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A Problem So Big that Bezos, Buffett, and Dimon Backed Out

Incomprehensible Fragmentation Killed Haven

What does it mean when Amazon, Berkshire Hathaway and JP Morgan confront a problem that’s not only too big to tackle, but it may also be too big to fully understand?

In the last 24 hours, business journalists have been having a field day reporting on the demise of Haven — the collaborative healthcare venture created by three of the nation’s biggest names in supply-chain management and finance. They’re asking why it failed and offering plausible reasons.

CNN reports the founding companies continued their own projects separately, “obviating the need for a joint venture, to begin with,” which The Wall Street Journal reports, “led to different priorities.” Barron’s surmises the venture failed because of the “challenge inherent in forging a collaboration between three separate mega-corporations, each used to having its own way.”

They’re missing the point.

The question isn’t what Haven did wrong. The question is bigger: what does it mean when Amazon, Berkshire Hathaway, and JP Morgan confront a problem that’s not only too big to tackle, but it may also be too big to fully understand?

Haven faced bigger problems than focus, logistics, and management. The death of Haven is further proof that the US health system is becoming more and more fragmented and disjointed. The venture’s shutdown may have been dogged by a lack of collaborative mindset, unwieldy structure, or even lack of uniting strategic priorities, but the challenge Haven sought to address is so persistent, so daunting that perhaps the three leaders at the top were never able to fully define it or understand how it should be addressed. In the end, their stated desire to reduce healthcare costs — the common refrain among elected officials — was emblematic of focusing on symptoms and not the underlying disease.

Our health system is pasted together. It was created slapdash, in a non-unified way over several decades. It’s so fragmented now that — as I have seen many times myself — corporate leaders don’t understand how companies in other parts of the sector contribute to care, operate or make money.

Leading economist and authority on integrated delivery systems Dr. Alain C. Enthoven wrote more than a decade ago that the “healthcare system is fragmented, with a misalignment of incentives, or lack of coordination, that spawns inefficient allocation of resources. Fragmentation adversely impacts quality, cost, and outcomes.” Not much has changed since he penned these words; fragmentation rears its head at every level of care.

You don’t have to work too hard to imagine a patient at a pharmacy, prescription in hand, being told that their physician’s medication recommendation isn’t covered by their health insurance formulary since most of us have been there. It’s also not hard to imagine being dependent on a medication for a life-threatening condition being told unexpectedly that, due to a non-medical switch decision, you’re being shifted to another therapy, which may or may not work. It happens every day. Fragmentation carries costs we can’t afford. It results in diminished patient care. It can result in death.

Think of the countless players lined up, each with their own operating model: payers, pharmacy benefit managers, product distributors, manufacturers, developers, specialty medicine providers, clinics, hospitals, doctors, pharmacies, mail-order pharmacies. Then, add Medicare and various state Medicaid agencies. Combined, each of these players add more complexity to a non-integrated system that generates more and more layers — each with their own economic model and generating an invoice to be paid by some part of the system. And at the bottom of this system, supporting it, hopefully benefitting from it, but just as often held captive by it, is the patient consumer. Do they even understand how their private or public insurance programs operate, how their care is paid for, and what their benefits can be?

Organized chaos within the health system isn’t part of any master plan. It isn’t even organized. It’s the result of inwardly focused economic structures centering around four decision-making health sectors: payers, policymakers, product innovators, and providers. But the fifth sector, the one in which everyone is focused on “helping” — patients — doesn’t have a reserved seat at the decision-making table. While patients undoubtedly have the most skin in the life-preserving game, their interests and voice are often left outside the conference room.

What we’re left with is a system that provides service in spite of itself and which makes no sense. The opposite of an understandable, replicable business model, it’s a gordian-knot-like tangle that neither Amazon, Berkshire-Hathaway nor JP Morgan had the inexhaustible resources, patience or the need to untangle.

Haven is dead. It didn’t die because it lacked leaders with strategic vision or acumen. Likely, it died for the same reasons that people too often die tragically; we look to treat the symptoms of an illness and fail to determine the underlying cause of the disease itself. Haven died because the US health system is overly complex and fragmented, and Bezos, Buffett and Dimon and their combined team and resources could not envision how to find their way out of the health-system labyrinth, let alone fix it.

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