“Healthcare Is Hard”: Reflections on the Collapse of the Haven Experiment

Jan. 5, 2021
In the wake of the shuttering of Haven Health, the joint venture among Amazon, Berkshire Hathaway, and JPMorgan Chase, some reflections on the deep, crunchy challenges facing internal health system reformers

As I wrote yesterday, Haven Health, the healthcare joint venture created three years ago by senior executives at Amazon, Berkshire Hathaway, and JPMorgan Chase, is about to be shelved forever. Unveiled with great fanfare on January 30, 2018, Haven (which didn’t get its name until more than a year later—perhaps an omen…?) was brought into the world with tremendous expectations and interest, and the press release announcing its creation certainly didn’t indulge in any false modesty, stating on that day that “Amazon (NASDAQ: AMZN), Berkshire Hathaway (NYSE: BRK.A, BRK.B) and JPMorgan Chase & Co. (NYSE: JPM) announced today that they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs. The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints. The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.”

The Jan. 30, 2018 press release went on to state that “Tackling the enormous challenges of healthcare and harnessing its full benefits are among the greatest issues facing society today. By bringing together three of the world’s leading organizations into this new and innovative construct, the group hopes to draw on its combined capabilities and resources to take a fresh approach to these critical matters.” And it went on to provide statements from the CEOs of Amazon, Berkshire Hathaway, and JPMorgan Chase, namely Jeff Bezos, Warren Buffett, and Jamie Dimon.

As Buffett stated in that press release, “The ballooning costs of healthcare act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable. Rather, we share the belief that putting our collective resources behind the country’s best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes.” Dimon and Bezos offered similar sentiments for public consumption, with Dimon stating that “Our people want transparency, knowledge and control when it comes to managing their healthcare; the three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees, their families and, potentially, all Americans,” and Bezos saying that “The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty. Hard as it might be,” he added, “reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.”

So what happened???

Business Insider’s Blake Dodge wrote yesterday that “Haven was supposed to use the combined companies' resources to get costs under control and improve care for the member companies' employee populations, but it struggled to find an identity. It began by tackling primary care pilots that it couldn't market widely to employees in an effort to maintain secrecy, The Information's Paris Martineau reported in July. The pilot connected employees to primary care teams, similar to Amazon's app and service Amazon Care. Amazon Care, as Business Insider reported, was underway at the tech giant before Haven got started.  Haven lost financial backing, The Information reported, as well as key leaders like Dr. Atul Gawande, the former CEO. Tensions escalated between Haven and the founding companies as the upstart struggled to come up with ideas quickly, and Amazon in particular has been the most reluctant to make commitments to Haven, according to The Information and a person close to Amazon.” Dodge was referring in his report to a July 16, 2020 article by The Information’s Paris Martineau entitled “What’s Ailing an Amazon Health Venture.”

Dodge wasn’t the only one to provide revelations on Monday. The Washington Post’s Jay Greene, n an article entitled “High-profile health-care venture backed by Amazon, JPMorgan and Berkshire Hathaway shutters,” wrote that “Haven’s accomplishments remain unclear, and its struggles illustrate the challenges endemic to improving health care delivery in the United States, said Kate Bundorf, a professor of health policy at Duke University. ‘Health care is hard,’ Bundorf said. ‘It wasn’t totally obvious to me what exactly those three organizations working together were going to accomplish.’’

Well… yes.

Honestly, all of this inevitably reminds me of one of President Trump’s more memorable statements, made on February 27, 2017. Having failed to come up with a substitute to replace the Affordable Care Act, which he was determined to eliminate, he told reporters, “Now, I have to tell you, it’s an unbelievably complex subject. Nobody knew health care could be so complicated.”

Well…some people knew.

And that’s where this Haven collapse becomes particularly interesting, I think. Inevitably, as Business Insider’s Dodge reported (see above), the leaders of the Haven joint venture got tangled up in the complexity of the healthcare delivery system. What might have seemed rather self-evident to the CEOs of three of the most powerful and influential corporations in America actually turned out to be endlessly complicated in reality, when approached on the ground level. As Dodge noted, the theory was that the combined strength of the three corporations as healthcare purchasers should have worked to the venture’s advantage, but in the end, Haven turned out to produce only small-ball pilot projects, and began by “tackling primary care pilots that it couldn't market widely to employees in an effort to maintain secrecy.” And then, in retrospect, one can see that bringing in a superstar like Atul Gawande, M.D. likely only added to the challenges, as, one surmises, clashes of egos began to infiltrate the initiative.

So what the Haven people discovered was the problem that so many other internal system reformers have discovered: the “Goldilocks problem” of internal health system reform. Either one tries to boil the ocean, or one ends up creating teensy pilots that don’t really move the needle at all. It is in that vast conceptual space between teensy-pilot-launching and ocean-boiling that genuine internal health system reform is happening, and happening now, most clearly among the pioneers of value-based and risk-based contracting, including among the leaders of ACOs (accountable care organizations). But it’s really hard work, and takes years.

One gets the very strong sense here that these titans of industry—golden wizards of big business Bezos, Buffett, and Dimon—simply lacked the patience to actually plunge headlong into the unending complexity that is healthcare delivery. The simple truth turns out to be one around complexity: there is no quick, easy way to reform and reengineer the U.S. healthcare delivery system, certainly not from the outside. What seems clear to those of us who have been tracking healthcare delivery system for a long time (I myself have been doing so since 1989), is that there are simply no shortcuts to genuine system reform. It involves hard work, tremendously complex work, and an acceptance of healthcare’s endless complexity.

And yes, that is frustrating. One of the most interesting moments for me in doing the research for my first book, Paradox and Imperatives in Healthcare, which I coauthored with noted healthcare economist Jeffrey C. Bauer, Ph.D. in 2008, was the opportunity afforded me to tour the Toyota auto manufacturing plant in Georgetown, Kentucky, just outside of Lexington. As I’ve told colleagues and friends ever since, yes, it was fun to ride around on large, open motorized vehicles and to be able to see people soldering bolts onto car chassis, and all that; but the real revelation for me was to see something very low-tech: the gigantic bulletin boards that allowed anyone in the plant—absolutely anyone—to suggest anything that might in some way improve operations. As I had already learned prior to my visit, one big element in the Toyota Production System (TPS) is the idea that every single employee in any plant might have information and insights to offer their co-workers. And a core element in TPS is that everything is constantly, constantly examined. Processes are constantly being mapped, analyzed, reengineered, and then reanalyzed. It is that constant cycle of continuous process improvement that makes TPS so successful and useful.

The healthcare delivery system remains early on compared to auto manufacturing and many other industries in harnessing the capabilities of the quality and process improvement methodologies—TPS, of course, but even more famously, Lean management (which came out of Toyota) and Six Sigma, all methodologies created to create fundamental change in manufacturing and other business processes.

Of course, one constantly hears that the healthcare system is not only different, but unique. Well, it is different and unique, but that doesn’t mean that it can’t benefit from continuous improvement through the use of quality and process improvement methodologies. But what process improvement inevitably means in patient care organizations is a combination of clinical transformation and operational transformation—and that is hard, hard work, and infinitely complex.

The leaders of patient care organizations are moving forward—inevitably, at uneven rates of progress, of course—to address the core clinical and operational transformation challenges facing the U.S. healthcare system. But it is turning out to be every bit as challenging as anyone inside healthcare delivery had expected.

And there, perhaps is where the understanding gap of the titans of industry turned out to lie, in the case of the Haven venture: because, as challenging as it is to reform healthcare from the inside, it’s even harder to do so from the outside, though the corporate purchasers of healthcare have been impatient to do so for decades. And, certainly, as we head towards spending $6 trillion a year and somewhere around 20 percent of our GDP on healthcare every year in this country, the urgency of the burning platform is certainly there.

But there is hubris in believing that such challenges can easily be taken on from the outside, and Haven’s sponsors had to learn that lesson the hard way—the very hard way.

Not surprisingly, the Twittersphere erupted in comment, ranging from the empathetic to the derisive.

Rasu Shrestha, M.D., chief strategy and transformation officer and vice president at the Charlotte-based Atrium Health, tweeted that:

This was a "go big, or go home" play. And we know bigger isn't always better.

There was never any clarity to execution. #hcldr #digitalhealth https://t.co/RP0QjVn6gr

— Rasu Shrestha MD MBA (@RasuShrestha) January 4, 2021

In the end, the daunting complexity of the U.S. healthcare system, the impossibility of super-quick “easy wins,” and the fact that the Amazon, Berkshire Hathaway, and JPMorgan Chase CEOs were coming at this entirely from the outside, clearly appear to have doomed the effort. Was Haven Health worth trying? Absolutely. But it will also go down as an important lesson for those outside direct patient care delivery who might think they can develop shortcuts to the challenging, longer-term work that needs to be done to transform the U.S. healthcare system.

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