Offbeat Bezos-Buffett health care venture struggles to find CEO

21:31  16 may  2018
21:31  16 may  2018 Source:   cnbc.com

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Amazon CEO Jeff Bezos writes, “Hard as it might be, reducing health care ’s burden on the economy while improving outcomes for employees and their Buffett may have been more accurate than he wished he had been. There are no answers yet about what this venture will look like at the finish line.

Warren Buffett says the insane cost of health care is like “a hungry tapeworm on the American economy,” and he wants to find the cure. Buffett , the CEO and chairman of Berkshire Hathaway, is joining up with Amazon founder and CEO Jeff Bezos and JPMorgan Chase CEO and chairman Jamie

Jeff Bezos, Warren Buffett and Jamie Dimon.© Provided by CNBC Jeff Bezos, Warren Buffett and Jamie Dimon. Almost four months ago, Amazon, Berkshire Hathaway and J.P. Morgan Chase announced a bold new partnership aimed at bringing down the costs of health care.

But ABC, as the group is known, has encountered a surprising challenge filling the CEO spot.

The search for a person to lead ABC began around the time of the announcement in late January, with potential candidates meeting by phone as well as in Berkshire's hometown of Omaha, Nebraska, and in New York, where J.P. Morgan is based, according to people with knowledge of the process.

Health policy and insurance experts were among the initial targets, with ex-Aetna executive Gary Loveman and former Medicare chief Andy Slavitt on the list, along with Todd Park, who was previously President Obama's technology chief.

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More recently, ABC has started looking for a candidate with an entrepreneurial background in technology and health who is far removed from drug supply companies and health plans, which are viewed as part of the problem, said the people, who asked not to be named because the talks are confidential.

One of the top names to emerge in recent weeks was Owen Tripp, the CEO of Grand Rounds Health, a start-up that sells a second medical opinion service as a benefit to large employers like Walmart and Target, the people said. Prior to Grand Rounds, Tripp co-founded Reputation.com, a developer of online reputation software, and he also has a background in health-care consulting.

Owen Tripp, CEO of Grand Rounds Health.© Provided by CNBC Owen Tripp, CEO of Grand Rounds Health.

But Tripp told CNBC in a statement that he's committed to staying on as CEO of Grand Rounds.

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People got way too excited about Amazon, Berkshire Hathaway and JPMorgan's new health care venture . By Jeffrey Young. 550. Sure, a joint statement from Amazon CEO Jeff Bezos , Berkshire Hathaway CEO Warren Buffett and JPMorgan Chase CEO Jamie Dimon seems like a big deal, no

Capital venture news. Menu and widgets. Speaking on CNBC television, Buffett said "we can't afford to make a mistake" in finding the right CEO to help combat spiraling healthcare costs that now account for close to 18 percent of U.S. gross domestic product, or ,000 (7,114.91 pounds)per person.

"To the extent we can be part of their solution as their mission sharpens, we'd be glad to pitch in — just as we would assist any organization that wants to improve clinical outcomes," Tripp said.

Berkshire CEO Warren Buffett said at the company's investor meeting earlier this month that the consortium hoped to have a CEO "within a couple of months."

Todd Combs, an investment manager at Berkshire and the lead recruiter for ABC, has the challenge of finding a leader who can work across three companies with a combined 1.2 million employees and simultaneously help develop innovative solutions in a multitrillion-dollar industry. The group hasn't said much about how it plans to leverage its size and scale to bring down costs or how it will use technology to simplify the health-care system for consumers.

As if that weren't demanding enough, ABC is structured as an entity "free from profit-making incentives and constraints," according to the initial announcement, although it will not necessarily be a non-profit. That means Combs needs to find someone who can handle the requisite long hours, extensive travel and public scrutiny of running a high-profile start-up, but probably without the allure of a big stock incentive plan, which is typically an attractive incentive in tech recruiting.

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While the unnamed Bezos - Buffett health firm might not currently have much to offer in the way of actual plans, its impact is certainly being felt throughout the US healthcare world. Why IT Struggles with Digital Transformation.

Speaking on CNBC television, Buffett said “we can’t afford to make a mistake” in finding the right CEO to help combat spiraling healthcare costs that now account Buffett said that in starting the venture , “we have the perfect partnership” with JPMorgan CEO Jamie Dimon and Amazon CEO Jeff Bezos .

"Senior talent with an entrepreneurial background might not be inclined to a structure like that," said Annie Lamont, a managing partner at Oak Investment Partners who invests in health and financial start-ups. "They could find a professional manager, but true entrepreneurs might well be harder."

Longtime technology venture capitalist John Doerr has been tapped to help put forward names from his network. The other executives involved, according to the January announcement, are JPMorgan's Marvelle Sullivan Berchtold and Beth Galetti, a senior vice president at Amazon.

Transcend the challenges

Whoever ultimately takes the top job has to align with Combs, who's been kicking around the idea for the consortium for more than 5 years, according to people familiar with his thinking.

After getting his own company on board, Combs enlisted JPMorgan CEO Jamie Dimon, before bringing on Amazon as the tech partner, said one of the people. The three executives are also known to be friends.

"What's intriguing about this group is the possibility of innovation, tech and a consumer focus coming together to transcend the challenges with the health-care ecosystem," said Brian Marcotte, CEO of the National Business Group on Health, which represents large employers.

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Find the product that's right for you. "Warren Buffett 's forte is acquiring and running companies, particularly for the cash flow," the analyst added. The AWS business model may not fit with the healthcare venture 's mission, however.

Jamie Dimon's newly announced health - care venture with Jeff Bezos and Warren Buffett will be good for the U.S., former Celgene Chairman and CEO Bob Hugin says. Hugin is running for the Republican nomination for Senate in New Jersey.

One area where industry experts see the consortium having a potentially dramatic impact on pricing is in cutting out the network of middlemen rather than partnering with them, and giving patients more direct access to their medical needs, whether that's in the form of care, coverage or prescriptions.

The group could also expand. One person familiar with the matter said that other large employers have approached ABC about wanting to join once a CEO is announced.

That could be a while, as ABC has yet to find the right fit. Trevor Price, co-founder of executive search firm Oxeon Partners, which specializes in health, said there are significant potential upsides and downsides that make the position a tough sell for some.

"For anyone who believes they can build a fully integrated platform to care for millions of Americans, including the payer and provider and even gets into managing risk, nothing would stop them from taking this job." Price said.

But it's an extremely high profile gig in a historically difficult industry to crack, and it comes with the added weight of working under Jeff Bezos, Warren Buffett and Dimon all at once.

"If the CEO isn't successful," Price said, "it would be hard to come back from that," Price said.

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