Amazon, Berkshire Hathaway, JPMorgan End Health-Care Venture Haven
cnbc.com
cnbc.com
> One key issue facing Haven was that each of the three founding companies executed their own projects separately with their own employees, obviating the need for the joint venture to begin with
> Many of the Boston-based firm’s 57 workers are expected to be placed at Amazon, Berkshire Hathaway or JPMorgan Chase as the firms each individually push forward in their efforts, and the three companies are still expected to collaborate informally on health-care projects
Seems like a non-story, IMO
Imagine how much money was spent on this thing, plus the copious write ups in Axios etc.
They failed. The rest is noise.
What do you think they’re “collaborating” on now that this JV is wound down?
What’s a “health care project” in the context of JPMorgan? Employees still have normal group health insurance with normal healthcare delivery.
1) All three companies are still working on health care projects on their own and it sounds like most of the Haven employees are being offered positions on one of those continuing teams.
2) While it's could just be press release talk, but they claim they will still collaborate in an informal matter.
3) The three companies combined have almost 1.5 million employees. This entire venture consisted of 57 people. Even for the smallest of the three companies (JPM) this Haven was just a drop in the bucket. I've personally worked at much smaller companies that pissed away far more resources and no one gave a shit.
The idea is still valid, each company is still sees value in the space, there was no major falling out between the companies, and the number of employees affected in a negative way is negligible. This is basically an organizational restructuring. Total non-story, IMO.
The story is that an aligned, common goal isn't enough. You need cooporation and coordination to make it work. This is failure of the silo, and a reminder that in joint ventures, you have to work even harder to avoid that failure mode.
>But insiders claim that it will allow the founding companies to implement ideas from the project on their own, tailoring them to the specific needs of their employees, who are mostly concentrated in different cities.
Medical services is mostly a localized service, so each city is its own individual market. As large as Amazon, JPMorgan, and Berkshire are, their employees are spread out geographically, and even in their headquarter cities, they do not represent a significant number of people negotiating for medical services. Without a way to control the actual medical service supply (i.e. doctors and hospitals), their programs will have to negotiate at market rates, meaning there really is no way to achieve significant savings.
Amazon released their pill pack service, which helps because drugs can be shipped across the country, so there are efficiencies to be gained there. However, drug costs are still a smaller percentage of overall costs [0], albeit growing.
[0]https://www.ama-assn.org/about/research/trends-health-care-s...
The best model I've found for trying to understand health care is the Tri-dimensional Chess game that is a recurring prop in Star Trek The Original Series, https://en.wikipedia.org/wiki/Three-dimensional_chess#Star_T.... Different arrangements and alignments of chess boards exist in each regional market in the United States, with the chess boards representing integrated health care systems, city, county, or state-owned hospitals and care facilities, and public and private hospital groups.
As the Wikipedia article suggests, careful observation of Star Trek TOS episodes shows "boards are sometimes not even aligned consistently from one scene to the next within a single episode." This is akin to different dominant health care systems co-existing in the Philadelphia area, in Central New Jersey, in the western part of northern New Jersey, in the eastern part of northern New Jersey, and in several different areas in Downstate New York. In addition to these existing realities, in certain cases two dominant health care entities from adjacent areas collaborate to deliver services in certain hospitals and practices in areas where their respective markets meet each other.
Creating a business at scale that would be disruptive across multiple regional markets even within a 100 to 200-mile radius in certain parts of the U.S. would be extremely difficult.
Have to admit this is sad news as the promise of Haven was a possibly significant challenge to the current, awful, state of healthcare in the US and offer a commercial single-payer solution that would avoid the entrenched political agendas driving the public option discussion.
Lastly, I feel Amazon missed a huge opportunity here with their massive technical capability combined with the insurance and financial capabilities of their partners. Creating a vertical integrated health system isn't new, but the capabilities of Haven were significant. Sadly, seems like the Amazon Health strategy was limited.
I am in this same industry and I'm really interested to learn what a massively well connected and funded startup discovered that made it better to toss in the towel.
There's no single institution or person holding us back. Real life isn't a movie with a villain who can be defeated and then we live happily ever after. There's no magic HealthBot 3000 technology that will deliver a breakthrough in curing disease and injury, and/or disrupt current business models.
Hospitals don't want to lose revenue. Physicians who don't want to lose revenue and turf. Drugmakers don't want to lose revenue. Health insurance. Patients refuse to opt into* any limits on care, demand nearly perfectly safe drugs, and say they only want the best care. We want to see our doctor over a cold and demand a pharmaceutical solution. We get annoyed when doc tells us to lose weight or quit smoking/drinking. We cannot accept death or taxes. "We have met the enemy and he is us." - Walt Kelly. The only deflationary force in the industry is have nots avoiding care at significant cost to life and limb.
*Even relatively comfortable employer plans and Medicare have significant gatekeeping: "out of network," deductibles, what procedures and drugs are not covered.
https://library.osu.edu/site/40stories/2020/01/05/we-have-me...
1) voluntary certification, or
2) market reputation, or
3) threat of enforcement of anti-fraud laws that are less specific than licensure requirements.
The general idea being that it is seldom a good thing to remove cheap options (eg forcing poor people to go bankrupt instead of letting them choose worse care), and licensure both sets a quality floor, and also artificially restricts supply.
I think for life-and-death things like medicine this idea breaks down a bit, but that’s the end of the spectrum and how it’s argued as far as I’ve seen.
To give an example, many people who wish to become doctors are required to go through a residency program that features elements such as required 24 hours shifts. Personally, I would be quite fine seeing a doctor who wasn't required to do such shenanigans. As it stands right now, I can't make that choice, because various special interest groups have gained a government-granted monopoly on the certification of physicians.
[1] One objection would be that, if we didn't have the force of law (which is the force of violence) keeping "quacks" from practising medicine, then many people, particularly the poor, would actually have /less/ choice. This is a utilitarian argument, but even if the premise of utilitarianism is granted, this still seems incorrect due to two factors. First, regulatory capture has led to a system that already can prevent poor people from accessing care. No care is probably worse that mediocre care. Second, the U.S. (as a nation) spend more money than other developed nations on healthcare and gets similar outcomes. This seems to indicate that a lower cost of care wouldn't necessarily cause a sudden influx of quacks onto the market.
https://www.congress.gov/bill/116th-congress/senate-bill/112...
> One key issue facing Haven was that while the firm came up with ideas, each of the three founding companies executed their own projects separately with their own employees, obviating the need for the joint venture to begin with, according to the people, who declined to be identified speaking about the matter.
Diagnosis is fundamentally an information problem, so should be zero marginal cost. Generic drugs have near zero marginal costs, so the idea that most healthcare needs to be expensive is incorrect from first principles.
I think if this is impossible in the US due to regulations, surely there are some countries that would allow it?