Why Amazon, Berkshire Hathaway, and JPMorgan's Haven failed

Why Jeff Bezos, Warren Buffett, and Jamie Dimon gave up on their venture to disrupt US healthcare

So the CEOs of Amazon, Berkshire Hathaway, and JPMorgan Chase walked into largest and least efficient healthcare market in the world with a plan to disrupt it—and failed to do so.

Haven, the nonprofit joint venture of the three companies, will end all operations this coming February, after three short years of operation. This development isn’t entirely unexpected, given that most of Haven’s top talent, including its CEO—doctor and high-profile healthcare researcher Atul Gawande, who led the initiative from its inception—had stepped down in the last several months.

Haven’s goal was ambitious: to lower healthcare costs, first for the three companies’ hundreds of thousands of employees, and potentially for all Americans. “We’re able to focus on creating value for families, not shareholders, since we are free from profit-making incentives and constraints,” read the organization’s statement on its now-defunct website.

The venture’s launch generated panic in the healthcare sector, with existing companies seeing it as a potential competitor. But Haven’s birth was cause for enthusiasm, too: It seemed such a formidable trio was destined to succeed despite the enormous challenges facing the US’ muddle of a medical system.

It wasn’t, however. Haven’s goals, organization, and achievements over the last three years are still murky, so it’s hard to determine what exactly led to pulling the plug. But there are hints that point to the natural limits of the venture, and more concerningly, to those of the system it sought to disrupt.

Mission: impossible
Despite the secrecy around the venture, some of what might not have worked can be attributed to its management, as STAT News has reported. A few issues—such as a lack of visible progress, difficulties retaining talent, or the choice of a CEO who, while an expert in the field, had little experience running a company—hobbled the organization’s efforts.

But other problems run deeper. These pertain to Haven’s goals, how they were set up, and whether they were ever remotely attainable.

For one thing, Haven had a mission, but never quite a strategy, as Amitabh Chandra, the director of health policy research at the Harvard Kennedy School of Government tweeted. Its goal to “create simpler, high-quality healthcare at lower costs” (as the nonprofit’s site 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 combined 1.2 million people spread around the country. This makes it an interesting test group for solutions to lower healthcare costs around the country. But that geographic diversity also created a very challenging group to serve, Brian Marcotte, the CEO of National Business Group on Health, told Christina Farr in a conversation on Second Opinion. Healthcare benefits are dependent on the location of the employee, and Haven couldn’t introduce the same programs to all local markets. Instead, it would have to set up plans wherever they had employees, without the critical mass to make it a worthwhile endeavor.

Another problem, too, reported CNBC, was a divergence of interests between the three companies, each of which is expected to continue pursuing research in healthcare solutions for its own employees.

Define disrupt

Of the individual initiatives that may have accelerated the disbanding of Haven, Amazon Care is the most prominent. An initiative for Amazon employees living in the Seattle area, it seems to offer a product in line with what might have been devised by Haven.

An additional benefit offered to employees who have signed up to get healthcare coverage from the company (through traditional insurance policies), Amazon Care allows patients to text with their clinicians, have telehealth visits, get medications delivered, and even see a nurse at home. It seeks to encourage people to make fewer expensive visits to the doctor’s office, by taking care of whatever can be managed without an in-person diagnosis or treatment.

There aren’t yet data on whether Amazon Care is successfully reducing costs—for the employer and, less straightforwardly, 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 nowhere near a disruption of the system.

Amazon Pharmacy, another healthcare initiative by Amazon, is much larger in scope. Launched in November, it’s, well, a large online pharmacy. It offers discounts (so far, only on drugs purchased without prescription), and free two-day shipping for Prime customers. But once again, it’s hard to see it as a disruption of anything—rather, it looks like Amazon entering a very lucrative business at a very opportune moment.

No cure for the tapeworm

“Healthcare is the tapeworm of the American economy,” Warren Buffett famously told CNBC in 2018, when presenting Haven. Indeed, the size of the market—fueled by costs exponentially higher than in any other country in the world—continues to expand relentlessly, and is projected to make up 20% of America’s GDP by 2028. But the results of this spending are paradoxical: Americans live shorter, less healthy lives than their peers in other countries, while suffering from an epidemic of bankruptcies related to medical issues (an estimated 66.5% of all bankruptcy filings are caused by medical expenses).

Haven never explicitly said it would try to cure the tapeworm, but it’s telling how many hoped it just might be able to do so. The bandaids introduced by Obamacare in 2009 made it obvious that the US healthcare system is unsustainable, leaving a hunger for solutions: Perhaps employers could reform what the government wasn’t able to.

According to a Haven spokesperson who spoke to CNBC, the company’s team did make progress in “piloting new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable.” But all of these are small, marginal changes in a system whose cost is out of control. Even if clearer policies or transparent pricing reduced costs—which is not a given, as Chandra notes—the cumulative result would have a marginal benefit.

“Haven is yet another cautionary tale to outsiders that hope to disrupt the industry that their ambition is likely unrealistic and that solving key industry problems proves to be far more difficult than most anticipate,” says Jeff Becker, an analyst at Forrester.

By folding, Haven reduces hope in the possibility that private enterprise might fix US healthcare. And it leaves behind a loaded question: If some of the smartest, richest, most knowledgeable, well connected, and ambitious leaders in the room could not find a way to disrupt American healthcare, then who can?

The message on Haven Healthcare's portal:

In the past three years, Haven explored a wide range of healthcare solutions, as well as piloted new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable.
Moving forward, Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. will leverage these insights and continue to collaborate informally to design programs tailored to address the specific needs of their own employee populations.
Haven will end its independent operations at the end of February 2021.  


% Annalisa Merelli (Quartz)
% https://qz.com/1952225/why-amazon-berkshire-hathaway-and-jpmorgans-haven-failed/