By Caroline Humer and Ankur Banerjee

(Reuters) - Amazon.com Inc, Berkshire Hathaway and JPMorgan Chase & Co said on Tuesday they will form a company to cut health costs for hundreds of thousands of their U.S. employees, setting up a major challenge to an inefficient U.S. healthcare system.

The move by three of the best-known U.S. business leaders - Amazon's Jeff Bezos, Berkshire's Warren Buffett and JPMorgan's Jamie Dimon - would take on the world's most expensive healthcare system, whose mounting costs have hurt corporate profits. Shares in U.S. healthcare companies fell across the board.

The new, not-for-profit venture will initially focus on technology for "simplified, high-quality and transparent healthcare" for their more than 500,000 U.S. employees. They did not elaborate on their strategy, but said they are searching for a chief executive officer.

Healthcare industry experts say the new entity could eventually negotiate directly with drugmakers, doctors and hospitals and use their vast databases to get a better handle on the costs of those services.

That could undercut the industry's "middlemen," from health insurers to pharmacies and benefits managers.

"The ballooning costs of healthcare act as a hungry tapeworm on the American economy," said Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett. "Our group does not come to this problem with answers. But we also do not accept it as inevitable."

ISI Evercore analyst Michael Newshal said the selloff in healthcare stocks reflected the fear of disruption in a sector helped by rising prices year after year, but is under growing scrutiny from U.S. consumers, regulators and politicians.

"There are a lot of companies, or arguably almost all companies, in healthcare that benefit from cost inflation running as high as it has been for many years. And if there is pressure to lower that, that can flow throughout the entire system," Newshal said.

MAJOR DISRUPTOR?

U.S. healthcare spending has been increasing annually faster than inflation, and in 2017 accounted for 18 percent of the U.S. economy. Corporations sponsor health benefits for more than 160 million Americans.

Major healthcare players have tried to reduce costs without losing their profit margins. Most recently, pharmacy network CVS Health Corp reached a $69 billion deal to buy insurer Aetna Inc, arguing their combination could save money for the nation's employers.

Investors in the sector see Amazon becoming a major disruptor of healthcare, just as it has done in the retail industry, fuelled by media reports in recent months that the company was considering entering the pharmacy business.