Smart people from three very successful companies -- Amazon ( AMZN 1.11% ), Berkshire Hathaway ( BRK.A 1.80% ) ( BRK.B 1.42% ), and JPMorgan Chase ( JPM 1.18% ) -- apparently couldn't figure out how to make the U.S. healthcare system more efficient. The companies' joint venture, Haven, is disbanding, according to a report by CNBC.
When they came together three years ago, Warren Buffett of Berkshire Hathaway, Jeff Bezos of Amazon, and Jamie Dimon of JPMorgan Chase were initially looking to reduce the healthcare costs for their employees. If Haven was successful, the undertone was that the entity could offer services that ring out inefficiencies in the system to other companies that eventually wanted to sign up. The plan was for Haven to not turn a profit, allowing most of the financial benefits to be passed along.
A spokeswoman for Haven told CNBC that the companies would still work informally together on ways to improve healthcare efficiencies based on what Haven had learned. Many of Haven's 57 employees are apparently being offered jobs at the three companies.
We don't know exactly why Haven was shuttered, but it seems likely the group couldn't find enough efficiencies to justify the cost of the organization. While it was an ambitious idea for the healthcare outsiders, falling short of the goal isn't particularly surprising considering health insurers have been working for years to lower costs.
For example, to negotiate lower costs, payers need to be able to walk away if they can't get a low enough price. Excluding high-priced products and services works fine when there are multiple competing drugs, devices, or providers that insurers can pit against each other. But when healthcare companies have a monopoly and won't budge on price, payers unwilling to exclude options for their employees have no choice but to pay the higher cost.