What happened when Warren Buffett, Jamie Dimon and Jeff Bezos, technology’s biggest power player, got together to try to disrupt health care?
Amazon, Berkshire Hathaway and J.P. Morgan — announced that they wanted to do something about the problem of rising health care costs for their employees and a lack of improvement in care. In response to that news, health care stocks shed billions in value. CVS Health, Walmart, Cardinal Health and Express Scripts were among those affected.
It’s been more than a year since the consortium formed, and it just finally got a name: “Haven.”
The group has a CEO and a team of about a dozen people. But what will it actually do to fix health care’s myriad problems?
Here’s everything we know, everything we don’t, and what we expect to happen:
Haven is building quite a team.
Most recently, Haven hired Sandhya Rao, the senior medical director for health care system Partners Population Health, to run clinical strategy, according to an email viewed by CNBC announcing her departure. A Haven spokesperson confirmed the hire to CNBC, and said that Rao’s official title is vice president of clinical strategy.
She will join:
- CEO Atul Gawande, a surgeon and writer on health care
- Chief Operating Officer Jack Stoddard, a seasoned health-tech executive
- Chief Technology Officer Serkan, formerly CTO of ZocDoc, a doctor-booking app.
- Dana Gelb Safran from Blue Cross Blue Shield in Massachusetts, who will run run analytics projects.
- David Smith, an executive they hired from UnitedHealth’s Optum unit, which prompted a lawsuit from Optum over an alleged breach of contract.
So what do all these hires point to?
After analyzing the team, Trevor Price, founder and CEO of Oxeon Partners, a top health-tech recruiting firm, suggested that Haven will likely build a “risk-based clinically integrated network.”
That is, he believes the team would first build a curated network of doctors by analyzing data on performance, cost and other factors. Then it would build trust with employees and direct them to the appropriate type of care for their condition — for instance, an urgent care clinic, medical specialist or telemedicine appointment. It’s about “steerage,” said Price, which could save these employers on their health costs by preventing workers from seeing doctors that over-charge and under-perform.
Price says Stoddard is particularly interesting because he worked at a digital health company called Accolade that specializes in building these relationships with employees and then directing them to the most affordable care.
That suggests Haven might also contract directly with hospitals and clinics and agree to pay them based on the quality of care they provide, rather than the quantity of patients they see or tests they order.
All in all, said Price, it’s an impressive group that spans entrepreneurship, technology and clinical medicine , although it is biased towards people who’ve worked at large corporations. It suggests Haven has big plans, as these folks would be unlikely to leave their day jobs for an initiative that lacks ambition.
The group had no official name, so was often referred to by the initials of its partners: ABC or ABJ. Now, the group is called Haven.
So what’s in a name?
The definition of Haven is a place of safety and refuge. It’s a port in a storm, a shelter for ships and boats, a retreat. If health care is a scary place for consumers — particularly the 1.2 million combined workers of Amazon, Berkshire Hathaway and J.P. Morgan — Gawande’s Haven is sending a strong signal that it wants to help.
Gawande also made that loud and clear in his statement and responses to a FAQ on the company’s new web site. He described being an “ally” and a “partner” to doctors, insurance companies, and patients. He also described meeting with employees in recent months to hear from them about their health care experiences.
So Haven is a friend, not a foe, if you work for Amazon, Berkshire Hathaway or J.P. Morgan.
But will it be a threat to incumbents, like pharmacy benefits managers and insurers? That’s the big question at the center of a recent legal dispute over Haven’s hiring of Smith, the former Optum executive. Optum sued Smith, claiming that in the 18 months prior to his resignation, he played a role in defining the company’s strategy and had high-level access to confidential information. Optum also claimed that Smith printed off documents including a high-level analysis of the industry, while interviewing with ABC.
In response, Haven said it would not compete with Optum, a highly profitable unit of UnitedHealth that provides health care, data services and pharmacy benefits, and stressed that it would not offer products or services to the general market.
Even if Haven doesn’t do very much, that might still light a fire under the health care industry.
The fact that three companies have come together to say that they’ve had enough with the status quo is a big deal, argues Matthew Holt, a managing director who specializes in health at private equity firm New Mountain Capital.
“These execs have influence in the market by standing up and talking about inefficiency and cost,” he explained.
Behind the scenes, it’s clear that Bezos, Dimon and Buffett are rallying the industry to do something to improve the $3.5 trillion health care industry. At J.P. Morgan’s annual health care conference this January, Dimon hosted a private dinner for top executives from pharmaceutical companies and advocated for lower drug prices. He told the room, “we are not happy with health-care costs and want to help.”
That kind of talk sounds the alarm to others who feel similarly, suggests Holt.
“There are folks out there cheering them on, which in and of itself can drive influence,” he said.