When Amazon makes a move, others tend to notice. After all, when they purchased Whole Foods and cut prices by up to 43% on the first day, stocks of other major retailers crashed, wiping out $10 billion in market value in a single day.
So, it’s no surprise that their announcement to disrupt health care in the United States is making waves.
Together with Berkshire Hathaway and JPMorgan Chase, Amazon announced on January 29 their leadership over a plan to form a new health care company for their American employees.
No doubt they took this action because of issues they and many other companies currently have with health care costs in the United States. These have been growing much faster than inflation for years now.
In fact, this can be an onerous burden on employers like Amazon and their new partners, especially when their combined workforce now numbers 1.2 million people. The estimated cost to ensure that many workers? $15 billion, according to Wallis Towers Watson.
Although this may sound revolutionary, it is not a new thing. Other companies have tried in the past to start their own health care programs to cut costs.
The reason why others are taking notice is because of the presence of Amazon. Its history of disrupting industries and performing in uncharacteristic ways makes them a wild card for others in the same space.
Another major aspect of this equation is that, unlike many industries, Amazon is focused on growth, not profits. Famously as a retailer Amazon has often looked only to break even, relying on growth and new investors to buoy the company and keep them moving forward. And so far, this strategy has worked for them incredibly. Amazon is now one of the world’s most valuable companies, and its founder Jeff Bezos one of the world’s wealthiest men.
Profit is, of course, a long-term goal. But for now, cost-cutting is likely to be their primary focus.
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