Even for Bezos, Fixing Health Care Will Be Hard

Over the last few decades, a series of grand efforts to control U.S. health care costs have been loudly announced, and have mostly flopped. Health care now accounts for about 17 percent of gross domestic product, nearly twice the average in other developed countries. Warren Buffett has compared the system to a hungry tapeworm eating away at its corporate and taxpayer hosts. Buffett is trying to do something about it as part of the health-care alliance formed in January between his Berkshire Hathaway Inc., Jeff Bezos’s Amazon.com Inc. and Jamie Dimon’s JPMorgan Chase & Co. Now the three have appointed surgeon-writer Atul Gawande to lead the venture. A week later Amazon bought the online pharmacy PillPack Inc. Whether it succeeds or not, the joint venture is likely to be interesting.

It will initially focus on new technology to simplify health care and reduce costs for the three companies’ 1 million-plus employees. After his appointment, Gawande laid out some initial goals: targeting administrative costs, inflated prices and "misutilization,” which he defined as "the wrong care at the wrong time and the wrong way." Investors in the health-care industry are getting jittery -- both the initial announcement and news of Amazon’s purchase of PillPack yo-yo’d the stocks of health insurers and drug plans.