February 17, 2020
Can Haven Fix Healthcare?
By Michael D. Shaw
Haven is the name given—more than a year after its founding—to the healthcare company formed by Amazon, Berkshire Hathaway, and JPMorgan Chase. Berkshire Hathaway’s Warren Buffett stated at its inception, “The ballooning costs of [healthcare] act as a hungry tapeworm on the American economy. Our group does not come to this problem with answers. But we also do not accept it as inevitable.” Haven first intends to focus on the needs of the 1.2 million employees in its combined companies. It is hoped that this experience will enable Haven to create models for improving care that might apply more broadly to other companies and patients.
The name “Haven” was chosen to reflect the founders’ desire to be a haven for patients and all ideas that may improve healthcare services and make them more affordable. Those familiar with how touchy the stock market can be were not surprised to hear that upon the January, 2018 announcement of Haven’s formation, healthcare stocks dropped. Evidently, these three masters of the universe were going to shake things up so much that all the conventional players were immediately threatened.
Certainly, there have been many attempts to fix healthcare—mostly focusing on how to pay for it. Government-run health insurance plans started with Otto von Bismarck, and showed how they could go wrong when Hitler grotesquely expanded Germany’s healthcare system to include mass euthanasia. Private health insurance began in 1929 in Dallas, TX as a way to keep Baylor University Hospital solvent. Even then, patients were having trouble paying their hospital bills. This was followed by the founding of Blue Cross in Sacramento, CA in 1932.
Bear in mind that much healthcare technology that we take for granted these days did not exist before 1950. As such, healthcare back then was costly primarily because it was labor intensive. Nowadays, besides being labor intensive, it is steeped in high-ticket technology, and is one of the most regulated industries in the country.
Beyond figuring out how to better finance healthcare, there are, of course, any number of suggestions on how to fix it. Last year, Forbes ran a piece offering “18 powerful ideas to fix healthcare.” The best ones recommended reducing the number of specialists and working toward some type of capitated model, thus rewarding quality over quantity.
I would add: Balance the emphasis between cognitive and procedural medicine. For electronic health records to actually have an impact, provide some subsidy (or good tax deduction) for medical scribes, so the docs can focus on care. A capitated model would likely end the present absurd focus on “coding,” as a method to increase reimbursements by finding every possible way to bill things out. Allow health insurance companies to compete across state lines and allow the formation of recognized guilds, associations, and trusts to promote larger insurable groups.
But, what about Haven? As Laura Dyrda pointed out in a recent Becker’s Hospital Review article, since the three companies involved announced their venture in January, 2018, few details have emerged. Presumably, Haven will use big data to help forge new solutions.
We do know that they are now offering health insurance plans to certain of their employees. The new plans do not have deductibles, and offer incentives for fulfilling various wellness goals. These incentives can be used to offset doctor visit co-pays or the cost of prescriptions. However, there is nothing novel about such provisions, in large corporate settings.
Dyrda quotes Randy Davis, CIO of CGH Medical Center, Sterling, IL…
“Even such incredible minds and visionaries have been surprised at the true complexity and difficulties in bringing about change in healthcare. It’s three-dimensional chess, and surprise, surprise, those in healthcare like it that way. They’ll nibble at their easy wins, but it won’t amount to huge dollars. CVS/Aetna is better positioned to really run at it than these folks. They have location going for them. The Panama Canal wasn’t a canal project; it was a railroad project to move dirt. When these players figure out what the real project is, look out. I expect a major reference lab to be on their purchase list in the near future.”
Time to grab some popcorn and watch what happens.