Why the Amazon/JP Morgan/Berkshire Hathaway healthcare venture failed

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Jun 10, 2021

In 2018, we published a blog post about Haven Healthcare, the Amazon/JP Morgan/Berkshire Hathaway joint venture that sought to tackle ballooning US healthcare costs while improving outcomes. We wrote that the project held a lot of potential to positively change healthcare, for three main reasons: 

  • As self-insured employers, the companies were well incentivized to keep employees healthy, rather than just pay for care when they are sick
  • All three companies brought a unique range of resources and capabilities to the table such as Amazon’s digital platform experience and JP Morgan’s financial expertise
  • Berkshire Hathaway’s multitude of holdings nationwide could help the venture scale beyond treating its own employees

Unfortunately, Haven’s momentum fizzled out. Following a number of C-suite departures, including their CEO Atul Gawande, Haven closed its doors less than three years after its founding. What caused one of the most promising healthcare moves of the century to take such a sharp southward turn?

1. It appears that Haven neglected to achieve a cohesive strategy across the three companies

There is no denying that Amazon, JP Morgan, and Berkshire Hathaway are giants when it comes to resources—namely cash, technology and manpower—but resources aren’t everything. To be effective, Haven’s sponsor companies also needed to establish a unified strategy and operating model, as well as patterns of interaction, coordination, communication, and decision making to support that strategy. Unfortunately, the three companies didn’t succeed in executing a unified strategy for their employees.

Haven was supposed to create a combined plan under one name, and use its collective power to influence healthcare through several channels—particularly, directly negotiating with hospitals and pharmaceutical companies, creating broader telehealth access, and expanding primary care availability. It was through this collective power that experts felt that Haven had the power to truly transform healthcare. Instead, the three companies separately developed and implemented their own healthcare strategies, effectively defeating the purpose of the joint venture.

2. Haven diminished its bargaining power 

Haven’s initial goal was to improve healthcare for employees of the three companies involved. However, it always intended to share its insights with the entire healthcare system and scale beyond its employees

As we noted in our previous blog, this seemed possible given Berkshire Hathaway’s multitude of holdings nationwide, however Haven failed to gain traction because it was unable to secure sufficient bargaining power in individual states.

Healthcare is one of the largest industries in the US. The top five healthcare insurance companies in the US make up 44% of the insurance market. That large of a presence comes with significant negotiating power with healthcare providers and pharmacies to set the costs of care for beneficiaries. Because Haven effectively operated as three distinct entities, it diminished its bargaining power. For a newcomer, negotiating prices on behalf of three different sets of employees, especially when those employees are spread throughout the country, is a massive undertaking—even for three of the biggest companies in America. Despite its size nationwide, Haven ultimately didn’t have enough scale in individual states to achieve its ambitions.

3. Haven worked within the existing system, rather than working to create a new one 

When an innovator seeks to make significant change in its given market, they can’t just follow the same path as their predecessors. So long as they’re employing the same value network (conducting the same activities and using the same partners) their solution will be relatively the same, with existing cost structures, processes, and priorities supporting the status quo. For transformation to happen, innovators need to create an entirely new system that works with—not against—the changes they seek to make. Haven didn’t do this. 

Haven wanted to focus on keeping employees healthy and making healthcare more accessible. While the venture independently may have made some strides towards achieving its goals (such as a JP Morgan-specific pilot offering health plans to 30,000 employees), they replicated  what’s already been tried by other insurers: in this case, offering financial incentives for participating in wellness activities. It’s worth noting that wellness programs often don’t yield their desired outcomes (read Ryan Marling’s perspective on how they tend to  benefit patients who already have wellness as a top priority, rather than those with the highest need).  

Rather than replicating broken business models and hoping for improved results, Haven may have found better success exploring alternative healthcare models, such as the integrated payer-provider models adopted by Kaiser Permanente and Intermountain Healthcare. By trying to work within the current healthcare system (which still greatly prioritizes treatment over prevention), Haven limited what it was capable of accomplishing. 

Haven had a lot of potential to make waves in healthcare; so much so that even with its closure experts speculate whether or not it’ll have a lasting impact on how employers treat healthcare. But it also suffered a series of tragic missteps. If Haven’s founders were intentional and united from the start, then maybe Haven would’ve lasted long enough to see its goals come to fruition. 

Jessica is a research associate at the Clayton Christensen Institute for Disruptive Innovation, where she focuses on business model innovation in healthcare, including new approaches to population health management and person-centered care delivery.