5 ms·

whatever happened to the old Amazon- Berkshire Hathaway deal that was going to disrupt the pharma retail industry? did it fall apart? edit: ah looks like yes h

by swyx 4y ago

whatever happened to the old Amazon- Berkshire Hathaway deal that was going to disrupt the pharma retail industry? did it fall apart? edit: ah looks like yes https://www.cnbc.com/amp/2021/01/04/haven-the-amazon-berkshire-jpmorgan-venture-to-disrupt-healthcare-is-disbanding-after-3-years.html https://www.cnbc.com/amp/2021/01/04/haven-the-amazon-berkshi...

duxup 4y ago
> One key issue facing Haven was that while the firm came up with ideas, each of the three founding companies executed their own projects separately with their own employees, obviating the need for the joint venture to begin with, according to the people, who declined to be identified speaking about the matter Man, tanked their own venture.
- grouchomarx 4y ago
  imagine the egos at each of these firms are so wild that nothing would ever get done collaboratively
  - duxup 4y ago
    I was thinking along the lines of whatever benefits team or HR had no interest in the actual venture and just hijacked it for their own purpose and thus sank the venture.
s1artibartfast 4y ago
Yeah, it is really a shame. It would be great to see some new competition in the pharmacy benefit managers and pharmacy sector
- lotsofpulp 4y ago
  Managed care organizations (health insurance companies) earn 2% to 5% profit margins. Not sure what was in it for JPMorgan, Amazon, and Berkshire, who already earn better profit margins. If they want to go vertical the whole way, then retail pharmacies are also not a money maker (see Walgreens’ figures, and CVS pre Caremark and Aetna merger). Then there is getting into the provider side, such as employing doctors and owning and operating hospitals. This side has more margin, but is very liability heavy and very risky to get into. And Kaiser Permanente already does the entire healthcare vertical, but even they are not able to offer measurably lower premiums. The biggest margins are in pharmaceuticals, but that requires billions of dollars in investment and many years to develop, all for what? At the end, you might as well sell your own medicines at a high margin. I feel like a lot of the costs in medicine have to do with liability, and without tort reform, there is not much any business can do about costs.
  - sidlls 4y ago
    Their notion was to reduce costs, not (necessarily) to earn more profit. They wanted to reduce medical costs, and therefore their insurance costs, basically. I worked in a health tech company when this news broke years ago and was skeptical then. Health care is a hard industry with tons of perverse incentives and opposing interests. Any solution for our health care costs will include government regulations and laws. The private sector cannot, on its own, do it.
    - lotsofpulp 4y ago
      The existing profit margins are a rough measure of how much you can expect them to reduce costs, absent any technological advancements that lead to more efficiency. If there’s multiple huge companies operating with similar, small profit margins over the course of 10+ years, it probably means they have optimized as much as possible within the constraints of the existing system. Hence, I would conclude that any further optimizations would have to come from changing the constraints.
  - cavisne 4y ago
    There is a large administrative load for all healthcare which seems to serve no one except the hospitals (to avoid paying any local taxes their non-profit status does not get them out of), and the insurers (who justify their margins by negotiating through the bureaucracy). The three companies all self fund their employees insurance, so the goal was to cut out some of this bloat by providing services directly to employees. The Amazon Care implementation was amazing, it's unclear why it failed. I would speculate its because costs are dominated by services they didn't provide (emergency rooms etc).
    - lotsofpulp 4y ago
      Sure, but if it was as easy as cutting out the bloat, then wouldn’t Kaiser Permanente (KP) be the healthcare insurer/provider of choice where it exists? Yet other plans are able to compete on the west coast.
      - 4y ago
cvccvroomvroom 4y ago
No idea. NowRX does meds regional delivery, ExpressScripts was one of the first by mail, and other US pharmacy chains are sending meds by mail too. Amazon has PillPack, where they combine meds by time of day.

by swyx 4y ago

duxup 4y ago

> One key issue facing Haven was that while the firm came up with ideas, each of the three founding companies executed their own projects separately with their own employees, obviating the need for the joint venture to begin with, according to the people, who declined to be identified speaking about the matter Man, tanked their own venture.

grouchomarx 4y ago
imagine the egos at each of these firms are so wild that nothing would ever get done collaboratively
- duxup 4y ago
  I was thinking along the lines of whatever benefits team or HR had no interest in the actual venture and just hijacked it for their own purpose and thus sank the venture.

s1artibartfast 4y ago

Yeah, it is really a shame. It would be great to see some new competition in the pharmacy benefit managers and pharmacy sector

lotsofpulp 4y ago
Managed care organizations (health insurance companies) earn 2% to 5% profit margins. Not sure what was in it for JPMorgan, Amazon, and Berkshire, who already earn better profit margins. If they want to go vertical the whole way, then retail pharmacies are also not a money maker (see Walgreens’ figures, and CVS pre Caremark and Aetna merger). Then there is getting into the provider side, such as employing doctors and owning and operating hospitals. This side has more margin, but is very liability heavy and very risky to get into. And Kaiser Permanente already does the entire healthcare vertical, but even they are not able to offer measurably lower premiums. The biggest margins are in pharmaceuticals, but that requires billions of dollars in investment and many years to develop, all for what? At the end, you might as well sell your own medicines at a high margin. I feel like a lot of the costs in medicine have to do with liability, and without tort reform, there is not much any business can do about costs.
- sidlls 4y ago
  Their notion was to reduce costs, not (necessarily) to earn more profit. They wanted to reduce medical costs, and therefore their insurance costs, basically. I worked in a health tech company when this news broke years ago and was skeptical then. Health care is a hard industry with tons of perverse incentives and opposing interests. Any solution for our health care costs will include government regulations and laws. The private sector cannot, on its own, do it.
  - lotsofpulp 4y ago
    The existing profit margins are a rough measure of how much you can expect them to reduce costs, absent any technological advancements that lead to more efficiency. If there’s multiple huge companies operating with similar, small profit margins over the course of 10+ years, it probably means they have optimized as much as possible within the constraints of the existing system. Hence, I would conclude that any further optimizations would have to come from changing the constraints.
- cavisne 4y ago
  There is a large administrative load for all healthcare which seems to serve no one except the hospitals (to avoid paying any local taxes their non-profit status does not get them out of), and the insurers (who justify their margins by negotiating through the bureaucracy). The three companies all self fund their employees insurance, so the goal was to cut out some of this bloat by providing services directly to employees. The Amazon Care implementation was amazing, it's unclear why it failed. I would speculate its because costs are dominated by services they didn't provide (emergency rooms etc).
  - lotsofpulp 4y ago
    Sure, but if it was as easy as cutting out the bloat, then wouldn’t Kaiser Permanente (KP) be the healthcare insurer/provider of choice where it exists? Yet other plans are able to compete on the west coast.
    - 4y ago

cvccvroomvroom 4y ago

No idea. NowRX does meds regional delivery, ExpressScripts was one of the first by mail, and other US pharmacy chains are sending meds by mail too. Amazon has PillPack, where they combine meds by time of day.