Well-regarded surgeon and author Atul Gawande, a critic of his industry’s medical practices, will lead the new company being formed by Amazon.com Inc, Berkshire Hathaway Inc and JP Morgan Chase & Co that aims to cut US employee healthcare costs, the companies said on Wednesday.
Amazon, Berkshire and JPMorgan announced the joint venture in January, saying US healthcare costs were rising too fast and holding back economic growth. The three companies said they would use big-data analysis and other high-tech tools to improve care and cut waste.
The choice of Gawande reflects the company’s plans to focus on the entire healthcare system, rather than just looking to curb prescription drug costs, as some investors had first thought, analysts said on Wednesday.
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, both located in Boston, where the new company will be headquartered. He is set to start in the new role on 9 July.
'Extraordinary leader and innovator'
Berkshire Hathaway Chairman and CEO Warren Buffett said talent and dedication were manifest among many professionals the trio interviewed. "All felt that better care can be delivered and that rising costs can be checked. Jamie, Jeff and I are confident that we have found in Atul the leader who will get this important job done," he said
Chairman and CEO of JPMorgan Chase Jamie Dimon said in a statement that as employers and as leaders, addressing health care was one of the most important things that can be done for employees and their families, as well as for the communities. "Together, we have the talent and resources to make things better, and it is our responsibility to do so. We're so grateful for the countless statements of support and offers to help and participate, and we're so fortunate to have attracted such an extraordinary leader and innovator as Atul," he said.
"We said at the outset that the degree of difficulty is high and success is going to require an expert's knowledge, a beginner's mind, and a long-term orientation," said Jeff Bezos, founder and CEO of Amazon. Atul embodies all three, and we're starting strong as we move forward in this challenging and worthwhile endeavour," he said
“The choice suggests that the ... 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 analyst Ana Gupte said in a note.
KPMG principal Ash Shehata, who is focused on healthcare, said Gawande’s expertise would enable him to take a high-level view of how payers, providers and government agencies could do a better job to improve care and reduce costs.
When the joint venture was first announced, shares of companies in the healthcare supply chain, including CVS Health Corp and Express Scripts, fell on expectations that they and other “middlemen” could lose business. Amazon’s record of disrupting other industries, like retail, was a key concern.
The three companies have said they will focus first on new options for their own employees and dependents, which represent more than 1 million people, and then could open the venture up to outside companies.
Over the past few months, JP Morgan Chief Executive Jamie Dimon, who is working with Berkshire head Warren Buffett and Amazon’s Jeff Bezos, has laid out areas of particular concern.
In an investor meeting on 1 June, Dimon pointed to fraud, administrative costs, and chronic care costs related to smoking and obesity. He also singled out end of life costs as being very expensive. This is an area of expertise for Gawande.
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.
The group will look at some of the existing corporate efforts to cut healthcare costs, Reuters reported recently, including models introduced by Cisco Systems Inc and Intel Corp that more closely manage workers’ health instead of looking to insurers to do it.
Buffett has described US 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.
“The resistance will be unbelievable, and if we fail, at least we tried,” Buffett said last month.
Gawande said he was "thrilled" to be named the CEO of the health care initiative.
"I have devoted my public health career to building scalable solutions for better health care delivery that are saving lives, reducing suffering and eliminating wasteful spending both in the US and across the world," he said.
"Now I have the backing of these remarkable organisations to pursue this mission with even greater impact for more than a million people, and in doing so incubate better models of care for all. This work will take time but must be done. The system is broken, and better is possible," he said.
Gawande is founding executive director of the health systems innovation center, Ariadne Labs and is also is a staff writer for The New Yorker magazine
Gawande has written four New York Times bestsellers: Complications, Better, The Checklist Manifesto, and Being Mortal and has received numerous awards for his contributions to science and health care.
--With inputs from agencies
Updated Date: Jun 21, 2018 17:25 PM