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The Amazon-Berkshire-JPMorgan Chase Healthcare Venture Disbands

By Brian Orelli, PhD - Jan 4, 2021 at 3:14PM

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Improving healthcare is hard, even for top-notch companies.

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.

Pills and capsules randomly placed on $100 bills.

Image source: Getty Images.

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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$3,427.37 (1.11%) $37.58
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$426,200.00 (1.80%) $7,524.00
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$281.38 (1.42%) $3.95
JPMorgan Chase & Co. Stock Quote
JPMorgan Chase & Co.
JPM
$160.16 (1.18%) $1.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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