Investors trembled in the first days of January of 2018, when three giants of American capitalism,
announced they would form a new company that would cut the cost of providing health care to their workers.
No one knew how they planned to do it, but the notion of that heavyweight triumvirate mucking about in the managed care and pharmacy businesses sent the S&P 500 Managed Health Care Industry Index down 4.4% in a single day.
Three years later to the month, the joint venture the three companies formed announced Monday it was shutting down. Called Haven Healthcare, the joint venture never said much about how it planned to cut health care costs, never mind disrupting the managed care industry.
The demise of Haven was first reported by CNBC at midday on Monday. In a statement on its own website, Haven said that it had “explored a wide range of health care 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.” It said that Amazon (ticker: AMZN), Berkshire Hathaway (BRK. A), and JPMorgan (JPM) would continue to work on those projects independently.
The S&P 500 Managed Health Care Industry index rose 2.2% between when the news broke at noon and the market’s close on Monday, while the S&P 500 rose 0.4%.
Over the past three years, Haven has been largely silent about the progress of its work. One hint about what the company was up to came in a November 2019 story by Bloomberg News, which reported that Haven was testing a health plan with JPMorgan employees that had no deductibles, and offered workers perks for achieving certain health goals. The news seemed a hint that Haven was looking to move away from cost-sharing, a popular strategy to contain health costs that some employers have begun to worry is counterproductive, but Haven never spoke publicly about the project.
Instead, most of the news to come out of Haven was about high-profile staff arrivals and departures. Haven hired as its CEO Dr. Atul Gawande, a heart surgeon and the well-known author of a number of influential, top-selling books about the health-care system. But in May 2019, the company’s chief operating officer left after just nine months at the company, citing the commute, and in May 2020 The Wall Street Journal reported that Gawande himself was planning an exit.
Haven’s demise might be a testament to the challenge inherent in forging a collaboration between three separate megacorporations, each used to having its own way. According to CNBC, one major problem Haven faced was that its ideas were put into practice separately by each of its three stakeholders.
But Haven’s struggle, and the fact that its anticipated disruption of the health care insurance space never materialized, also underlines the difficulty inherent lowering health-care costs for employers. Even with some of the best minds in the business on staff, and the resources of three of America’s largest corporations at their disposal, Haven doesn’t seem to have cracked the problem.
Write to Josh Nathan-Kazis at [email protected]