Amazon is now so dominant as a corporate force that even the announcement of a plan to someday enter a new industry is enough to crush stocks.
This happened to Blue Apron last summer after Amazon bought Whole Foods and filed a trademark for a possible meal-kit service a week after Blue Apron’s IPO, whose new stock proceeded to immediately tank.
Now it’s happening to healthcare, as Amazon, Berkshire, JPMorgan partner to cut U.S. healthcare costs:
Shares of UnitedHealth Group Inc (UNH.N), Cigna Corp and health insurer Anthem Inc (ANTM.N) were 4 percent to 7.2 percent lower at the close. Drugstore operators CVS and Walgreen Boots Alliance (WBA.O), as well as Express Scripts, closed between 3 percent and 5.2 percent lower. Drug distributors Cardinal Health (CAH.N), AmerisourceBergen Corp (ABC.N) and McKesson Corp (MCK.N) were off 1 percent to 3 percent. Amazon closed up 1.4 percent.
To be sure, the $69 billion loss in healthcare stock value should rapidly self-correct (unlike for Blue Apron, which does not enjoy a stranglehold on an entire segment of the economy).
But in the announcement, the new venture has zero stated plans outside of using “technology” to reduce costs for their own employees, but they do plan to “share the strategies and technology they ultimately develop to reduce costs for the economy and the government.” It doesn’t matter what Amazon does, just that they plan on doing something.
The fact that Bezos is joined by the biggest bank (JPMorgan) and the biggest non-healthcare insurer (Berkshire) just nicely rounds out the trifecta.
Who knows, maybe they could deign to start by developing a good EMR that also uses standards to make healthcare data completely portable in order to empower patients and reduce confusion, overuse, and duplication. If it’s just Amazon Prime Rx with cheaper mail order prescriptions, I’ll be a bit underwhelmed.
“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway Chairman and CEO Buffett. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”
Buffet’s still got it.