You may recall three years ago there was a major announcement that Amazon, Berkshire Hathaway, and JP Morgan Chase were creating a joint venture that would solve the healthcare cost and delivery crisis in our country through an employee benefits program for their collective 1.1 million employees. This was to be the “big disruptor” in the U.S. Health system, which caused a big sell-off of all major insurance companies’ stock. Back then most of the financial pundits thought they could be successful in eliminating most of the administrative cost associated with the current system. Subsequently they named the venture Haven and hired Dr. Atul Gawande a leading physician, healthcare expert, author, and professor to head up the effort. Dr. Gawande left the company last May without much explanation nor public comment from the three business giants behind the venture. This week they announced that they were shuttering the effort and closing down Haven.
What happened? This was supposed to bring innovation and break our age-old healthcare system that has grown into colossal monopoly that rewards CEO’s and middlemen, and controls lawmakers through ungodly amounts of spending on lobbyists while bankrupting a large portion of their customers (patients). I think we can speculate on several different reasons, but I’ll provide two that seem to be most evident. The first is the potential for conflict of interest. All three of these companies have interest in various parts of the health care system where they make money from financing, providing tech platforms, or outright owning companies within the health care universe. In his daily podcast today Dr. Eric Bricker, a leading health care expert provided his opinion that Haven didn’t fail. It quit (You can find the video on YouTube). And that’s not a bad thing due to their financial conflicts of interest. Berkshire Hathaway holds roughly 1/3 ownership interest in Davita, the dialysis company that provides services to about half of the country’s patients dealing with kidney failure. He claims that their charges average $12,000 per patient per week -which is paid by you the employer. Medicare pays Davita about $750 for the same treatment for Medicare members. How would the other stockholders of Davita feel if a major stockholder created strategies to reduce the cost of Dialysis? The stockholders of both companies must be pleased about the closing of Haven as Berkshire Hathaway daily stock price is up 2% and Davita is up 3.2% as of this writing. My contention is that at least part of the failure for the three giant companies to succeed could be connected to their interest in profiting from the medical-industrial complex that is our current health system.
The other reason I present is more contentious and a little harder to comprehend. I submit that our health care cost and access issues cannot be solved at a macro level across a wide geography like the one Haven represented by the nationwide spread of the 1 million plus employees of the three companies. In their efforts to drive improvement they found out what worked for employees in California doesn’t necessarily work in Nebraska or Massachusetts. The only viable way to change the system is with a grass roots initiative at the local level that can address the issues that pertain directly to you and the employees and families that you provide health care for. Because one of the main problems of our current health system is that there is no consensus of how and where health care is delivered across the country. Let alone a common price we pay for any given episode of care. The change has to start with you. Because you’re in the health care business even if you don’t like it. Warren Buffet once said, “GM is a health and benefits company with an auto company attached.” No matter what business you’re in or how large your company is it’s likely that your two largest expenses are labor and benefits. That puts you in the health care business even if it’s involuntarily. And that change that you must initiate starts when you begin to look at your benefits cost as a business unit that requires the same type of management you afford to your supplies, materials, or other services you use to operate your busines. That will lead you to discover the things you can do to lower your costs and improve your offerings that keep your employees and their families satisfied and healthy. And you will find out that there’s a lot you can do that you weren’t aware of, beginning with addressing the costs and quality of your local hospitals and doctors and weeding out the outside entities that have no real interest in the improvement of health care cost and delivery in your community. Health care must change, or you and I will go broke. The change starts with you and it starts locally.
If you want to learn how to take the first steps in changing the health care system for you and your employees give me a call or fill out the “Contact Me” tab found above. We’ll start a no obligation conversation on where to begin.