Inside Haven's downfall: How Jeff Bezos, Jamie Dimon, and Warren Buffett set their healthcare venture up for failure

  • Haven, Amazon's health venture with JPMorgan and Berkshire Hathaway, is disbanding. 
  • Details about Haven have been few and far between ever since it was announced in 2018. It started without a clear mandate from the founding companies and never landed on one.
  • Haven's first big bet on primary care was shut down when the coronavirus pandemic started. Dozens of employees left the venture last spring and summer, including Dr. Atul Gawande, the CEO.
  • The venture's failure is coming at a shock to an industry that thought it could be transformational.
  • Business Insider tracked out Haven's three-year struggle to find a voice in healthcare before disbanding.
  • For more stories like this, sign up here for Business Insider's daily healthcare newsletter.

When Haven formed in January 2018, the healthcare industry flinched. 

Announced with a cryptic press release, its founders Amazon, JPMorgan, and Berkshire Hathaway said they were starting an independent company, free from profit-making incentives, that would focus on improving care and lowering cost for their employees. 

The ideas behind Haven were born out of the personal frustrations of the three CEOs, Jeff Bezos, Jamie Dimon, and Warren Buffett, three people familiar with the partnership told The New York Times in 2018. 

They met over the course of several months, discussing the difficulties of covering the medical costs of employees, which has been rising steadily for years. They went ahead with the new venture without a clear solution, in part, so that they could start recruiting for it, the report said.

"Our group does not come to this problem with answers. But we also do not accept it as inevitable," Buffett said in the announcement. "Rather, we share the belief that putting our collective resources behind the country's best talent can, in time, check the rise in health costs while concurrently enhancing patient satisfaction and outcomes."

Also in statements, Bezos said the venture was clear-eyed about the level of difficulty in achieving its goals, but that success was worth it. The fruits of its labor could eventually benefit all Americans, not just the employees of the founding companies, Dimon added.

The lack of specifics was allowed, for a while. 

Employers insure roughly half of all Americans and spend $880 billion on healthcare each year. Haven's three founding companies, in particular, could throw their weight around, or so people thought. Their leverage, as of 2019, was more than 1.2 million employees and $4 billion in annual healthcare spend.

The day Haven was announced, billions of dollars in value were erased from healthcare companies based solely on the notion that three of the world's biggest and most powerful companies and CEOs were coming for the lunch of industry gatekeepers like health plans, drug companies, or middlemen like pharmacy benefits managers.

But in retrospect, Haven's fundamental flaw was laid bare from the start.

The new company was in the "early planning stages," the release said, with no name, headquarters, CEO, long-term management team, or mission. Apart from bringing down the "costs" of healthcare, Haven didn't have a particular aspect of the $3.8 trillion industry it wanted to focus on. 

Read more: 3 reasons why Haven, Amazon's joint healthcare venture with JPMorgan and Berkshire Hathaway, was doomed from the start

In short, details of the new venture were "sketchy," as CNBC reported at the time. And over the course of the next three years, the mission never really crystallized. 

This account of the venture's ultimate downfall is based on Business Insider's own reporting, as well as reporting from The Information, Stat News, The New York Times, CNBC, and other outlets.

Employer-funded healthcare is a notoriously difficult problem to tackle, as Nikhil Krishnan, a former CB Insights analyst and current writer, chronicled in a popular graphic titled "The tech person entering healthcare." 

On their road to enlightenment, founders eventually run into the difficulty of getting huge employers on board, who pay for most healthcare costs in the US but are risk-averse and data-driven, he told Business Insider. 

Unlike most upstarts, Haven had brand recognition and, at least in theory, a large employee population to experiment on — but couldn't overcome a poor organizational structure, he said. 

"My general gist is everyone should be applauded for trying to take big swings in healthcare," Krishnan said. Combining three large companies with vastly different employee groups across the country set the venture up to be difficult, he said. So did Amazon's own internal work in healthcare. 

"It was just going to be complicated from the outset," he added.

Haven began without a clear focus and never found one

Haven found its leader Dr. Atul Gawande in June 2018. 

The practicing surgeon, former advisor to President Bill Clinton, Harvard professor, author, and New Yorker staff writer was known as a visionary who could explain tough healthcare problems in plain terms. 

He champions the adoption of simple "checklists" in medicine that, surprisingly, cut down on surgical errors by 50%, according to Gawande's preliminary data. 

But he had no experience managing a business, and never fully left his various other roles to focus exclusively on Haven, as Stat News' Erin Brodwin and Casey Ross reported.

"Atul is a visionary. What he's not is the CEO of an operating company that can do something different in health care," Kimberly MacPherson, executive director of health management at the University of California at Berkeley Haas School of Business, told Stat. 

Read more: Meet the surgeon, professor, and writer tapped to run the Amazon-JPMorgan-Berkshire Hathaway health venture

For a while after accepting his post, Gawande didn't know what Haven was about any more than Bezos, Buffett, and Dimon did. Five months after he joined, he told audience members at The New Yorker Festival that he suspected the venture might focus on the lower-middle class, who can't afford commercial insurance but don't qualify for federal assistance. 

The joint health venture didn't have a name until nine months after he joined, in March 2019. 

Passionate about primary care, Gawande led Haven toward its first pilot, codenamed "Starfield," which aimed to connect employees with dedicated primary care teams, as The Information's Paris Martineau reported in July.

The pilot, launched in November 2019, flopped just five months later. 

Haven's only big project flopped, and it lost too many leaders

Starfield was built around JPMorgan's Ohio employees and a local provider, Central Ohio Primary Care, per The Information.

The pilot program had a few aspects working against it. For one, Haven's culture of secrecy didn't help with getting the word out to eligible employees that the new app was up and running in Columbus, Martineau reported. It also lacked support from Amazon, Business Insider found, which was building a similar program internally.

To make matters more difficult, the founding companies' operations and employees were spread out all over the country. 

Brian Marcotte, the longtime President and CEO of the National Business Group on Health, told OMERS Ventures on Monday that pilots that are tied to a specific slice of the country, and the local care in that place. That makes the pilots difficult if not impossible to scale. 

"To me, changing health care will start with some kind of virtual, scalable solution that will integrate with local health care but won't be defined by local health care," Marcotte said. 

In April 2020, Gawande told employees that Haven was shutting down Starfield, which Gawande attributed to the business pressures associated with the coronavirus pandemic, The Information's Martineau reported. The company then laid off roughly 20% of its employees. Gawande left his post at CEO just a few weeks later, joining the board as chairman. 

By that point Haven was gasping for air. The venture lost 21 staff members between May and December 2020, dropping to just 59 employees, according to Stat and LinkedIn data. 

The heads of product management, recruiting, provider analytics, and product design all left, Stat reported, as well as Serkan Kutan, the chief technology officer, and Yvette Pasqua, the vice president of engineering.

In December, Haven confirmed to Business Insider that it was no longer focused on primary care. While ongoing pilots and at least one data project with the founding companies were still underway, the upstart never landed on another guiding strategy that worked for all its bosses.

Strained relationships with founders led to confusion

While Gawande was the right leader for Haven, he lacked the necessary support from the human resources departments at the founding companies, one person close to Haven, who spoke on condition of anonymity told Business Insider.

Haven got started by the three CEOs airing out their frustrations, not the benefits managers of the companies who would be making the day-to-day decisions about what moved forward. Amazon, for instance, did not enroll employees in Haven's primary care pilot.

"Once you put bodies and a budget together collectively, you'd better be sure that each of the parties in a joint venture are agreed as to how they win as partners," the person said. "And there was no agreement, and there's still no agreement."

In a statement, Haven's Thurston said that the three companies would continue to work together loosely in pursuit of their individual ideas, depending on what makes sense for their employee populations. 

Amazon's bet on controlling healthcare spend internally and beyond the company is Amazon Care, a venture similar to Haven's pilot that provides employees with home visits, remote care, and prescription deliveries. As Business Insider discovered, it's plotting a national expansion and wants to work for other employers. 

Beth Galetti, a senior vice president of HR at Amazon, sat on Haven's board. She's been involved in Care's incubation, a person close to Amazon said. The Care division got started through a combination of the HR department and Grand Challenge, Amazon's secretive lab. 

"No one at Amazon was happy about Haven because it was a shot across the bow from Bezos that the internal team wasn't doing its job to control costs," a person familiar with the matter previously told Business Insider. "Hence, everything Haven brought them was dead on arrival."

Read more: Amazon wants to provide medical care to workers at major companies. Here's an inside look at Amazon Care.

JPMorgan will continue its pilots with Aetna and Cigna, a person with direct knowledge of the matter told Business Insider. First reported by Bloomberg, the bank started rolling out the Haven program to workers in Ohio and Arizona in 2019. The plans eliminated deductibles and offered perks for when workers hit certain wellness goals. 

Uniform benefits, meanwhile, are not really Berkshire Hathaway's thing. The conglomerate includes about 60 companies from Geico to Fruit of Loom, with more than 360,000 employees worldwide. 

"Warren Buffett has been extraordinarily successful running a holding company by investing in businesses where management maintains decision-making authority," the person close to Haven said. "He doesn't buy companies to turn them around. So it's not in his nature to do anything more than offer the option."

There's still room to disrupt employer-funded healthcare

The purpose behind Haven is even more important now than it was three years ago, Elizabeth Mitchell, the CEO of the Pacific Business Group on Health, told Business Insider.

The US healthcare system is continuously consolidating, leading to higher prices, and the coronavirus pandemic is putting adding financial pressure on companies to cut costs, she said. 

"We were really encouraged by the C-suite leadership we saw from Haven," Mitchell said. 

PBGH for its part is incubating a stealth venture based on something that member companies Walmart, McKesson, and Lowes brought to the coalition to scale about eight years ago, Business Insider has learned.

It will seek out the best doctors for employers, with focuses on specialty and primary care, Mitchell said.

Employers will be able to participate when it suits them, and PBGH will do the dirty work of understanding contracts and finding the best care, making it scalable, she said.

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