Why Did Haven Healthcare Fail?

With the resources of three large and very successful companies, Haven will cease operations in late January, 2021.

Why Did Haven Healthcare Fail? Because they focused and worked on the wrong thing. That is the topic and lesson from Dr. Steven Goldstein on the latest edition of the Houston Healthcare Initiative Podcast.

Haven was a joint venture of Amazon, Berkshire Hathaway, and JPMorgan.  It was formed three years ago to better manage healthcare for the one million employees of these three large, successful and high tech companies. After three years and approximately $100 million Haven will cease operations. Dr. Goldstein tells his podcast audience the reason for the shortfall had nothing to do with resources, talent or intention and everything to do with trying to fix the wrong thing. The people at Haven were approaching the challenge with trying to fix the existing system.

But according to Dr. Goldstein, the existing system is the problem. “Our current healthcare system is focused on treating sick people not preventing illness,” Dr. Goldstein told his audience and he gave an example. “The more people there are in hospital beds, the more money is made by the hospitals, doctors and everyone else involved in patient care. Ours is a volume-based system of reimbursement for getting paid. There is no tie to healthier outcomes for patients or incentives for those same patients to take better care of themselves. It’s just more of the same.” 

The strategies Haven pursued was to leverage the scale of all those employees for better rates and prices. With over a million employees it seems like that might have worked. But it did not because the healthcare industry is not governed by the free market. Instead, it is governed by lobbyists from the hospital, pharmaceutical and insurance industries all who work together to help make sure that little meaningful change is ever introduced never mind adopted. “The focus is not on improving the population’s health, Dr. Goldstein said. “And ultimately that was the biggest mistake the people at Haven made. They were focused on the wrong problem. They might have been able to make a bad system work somewhat better, but it is still a bad system.”

 It was a shame that so much money and time went into this laudable goal but yielded no good outcome.  A common sense approach to managing the public’s health and is exactly what the insurance, hospital, and drug companies do not want. Given the collective influence (deep pockets) of these businesses and their lobbyists, the American public will continue to get the bill for a medical industry that puts maintaining the status quo as its priority.