So Amazon CEOs Berkshire Hathaway and JPMorgan Chase entered the world’s largest and least efficient healthcare market with a plan to stop it – and they didn’t.
Haven, the non-profit joint venture of the three companies, will close all operations next February, after three short years of operation. This development is not entirely unexpected, given that most of Haven’s top talents, including its CEO – physician and high-profile health researcher Atul Gawande, who led the initiative from the beginning – have stepped down in recent months.
Haven’s goal was ambitious: to reduce healthcare costs, first for the hundreds of thousands of employees at the three companies and, potentially, for all Americans. “We can focus on creating value for families, not shareholders, since we are free from incentives and restrictions for profit,” says the statement from the organization on its defunct website.
The launch of the venture generated panic in the health sector, with existing companies seeing it as a potential competitor. But Haven’s birth was also a reason for enthusiasm: it seemed that a formidable trio was destined for success, despite the enormous challenges faced by the confusion of the United States’ medical system.
It was not, however. Haven’s goals, organization and achievements over the past three years are still unclear, so it is difficult to determine what exactly led him to pull the plug. But there are indications that point to the natural limits of the enterprise and, more worryingly, to those of the system he sought to interrupt.
Mission Impossible
Despite the secrecy surrounding the venture, part of what may not have worked can be attributed to its management, as reported by STAT News. Some problems – such as a lack of visible progress, difficulties in retaining talent or the choice of a CEO who, although an expert in the field, had little experience in running a company – hindered the organization’s efforts.
But other problems go deeper. These concern the objectives of Haven, how they were configured and whether they were remotely reachable.
On the one hand, Haven had a mission, but never exactly a strategy, as tweeted by Amitabh Chandra, director of health policy research at the Harvard Kennedy School of Government. His goal of “creating simpler, higher-quality healthcare at lower costs” (as the nonprofit’s website put it) was as vague as it was ambitious – a vision rather than a business plan.
Then there was the issue of the companies involved. Amazon, Berkshire Hathaway and JPMorgan Chase employ a total of 1.2 million people across the country. This makes it an interesting test group for solutions to reduce healthcare costs across the country. But that geographic diversity has also created a very challenging group to serve, said Brian Marcotte, CEO of the National Business Group on Health, Christina Farr in a conversation about Second Opinion. Health benefits depend on the employee’s location, and Haven could not introduce the same programs in all local markets. Instead, it would have to establish plans wherever it had employees, without the critical mass to make it worthwhile.
Another problem, too, reported CNBC, was a divergence of interests between the three companies, each of which is expected to continue to develop research on health solutions for its own employees.
Set interrupt
Of the individual initiatives that may have hastened Haven’s dissolution, Amazon Care is the most prominent. An initiative for Amazon employees living in the Seattle area, it appears to offer a product in line with what could have been designed by Haven.
An added benefit offered to employees who have signed up for company health coverage (through traditional insurance policies), Amazon Care allows patients to send text messages to their doctors, make telehealth visits, deliver medications and even even see a nurse at home. He seeks to encourage people to make less expensive visits to the doctor’s office, taking care of everything that can be done without a personal diagnosis or treatment.
There is still no data on whether Amazon Care is successfully cutting costs – for the employer and, less directly, for employees. But in any case, its goal is more limited than Haven’s: in the short to medium term, Amazon Care aims to save on existing policies, which would be a welcome change, but far from a disruption to the system.
Amazon Pharmacy, another Amazon health initiative, has a much larger scope. Launched in November, it is, well, a great online pharmacy. Offers discounts (so far, only on drugs purchased over the counter) and free shipping in two days for Prime customers. But, again, it is difficult to see this as an interruption of anything – on the contrary, it seems that Amazon is entering a very profitable business at a very opportune time.
No cure for tapeworm
“Health is the tapestry of the American economy,” Warren Buffett told CNBC in 2018, introducing Haven. In fact, the size of the market – fueled by exponentially higher costs than in any other country in the world – continues to expand relentlessly and is expected to represent 20% of America’s GDP by 2028. But the results of these expenditures are paradoxical: Americans they live shorter and less healthy lives than their peers in other countries, while suffering from an epidemic of bankruptcies related to medical issues (about 66.5% of all bankruptcy filings are caused by medical expenses).
Haven never said explicitly that he would try to cure the tapeworm, but he is saying how many hoped it could be done. The bandaids introduced by Obamacare in 2009 made it obvious that the US health care system is unsustainable, leaving a hunger for solutions: perhaps employers could reform what the government was unable to do.
According to a Haven spokesman who spoke to CNBC, the company’s team has progressed in “piloting new ways to make primary care easier to access, the benefits of insurance easier to understand and use and prescription drugs more accessible.” “. But all of these changes are small and marginal in a system whose cost is out of control. Even if clearer policies or transparent prices reduce costs – which is not certain, as Chandra observes—The cumulative result would have a marginal benefit.
“Haven is more of a cautionary tale for foreigners hoping to upset the industry, that their ambition is probably unrealistic and that solving the industry’s main problems proves to be much more difficult than most anticipate,” said Jeff Becker, an analyst at Forrester.
By giving up, Haven lowers hope that private companies will fix healthcare in the United States. And that leaves a loaded question: if some of the smartest, wealthiest, best-informed, best-connected and most ambitious leaders in the room have failed to find a way to disrupt American health, then who can?