Why have a film featuring one superhero when you can have a whole team of them – like the Avengers, the X-men or the Justice League?
Earlier this month, we saw the corporate equivalent when three of the most powerful businesses in America joined forces against a dire threat to the nation.
Derek Thompson of the Atlantic is amazed:
“Amazon, JPMorgan Chase, and Berkshire Hathaway announced on Tuesday that they intend to form a new company that manages health care for their hundreds of thousands of U.S. employees, the idea being that a unified, not-for-profit entity can reduce workers’ expenses.
“The surprising trio of the nation’s largest online retailer, largest bank by assets, and most famous investor (Warren Buffett, the chief executive of Berkshire) riding to the rescue of the beleaguered health system already rocked insurance stocks and thrilled health-care experts who have long dreamed of a technological solution to ‘bend the curve’ of inexorably rising medical costs.”
The immediate interest of the three companies is obvious – reducing the cost of providing healthcare benefits to their combined workforce. But if they succeed in developing a new and much cheaper healthcare model, the opportunities for expansion are clear and will hardly be lost on a company like Amazon.
Though the announcement was light on detail, it made a heavy impact on the markets:
“Across the economy, Amazon has become a kind of deflationary Death Star, so well-known for its high-volume, low-profit model that stocks plummet in every sector it threatens to enter. Indeed, within minutes of the announcement, shares fell for pharmacy managers and drugmakers.”
“Deflationary Death Star” is a brilliant turn of phrase, though one more suggestive of villainy than heroism. But if any one business can reorganise an entire sector of the economy, to eliminate the friction between its working parts, then it’s Amazon. As Nigel Cameron says the opportunity for market disruption is huge.
One might venture that Amazon (and its partners) are doing to the American health care system what the National Health Service did to the British health care system in the post-war period – i.e. bring a vast array of divergent interests under one roof to align incentives and squeeze out costs.
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