In January 2018, research was launched to find a framework that could help three gigantic companies – Amazon, Berkshire Hathaway and J.P. Morgan – to rethink one of their main cost drivers: healthcare.
Haven had come at a good time and was trying to solve very real problems, especially since employers bought health care for almost half of the Americans. The CEO, visionary physician and writer Dr. Atul Gawande, would carry the weight of three billionaire business leaders – Jeff Bezos of Amazon, Warren Buffett of Berkshire and Jamie Dimon of J.P. Morgan behind him.
But after just over two years of work, Gawande announced this week that he would leave Haven to focus on other areas, including the Covid-19 crisis, after two years of work. The company is now looking for a new CEO, while its chief operating officer – Mitch Hetses, a long-time CVS executive – takes over day-to-day operations.
Despite his departure, many health industry insiders agree that there is still a path for Haven to follow. The key will be for management teams to rally behind this person in an important way, and for this new recruit to bring benefits in line with their plans. Do it right, and there is still a big advantage.
“Innovative employers, in partnership with the best providers, are most likely to fix healthcare in the United States,” said Jonathan Slotkin, medical director of Contigo Health, an employer health-focused company that has was formed within Premier. “It will really take a partnership between the providers and the employers who pay for it,” he said.
Here are the three areas that experts have told CNBC are still likely to be targeted by Haven, or any other employer-focused group trying to change health care:
- Forging direct agreements with hospitals
- Reduce pharmacy costs
- Better access to primary care
Offers with hospitals
Elizabeth Mitchell heads the Pacific Business Group on Health, which works with large employers to test new ways to reduce healthcare costs, and has believed in Haven’s potential from the start. In his view, it is “difficult but not impossible” to shake up employer-sponsored health care without compromising quality.
She recognizes that it’s a big challenge to change employee health benefits in the midst of a pandemic, but still sees a viable path for Haven.
First, she believes Haven should hire a new executive who has experience with benefits and who can help employers understand how the system really works. Bringing a newcomer into space would probably push the business even further.
Mitchell would expect Haven to deepen the direct contracts. Large employers like Boeing, General Motors and Walmart have been signing agreements for years, often called “centers of excellence” programs, with a provider organization. In this way, they can ensure that their employees are seen by better providers, and they are much less likely to pay for unnecessary care.
Slotkin, along with Contigo Health, has been heavily involved in an initiative like this in his other role, treating patients as a neurosurgeon at Geisinger Health. When an employee is diagnosed as needing spinal surgery, Walmart, at their expense, will send employees to Geisinger for a second opinion from a doctor who has no financial incentive to recommend procedures. In fact, many do not.
Of the society Centers of Excellence Program, which forces its employees to use an organized list of hospitals for certain surgical procedures, has been in place for about seven years. (It was optional until 2018.)
These types of programs tend to work best when the leaders of these companies are fully engaged, according to experts.
“To avoid payers, you need a business imperative and you need the support of the CEO,” said Gillian Printon, national accounts manager at Centivo, a company that helps employers manage healthcare costs. . The reason is that some employees may resist a so-called “closer network,” preferring instead to see a health care provider to which they are loyal.
“For some people, this may seem paternalistic or limit choices,” said Dr. Sachin Jain, assistant professor at Stanford Medicine and former health insurance executive.
Printon said there is another challenge: for these direct contracting programs to work, the employer often needs to have a large concentration of workers in a specific geographic area. For Haven, this could mean hiring other employers in his consortium who have more than one overlap with the current distribution of J.P. Morgan, Amazon and Berkshire Hathaway.
“Ultimately, these are difficult compromises to make in a system of interdependencies,” said Jain.
Other insiders that Haven will likely attempt to approach are pharmacy and primary care, say these insiders.
According to Jain, it’s not as simple as it sounds. He believes Haven will not make much progress in these areas without hiring experts in these areas who can navigate the system and advocate for regulatory changes.
“You are going to need a mix of suits and hoodies,” he said. “To change society, you need people who understand them both, but with enough elimination to be critical.”
The pharmacy is particularly complex. Very few people in the world really have a gauge on how the system fits together, and many of them are on the payroll of a space company with its own program. In the United States, the government does not negotiate drug costs. So it all falls on a complex network of for-profit businesses, including health plans.
But pharmacy costs for employers are astronomical, accounting for about 20 to 25 percent of their overall health care spending, so it would be impossible to ignore a group with Haven goals. For this reason, it is not entirely surprising that the current COO comes from the world of pharmaceutical benefits.
Another crucial area in improving access to preventive and primary care – Mitchell says we have to do it, “or we will be overwhelmed by monopolistic healthcare systems driving up prices.” In his view, primary care offers a way to avoid downstream costs by catching health problems before they become serious.
Having a relationship with a family doctor, whether online via telemedicine or in person, can also be essential in helping employees live healthier lives. And it can help reduce hospital admission rates, which are a huge cost factor for employers.
In Mitchell’s opinion, there is a great time now. Many employers are struggling during the pandemic and are looking for ways to reduce their overhead costs
“These cost pressures could force change,” she said. “For the right person at the helm, who understands health operations and knows what they are dealing with, there is a great opportunity here.”