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Transformation Hub

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Operations
May 15, 2020 04:13 PM

Industry observers still holding out hope for Haven

Alex Kacik
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    Dr. Atul Gawande recently relinquished the chief executive role of the Amazon, JPMorgan Chase and Berkshire Hathaway venture for chairman of the board.

    Despite minimal public disclosure and a leadership change two years into the highly anticipated healthcare joint venture, observers are still cautiously optimistic that Haven will help the industry progress.

    Dr. Atul Gawande relinquished the chief executive role of the Amazon, JPMorgan Chase and Berkshire Hathaway venture for chairman of the board. Little is known about the endeavor, other than the founders' description in early 2018 of an independent company "free from profit-making incentives and constraints" with the aim of improving employee satisfaction and reducing healthcare costs for their U.S. employees.

    Reactions to the leadership change varied. It may indicate Haven is moving from the conceptual to implementation phase. Some are concerned that a lack of transparency means that little progress has been made. Speculation aside, the need for an improved healthcare delivery model hasn't waned, experts said.

    "The moment for employers to step up and innovate has never been greater," said Suzanne Delbanco, executive director of the Catalyst for Payment Reform, a nationwide coalition of employers and healthcare purchasers. While she didn't expect two-and-a-half years to pass without seeing more visible plans, Delbanco is still hopeful that Haven will, at minimum, come up with a good solution for their employees.

    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 by 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 medical prices accounted for nearly three-quarters of spending growth between 2014 and 2018.

    "In a loose labor market, there is likely a greater acceptance of the idea of trading off more affordable premiums and cost sharing for choice," Delbanco said. "The more we have the buy side of the market specify what it wants from the delivery system, the more patient centered and high value it can be."

    Gawande—known for his work as a surgeon, academic, policy adviser and professional communicator—said as he reflected on how he could best contribute to Haven, chairman of the board was an ideal role. Mitch Betses, chief operating officer, will manage day-to-day operations as Haven searches for a new CEO.

    "This will elevate my focus from daily management to supporting Haven's strategy, board and leadership," Gawande said in prepared remarks. "It will also enable me to devote time to policy and activities addressing the immediate and long-term threats to health and health systems from COVID-19."

    Companies like Haven, which brand themselves as disruptors, have sought to transform an industry that's very reluctant to change, said Pam Arlotto, CEO of the consultancy Maestro Strategies. Even the Affordable Care Act, with its initiatives around population health and value-based care, didn't meaningfully change the business of healthcare.

    Therefore, Arlotto said it makes sense that Gawande would transition to working on COVID-19, a development that's turned the industry on its head in just six weeks.

    "COVID has smashed more barriers and been more disruptive than anything else," she said. "The fact that Gawande is going to work on COVID makes more sense than anything to me. He's going where the disruption is happening, and he is a strategic thinker."

    Haven has likely had a slow start, said Lyndean Brick, CEO of the consultancy Advis. The leadership change may indicate that the company has established the groundwork and is ready to put some of its ideas into practice, which makes sense given Gawande's skill set, she said.

    "He is what they needed to get off the ground but I don't see him as the one to lead day-to-day management," Brick said. "I would imagine he feels called to respond to this pandemic."

    As far as the implementation phase goes, Brick expects to see the first big developments in the pharmacy space and drug costs, as well as primary care—following Amazon's healthcare investments, she said. Amazon has also been incrementally building out its healthcare supply chain technology.

    Serkan Kutan, Haven's chief technology officer, posted on LinkedIn about a month ago that the company is looking to hire "dynamic data engineers with a strong background in healthcare data."

    "We are recruiting mission oriented high performers to help us build the data platform that powers our work," Kutan wrote.

    Haven's website lists a number of open positions in its Boston and New York offices, including in enterprise information technology, information security, strategy and research, finance and data science.

    "That tells you people are still there who have strong metrics, analytics and data backgrounds," Arlotto said.

    Although it may sound like a tech startup, startup companies typically want to get a product to market quickly. Haven feels more like a think tank, said Arlotto, adding that what Haven is doing now is the "antithesis" of what you'd typically see with a company of that level of visibility.

    "Atul Gawande has been such a name, such a thought leader in our industry for so long, that to put him in the CEO role was nothing but a visibility move," she said. "It was nothing but being out there."

    Haven represents a collaboration between physician leadership and business leadership, which is often missing in healthcare, said Bunny Ellerin, director of the healthcare and pharmaceutical management program at Columbia Business School. But some of the momentum has faded, she said.

    "They came out with huge fanfare as they said they were going to revolutionize healthcare—that is a big, bold statement to make," she said. "If you do that and people see the leaders of these companies and someone as brilliant and impactful as Dr. Gawande, they want to see what is going on. Still being shrouded in secrecy two-and-a-half years later is a big mistake—it leads me to believe that they may not be doing much."

    Many large employers have encouraged their staff to seek care for expensive procedures at a select group of lower-cost, high-quality hospitals. One example is Walmart, which paid for employees' travel to Centers of Excellence for spinal surgeries, among other procedures delivered via a direct-contracting arrangement.

    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, Delbanco said. 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."

    There have been several employer coalitions that combined to put pressure on providers. The Pacific Business Group on Health, similar to Catalyst for Payment Reform, created a narrow network of high-quality providers that its member employers contract with directly for certain services, such as hip and knee replacements.

    The Health Transformation Alliance, a coalition of now more than 50 employers, formed several years ago to leverage members' combined heft to secure better pharmacy contracts.

    With more than 1 million collective employees, Haven can customize benefit design and treatment pathways based on patient characteristics, said Rita Numerof, co-founder and president of a healthcare consulting firm.

    "Haven wields enormous market clout," said Numerof, adding that she doesn't think the leadership change alters Haven's ultimate impact. "The opportunity is enormous."

    Tara Bannow contributed to this report.

    Tags: Operations, This Week in Healthcare, Employee Benefits Subject, Employer Sponsored plans, Employer Sponsored Insurance Subject, Atul Gawande, Operations, Transformation, Transformation Hub
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