Yesterday, the healthcare dream team formed by Jeff Bezos, Warren Buffett, and Jamie Dimon announced that it would be closing.
Formed back in 2018 by three of America’s most powerful and wealthy CEOs, Haven was tasked with reforming one of the biggest issues plaguing U.S. employees: healthcare. However, after just three short years, the joint venture t is disbanding.
Yesterday, the company began informing workers that it will shut down operations by the end of February. It’s said that many of the Boston-based firm’s 57 employees will be placed at Amazon (NASDAQ: AMZN), Berkshire Hathaway (NYSE: BRK.A), or JPMorgan Chase (NYSE: JPM) as each firm is expected to be still going ahead with their own individual healthcare projects and may collaborate with each other occasionally.
The three business titans made the announcement in 2018 that they were teaming up to tackle the issue of healthcare. The press release sent shock waves around the world of medicine and as a result shares of prominent healthcare companies fell over fears the combined efforts of these three highly-successful leaders in finance and technology would represent huge competition in the healthcare market. Since the news broke the company is shutting down, shares of UnitedHealth Group, Humana and CVS Health each climbed more than 2%.
Why Haven was unsuccessful
What could have been a watershed moment in efforts to reign in healthcare costs and improve quality of healthcare has instead failed as a joint venture. One significant problem facing Haven was that while the firm came up with ideas, each of the three founding companies executed their projects separately by pursuing their own very different strategic approach. This meant that there really wasn’t much ‘joint’ about the joint venture to begin with. The decision to close Haven is also likely a sign of how difficult it is to radically change and improve healthcare in the U.S. The system costs the country roughly $3.5 trillion a year and is rooted with complexities including a mixture of doctors, insurers, drugmakers, and middlemen. In 2020, Warren Buffett signalled the difficulty of the task when he said there was no guarantee that Haven would succeed in improving healthcare.
Haven also faced stiff competition from retail giants Walmart and drugstore chains CVS Health and Walgreens Boots Alliance who each have piloted tests and programs with medical care providers and health insurers for the last few years.
Haven did launch some pilot programs which Amazon, Berkshire, and JPMorgan are going to continue. During those three years, the company explored healthcare solutions, as well as launching new ways to make primary care easier to access alongside insurance benefits that were easier to understand and cheaper prescription drugs. The three multinational companies plan to use these insights to address specific needs for their workforce populations.
Spokeswoman for Haven, Brooke Thurston, stated the company’s plans to close and explained:
“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 our individual employee populations and locations.”
The venture has not been a total waste as separate projects have been very successful. For example, Amazon has made good progress on its own in creating the Amazon Care program. The internal healthcare program for employees at its Washington offices includes provisions for both virtual and in-person doctor consultations and prescription delivery. Amazon Care is now considering expanding this service to other companies signalling that this project is a real business and not just a project for Amazon employees.
Last year, Amazon also released wearable health tracker ‘Halo’, which uses five health metrics to give users a comprehensive look at their health. The company launched Amazon Pharmacy in 2020, which allows consumers to compare prescription prices and have medication delivered to their home.
Why is healthcare in the U.S. so complicated?
The fact that three of the most successful, wealthy founders in the world could not fix these issues really does highlight the complexity and difficulties of the U.S. healthcare system. Challenges include U.S. hospitals essentially being profit centers, physicians trying to prevent lawsuits by ordering expensive “just in case” tests and scans, and lets not forget rising drug costs — Americans shell out almost four times as much for pharmaceutical drugs compared to citizens of other countries.
A lack of political support in the U.S. has also prevented the government from taking a larger role in controlling medicine and care costs. The Affordable Care Act focused on ensuring access to healthcare but still encouraged competition between insurers and healthcare providers. Now that COVID-19 has increased costs and threatens to swamp the healthcare system, there has never been more demand for change.
These challenges show just how big the issue of healthcare is in America. Although, on a positive note, it also highlights a real money making opportunity for the company to present a solution to it and it looks like Amazon has already been making good headway in the healthcare space.
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