Finding profit in creating a not for profit
Amazon
Berkshire Hathaway
JP Morgan Chase & Company
Companies that make a lot of money. Amazon's profit in the last quarter of 2017 hit an all-time record for the company of $1.9 billion. Berkshire Hathaway profits in 2016 were up 15% over the previous year. Last October, JP Morgan Chase reported a quarterly profit of $6.7 billion in addition to surpassing Bank of America as the biggest bank deposit holder in the U.S.
These firms make money by focusing on their bottom line. So why have they teamed up to form a not for profit venture to deliver healthcare coverage to their employees? It is an excellent question.
The companies actually established two goals. Reducing healthcare costs and improving healthcare satisfaction.
Per capita, no nation spends more on healthcare than the U.S., yet we rate dead last in life expectancy among the world's 12 wealthiest nations. A study published by NPR in 2017 showed that U.S. per capita spending on healthcare was $9,237 in 2014. Japan's per capita spending on healthcare was $3,816 that year. U.K. per capita spending on healthcare was $3,749. Both nations have higher life expectancy rates than the U.S.
But is healthcare spending the sole determinant in life expectancy? It is not. The U.S. has the highest rate of obesity on the planet among the 35 member nations of the Organization for Economic Cooperation and Development. We rank 12th overall among all nations in the rate of obesity. Considering the higher risk levels for diabetes, heart disease and high blood pressure for those of us who are overweight, that is also a factor in life expectancy.
In 2014, U.S. average life expectancy was 79.1 years. The obesity rate was 36.2%
In 2014, average life expectancy in the U.K. was 80.9 years. The obesity rate was 27.8%
In 2014, average life expectancy in Japan was 83.1 years. The obesity rate was 4.3%
I had an interesting conversation along these lines with someone recently. This person had worked in a profession where they earned a good salary but the benefits package was nearly non-existent. Now they work for Trader Joe's. They raved about the benefits package, which includes a free gym membership. And that's one factor that will help these three companies work toward their goal of improving employee satisfaction while driving down the cost of caring for those employees.
Wellness.
The healthier the employees are, the less it costs to care for them. Prevention is always less expensive than restoration. It is far less expensive to provide a "stop smoking" program for your employees than it is to treat the illnesses that smoking creates/worsens. Providing exercise opportunities is much cheaper than treating the complications of obesity.
Then there is the fact that by putting employee wellness and satisfaction above the "bottom line" is actually good for the bottom line. Healthier employees are more productive than unhealthy employees. It also employs a dictum I wrote about in a 2012 blog. Take care of the people and they will take care of the mission.
It remains to be seen just how this new venture will try to achieve its two stated goals. I suspect they are on the right path to success.
Berkshire Hathaway
JP Morgan Chase & Company
Companies that make a lot of money. Amazon's profit in the last quarter of 2017 hit an all-time record for the company of $1.9 billion. Berkshire Hathaway profits in 2016 were up 15% over the previous year. Last October, JP Morgan Chase reported a quarterly profit of $6.7 billion in addition to surpassing Bank of America as the biggest bank deposit holder in the U.S.
These firms make money by focusing on their bottom line. So why have they teamed up to form a not for profit venture to deliver healthcare coverage to their employees? It is an excellent question.
The companies actually established two goals. Reducing healthcare costs and improving healthcare satisfaction.
Per capita, no nation spends more on healthcare than the U.S., yet we rate dead last in life expectancy among the world's 12 wealthiest nations. A study published by NPR in 2017 showed that U.S. per capita spending on healthcare was $9,237 in 2014. Japan's per capita spending on healthcare was $3,816 that year. U.K. per capita spending on healthcare was $3,749. Both nations have higher life expectancy rates than the U.S.
But is healthcare spending the sole determinant in life expectancy? It is not. The U.S. has the highest rate of obesity on the planet among the 35 member nations of the Organization for Economic Cooperation and Development. We rank 12th overall among all nations in the rate of obesity. Considering the higher risk levels for diabetes, heart disease and high blood pressure for those of us who are overweight, that is also a factor in life expectancy.
In 2014, U.S. average life expectancy was 79.1 years. The obesity rate was 36.2%
In 2014, average life expectancy in the U.K. was 80.9 years. The obesity rate was 27.8%
In 2014, average life expectancy in Japan was 83.1 years. The obesity rate was 4.3%
I had an interesting conversation along these lines with someone recently. This person had worked in a profession where they earned a good salary but the benefits package was nearly non-existent. Now they work for Trader Joe's. They raved about the benefits package, which includes a free gym membership. And that's one factor that will help these three companies work toward their goal of improving employee satisfaction while driving down the cost of caring for those employees.
Wellness.
The healthier the employees are, the less it costs to care for them. Prevention is always less expensive than restoration. It is far less expensive to provide a "stop smoking" program for your employees than it is to treat the illnesses that smoking creates/worsens. Providing exercise opportunities is much cheaper than treating the complications of obesity.
Then there is the fact that by putting employee wellness and satisfaction above the "bottom line" is actually good for the bottom line. Healthier employees are more productive than unhealthy employees. It also employs a dictum I wrote about in a 2012 blog. Take care of the people and they will take care of the mission.
It remains to be seen just how this new venture will try to achieve its two stated goals. I suspect they are on the right path to success.
posted by me at 5:59 AM
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