world,” Gawande said in a statement from the group announcing his appointment. Along with his writing and medical practice, Gawande is a professor at the Harvard T.H. Chan School of Public Health and Harvard Medical School.

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NY Times best selling author Dr. Atul Gawande speaks at The New Jewish Home 3rd Annual Himan Brown Symposium at the AXA Auditorium in New York, NY on October 2, 2015. (Photo by Stephen Smith) *** Please Use Credit from Credit Field *** (Newscom TagID: sipaphotosfive712854.jpg) [Photo via Newscom]

The companies announced in January that they were forming the venture to improve employee health care. JPMorgan CEO Jamie Dimon and Buffett have since said it could take years for the venture to show results.

Employers are the largest providers of health insurance in the U.S., giving more than 150 million people access to coverage. The cost of insurance premiums have soared 55 percent over the past decade, according to the Kaiser Family Foundation, contributing to the growing dissatisfaction voiced by employers.

‘Cost conundrum’

Gawande, 52, rose to prominence among healthcare policy experts with a 2009 New Yorker article, “The Cost Conundrum,” that examined why health care was vastly more expensive in some parts of the U.S. than others, despite little difference in the sickness or health of people getting it. The piece focused on McAllen, Texas, and why the Medicare program spent $15,000 a year on the town’s older patients, thousands of dollars more than in other areas.

The new firm, the name of which wasn’t given in the statement, will be an “independent entity that is free from profit-making incentives and constraints,” the group said in the statement.

Fed up with the status quo, some major firms like Walmart Inc. have separately experimented with bypassing insurers entirely, instead buying health care for their workers directly from doctors and hospitals.

Meanwhile, health-care companies are embarking on a wave of unconventional deals to broaden the services they offer. The drug-store chain and pharmacy benefits firm CVS Health Corp. is acquiring insurer Aetna Inc., while insurer Cigna Corp. agreed to buy the drug benefits firm Express Scripts Holding Corp.

The Amazon-Berkshire-JPMorgan venture could put pressure on those middlemen. Buffett has said his ambitions are larger.

Health-care spending is taking up an increasing proportion of the U.S. economy, and a goal of the venture is to “at least” halt that, Buffett said on CNBC in February. He added that he hopes “we could find a way where perhaps better care could be delivered even at somewhat lesser cost.”

The companies have indicated a more modest initial goal, saying they want to use technology to reduce costs and improve care for workers.

Dimon, in his annual letter to his bank’s shareholders, also laid out a broader agenda: aligning incentives among doctors, insurers and patients; reducing fraud and waste; giving employees more access to tele-medicine and better wellness programs; and figuring out why so much money is spent on end-of-life care.

Bloomberg News