news

Snippet 1) Amazon, Berkshire Hathaway and JP Morgan Chase join forces to tackle employees’
health-care costs [Source: Washington Post] (https://goo.gl/SRDaqw)
§ Three giant and influential employers - Amazon, Berkshire Hathaway and JP Morgan
Chase - announced on 30th January that they are partnering to create an independent
company aimed at reining in health-care costs for their U.S. employees. There were almost
no details available about what the company would do or how it would use technology to
disrupt and simplify the complicated fabric of American health care. But there's no doubt that
the companies, which collectively employ more than 1 million workers worldwide, have a
real interest in ratcheting down their spending on health care. Health-care premiums are
split between employers and employees and have been growing much faster than
wages. Major health company stock prices tumbled on the news, and the announcement
stirred excitement — and questions — about how the three companies could bring their
clout to containing costs in the massive employer-sponsored health insurance market, which
provides coverage to approximately 160 million Americans.
§ Between 2012 and 2017, workers' earnings grew by 12%, while premiums went up by
19%. Between 2007 and 2012, premiums increased twice as fast as workers' earnings. The
announcement by the three corporate giants comes amid rampant rumors and anticipation
that Amazon could disrupt health care as it has in other industries, particularly in the
business of selling prescription drugs. The joint venture is not currently expected to be a
new health insurance company or a hospital or a pharmaceutical company, but a company
that can bring technology tools to bear on making health care more transparent, affordable
and simple. Interestingly, this isn't the first time big employers have tried to tackle healthcare
costs. Two years ago, 20 major companies including Verizon, American Express, IBM
and Shell Oil joined in a Health Transformation Alliance to improve the way health care is
purchased for employees. Mercer, a human resources consulting firm, runs several
collectives of employers that join forces to purchase prescription drugs, using the extra
leverage from having a larger group to wring better prices.
§ Brian Marcotte, president of the National Business Group on Health, said that one of the
problems of employer purchasing coalitions is that the existing health-care market remains
very centered on the providers. The new effort, he said, might be able to change that.
Amazon, with 541,900 employees globally as of October, is known for transforming
industries. For months, rumours that it could enter health care have sent shudders through
the stock prices of companies whose business models might be threatened. Some see the
biggest health-care deal in years - a merger between CVS and Aetna announced last year
— as partially fueled by the threat that Amazon could start selling drugs. Berkshire’s
longtime chairman, Warren Buffett, said last year at his shareholder meeting that healthcare
costs were a bigger impediment to American competitiveness than taxes. It’s unclear
as of now what new expertise this group will bring to the effort, but Berkshire has a lot at
stake in reining in health-care spending. The company last year spent $1.25 billion on
medical benefits for 300,000 U.S. employees and family members.
§ The independent company would be jointly led by executives from all three companies,
although a chief executive has not yet been announced. It will be free from the need to
deliver a profit. Todd Combs, an investment officer of Berkshire Hathaway, Marvelle Sullivan
Berchtold, a managing director of JPMorgan Chase and Beth Galetti, a senior vice president
at Amazon will manage the company in its early stages. The vague details about what the
company will do to contain health spending raise more questions than they answer, said
Benjamin Gomes-Casseres, a professor of strategy at Brandeis University International
Business School. “They are all companies who know well about profit. Their expertise is
managing profit in their core operations. If it does what they want to do, which is lower
health care costs for employees, that goes to their bottom line — lowering the health-care
costs of employees lowers the cost of employment," Gomes-Casseres said. Whether and
how that will benefit employees directly — and whether solutions the company develops will
scale and be a model that could be used by other employers — remains uncertain, he said.
2) China’s work ethic threatens to leave Silicon Valley behind [Financial Times]
(https://goo.gl/4NrgVD)
§ In California, the blogs are full of chatter about the inequity of life. In recent months, there
have been complaints about the political sensibilities of speakers invited to address a
corporate audience; debates over the appropriate length of paternity leave or work-life
balances; and grumbling about the need for a space for musical jam sessions. These seem
like the concerns of a society that is becoming unhinged. These topics are absent in China’s
technology companies, where the pace of work is furious. Here, top managers show up for
work at about 8am and frequently don’t leave until 10pm. Most of them will do this six days a
week — and there are plenty of examples of people who do this for seven. Beyond the
week-long breaks for Chinese new year and the October national holiday, most will just
steal an additional handful of vacation days. Some technology companies also provide a
rental subsidy to employees who choose to live close to corporate HQ.
§ In California, this sort of pace might be common for the first couple of years of a
company, but then it will slow. In China, by contrast, it is quite usual for the management of
10 and 15-year-old companies to have working dinners followed by two or three meetings. If
a Chinese company schedules tasks for the weekend, nobody complains about missing a
Little League game or skipping a basketball outing with friends. Little wonder it is a common
sight at a Chinese company to see many people with their heads resting on their desks
taking a nap in the early afternoon. While male chauvinism is still common in the home,
women have an easier time gaining recognition and respect in China’s technology
workplaces — although they are still seriously under-represented in the senior ranks. Many
of these high-flyers only see their children - who are often raised by a grandmother or