Why did Haven fail?

In regard to your recent article in the Wall Street Journal, “Why the Amazon, JPMorgan, Berkshire Venture Collapsed: Healthcare Was Too Big a Problem” and the reasons for failure.  Haven failed because it did not use first principles thinking. The people that ran Haven thought that by using technology, innovative ideas and big data they could lower the cost of healthcare.

Why did Haven fail?

Haven failed because it did not use first principles thinking. The people that ran Haven thought that by using technology, innovative ideas and big data they could lower the cost of healthcare.

But they neglected to ask and answer the question why do we need healthcare in the first place? Many would answer we need it to preserve health. If you think about it, health is preserved by clean air and water and a proper sewer system. Health is also preserved by an appropriate diet, adequate exercise, proper sleep and avoidance of toxins such as cigarettes, drugs and alcohol. Early detection of disease is also important as well as compliance with treatment of chronic disease. Thus any healthcare reform should focus on improving public health.

Nevertheless most of us would still like care when we get sick. Ok then, what should healthcare look like? If we treat healthcare as the commodity that it is, we know that the best way to insure an adequate supply at the lowest possible price is to permit the laws of supply and demand to work. Our current system is a highly government regulated system largely influenced by lobbyists who represent doctors, insurance companies, hospitals and drug companies. The consumers I.e. the public has little to say about it. But they could have a great deal to say.

For example, large groups of consumers or large companies, by organizing their workers and their families, can overcome this system. Companies that self insure can use the healthcare cooperative model with the “co-op” owned by the employees. Financial incentives based on lifestyle would result in lower healthcare costs by decreasing utilization. Ownership of the cooperative would pass the savings from the cooperative to the employees. It allows employees to remain members even if they leave the company. By transferring ownership of the cooperative to the employees, companies are no longer responsible for healthcare and can concentrate on their core business.

An innovative cooperative can educate its members to utilize independent providers of healthcare and avoid hospital systems as much as possible. They can publicize providers that offer transparent cash prices for services. Other savings can be achieved by the cooperative owning the electronic medical record (EMR) and granting access to providers as well as to patients. By owning the EMR, the cooperative would own the data.

The cooperative model encourages the use of technology, innovative ideas and big data to improve access, decrease bureaucratic inefficiency, improve diagnostic accuracy, improve treatment outcomes. The failure of Haven illustrates how the current insurance system is resistant to change in spite of the rhetoric to the contrary.

Steve Goldstein