3 reasons Haven failed: A former healthcare CEO's take

There are three main reasons Haven, the healthcare venture formed by Amazon, Berkshire Hathaway and JPMorgan Chase, failed, according to a Jan. 5 Harvard Business Review article.

The three corporate giants formed Haven in 2018 with an aim to lower healthcare costs for their 1.2 million workers, but the venture was unable to drive change in the industry and announced to employees this week its intent to dissolve. 

Here is a breakdown of three reasons it failed, according to John Toussaint, MD, founder and executive chair of nonprofit educational institute Catalysis and former CEO of Appleton, Wis.-based ThedaCare who penned the article. 

1. Insufficient market power to shift costs. Although the company has 1.2 million employees, the companies didn't have enough market power to make providers lower their costs, as its employees are scattered across the U.S. Unless an employer group has about 50 percent of a local market, providers won't change their prices, Dr. Toussaint wrote. 

2. Perverse incentives remain in the healthcare industry. Despite efforts to move  to a more value-based, lower-cost system, the healthcare industry still largely has fee-for-service reimbursement agreements. Since insurers and providers make big  profits using the fee-for-service system and because there are few incentives to change, not many have adopted these new, at-risk payment models. As a result, Haven faced challenges to lower healthcare costs. 

3. The COVID-19 pandemic. The third main reason was poor timing. When the pandemic emerged, providers shifted their focus to managing the virus and their financial hit due to the bans on nonurgent procedures. "Consequently, they are considering no new ideas until the crisis abates and even then, are unlikely to entertain taking on new risks," Dr. Toussaint wrote.  

More articles on strategy:
Haven, corporate giants' healthcare venture, to dissolve
Amazon wants to offer primary care to other employers, report says
Oak Street Health, Walmart open 3 clinics in Texas

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