Jamie Dimon, chief executive of the largest U.S. bank, JPMorgan Chase & Co., is facing backlash from clients in the healthcare industry who fret over the company’s new healthcare partnership with Amazon.com Inc. and Berkshire Hathaway Inc.
The three companies seek to overhaul healthcare for their employees, which number in the hundreds of thousands and give them strong collective buying power of medicines and services. Their announcement last week of the partnership clobbered the stocks of health insurers like UnitedHealth Group Inc., Cigna Corp., Humana Inc., Anthem Inc. and Aetna Inc.
Dimon had to get involved personally to answer questions from healthcare executives that worry JPMorgan is going to become a significant rival, The Wall Street Journal reported, citing unnamed sources. JPMorgan’s health-care bankers learned of the plan on night before it was announced, leading them to scramble to provide answers to clients who concerned about its effect on the healthcare market.
Dimon assured the bank’s clients that the healthcare partnership is intended to serve the employees of JPMorgan, Amazon and Berkshire. The firm’s healthcare bankers don’t want to lose business from miffed clients who see the bank as a competitor. They raked in $682 million in revenue for the bank last year, according to Dealogic, putting them ahead of Goldman Sachs Group Inc. and Morgan Stanley.
Amazon has a lengthy history of upending businesses such as book-selling, department stores and shopping malls, which has led analysts to speculate how the company can transform healthcare by being smarter with technology and data analysis.
“There’s the possibility for another Amazon Web Services success where they come out of nowhere and hit a home run,” Kirthi Kalyanam, director of the Retail Management Institute at Santa Clara University, told Bloomberg News. “Amazon just opened a cashier-less store. I don’t see any reason they can’t create a primary care facility that let’s you just check in with your phone.”
Even as healthcare investors were getting clobbered, a JPMorgan spokesman told the WSJ that feedback from healthcare industry has been “overwhelmingly positive.”
The bank has “had hundreds of phone calls and emails from client CEOs, doctors and health-care administrators looking to see how they can get involved,” spokesman Brian Marchiony said. “We see this as an opportunity to work with the industry to tackle the issues facing our country.”
JPMorgan, Amazon and Berkshire have provided few details about their plan to start a not-for-profit company to cut costs and improve the healthcare experience for hundreds of thousands of U.S. employees. The bank isn’t getting into the healthcare business with Amazon, which may set up pharmacy services as the e-commerce giant seeks to expand its business lines into other areas retail, including groceries.
JPMorgan last year spent $1.25 billion on medical benefits for employees based in the U.S., where its medical plans cover about 300,000 individuals, including employees and their family members, according to a disclosure in January.
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