Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
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January 04, 2021 01:24 PM

Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven

Alex Kacik
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    Haven is ending about three years after Amazon, JPMorgan Chase and Berkshire Hathaway set out to improve outcomes and lower costs for their employees, the companies announced Monday.

    The independent company "free from profit-making incentives and constraints" aimed to improve employee satisfaction and reduce healthcare costs for Amazon, JPMorgan and Berkshire's around 1 million U.S. employees, but executives shared little detail about the joint venture. Haven will cease operations at the end of February, according to its website.

    "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's demise didn't come as a surprise to many industry experts who criticized its "secretive" approach. But even after Dr. Atul Gawande—known for his work as a surgeon, academic, policy adviser and professional communicator—stepped down from his role as CEO of Haven in May, industry observers were still cautiously optimistic that it would help the industry progress.

    "It was never clear what these guys were going to do," said Jeff Goldsmith, founder and president of healthcare consultancy Health Futures, adding that he was surprised by all the attention Haven received. "These firms are so different in their core business and none of them were really players in healthcare. The idea they could turn a $4 trillion industry on its tail with almost no leverage to do so was baffling."

    Historically, employers have been hesitant to restrict their employees' choice of providers. But that sentiment is changing as healthcare continues to consume a greater portion of income, industry stakeholders said.

    Per capita health spending for the 160 million Americans in employer-sponsored health plans grew 4.4% in 2018, the third consecutive year of increases above 4%, according to the latest annual spending report by the Health Care Cost Institute. Higher prices accounted for nearly three-quarters of spending growth between 2014 and 2018.

    "A real possibility is that the entrenched complexity of the American healthcare business model proved too daunting to change," said Lyndean Brick, CEO of healthcare consultancy Advis. "As large as these parent organizations are, they still don't possess the economies of scale to tip the balance when it comes to healthcare. Moreover, no reported efforts at joint contracting or procedural integration were ever announced by Haven."

    The new price transparency mandates may have come into play, Brick added. Hospitals had to start posting their negotiated rates online on Jan. 1 in a machine-readable format. They also had to list their negotiated rates for at least 300 shoppable services in a consumer-friendly manner, including 70 picked by CMS.

    "Was the ability of providers to deal with these massive corporate entities made more difficult, perhaps even impossible, by the advent of the new transparency rules?" Brick asked. "Haven would have commanded unmatched bargaining power; providers would have found it difficult to put Haven's deal next to that of smaller market players for all to see. Providers would have found it awkward to explain the obvious."

    Haven is one of many employer-led coalitions. While they have put some pressure on providers to slow spending growth and improve quality, progress has been incremental.

    The Pacific Business Group on Health created a narrow network of high-quality providers that its member employers contract with directly for certain services, such as hip and knee replacements.

    There's a growing acceptance of narrow networks, including those hitched to an accountable care organization. Some organizations have seen success with reference pricing as well as tiered networks, said Suzanne Delbanco, executive director of Catalyst for Payment Reform, a nationwide coalition of employers and healthcare purchasers, told Modern Healthcare in May. But these efforts are often geographically specific, she noted.

    "One of the challenges they face in the partnership is that they are spread across the country," Delbanco said. "These take knowing providers in a particular space—a one-size-fits-all approach does not work."

    Catalyst for Payment Reform helps more than 30 large employers work with health plans to tie more of their insurance benefit payments to performance metrics.

    The Health Transformation Alliance, a coalition of now more than 50 employers, leverages members' combined heft to secure better pharmacy contracts. The alliance has also contracted with healthcare providers directly to care for employees with chronic conditions. In several high-profile cases, employers have used their scale to contract directly with a health provider for all of their employees' health needs, ultimately cutting out the insurance company.

    Private equity firm Blackstone Group created Equity Healthcare, which looks to use the scale of its portfolio along with those of several other firms to secure price discounts from insurers.

    "The moment for employers to step up and innovate has never been greater," Delbanco said.

    Tags: Operations, This Week in Healthcare, Employee Benefits Subject, Employer Sponsored plans, Quality, Transformation, Operations
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