Bloomberg Businessweek May 25, 2020 pp11-13 Business “Can Anybody Beat Health Costs?” “The coalition started by Jeff Bezos, Warren Buffett, and Jamie Dimon hasn’t tamed employer expenses”
Haven Healthcare formed in January 2018 by Amazon (Jeff Bezos), Berkshire Hathaway (Warren Buffett) and JP Morgan Chase (Jamie Dimon) and with famed medical icon Atul Gawande, M.D. was expected to find a path towards lowering healthcare costs but so far, after two years, nothing of significance has been reported. Employer-paid healthcare costs will rise about 5% in 2020 and is currently averaging $13,087 annually per employee with $3,031 of that paid by employees themselves for a grand total of $3.5 trillion. Of the $3.5 trillion experts estimate that 90% is spent caring for patients with chronic physical and mental health problems.
The outcome for Haven, so far, is not that surprising as similar collaborations have failed to quickly find significant cost savings. In common, if there are trends or likely incremental ways to drive down costs they are; 1) trying to incentivized providers to render more effective and efficient care, 2) direct patients to groups and centers that are successful at lowering costs without compromising medical quality 3) worksite health clinics and 4) learning the healthcare delivery and insurance system and taking over those operations thereby eliminating the middleman.
1) Kaiser, which is vertically integrated and likely has “as good as it gets” control of costs once noted margins that were only 10% better than the general market. Conclusion, healthcare delivery is complex and expensive-facilities, labor, materials, and legal fees.
2) Administration costs account for as much as a third of all expenses. Medical billing is especially cumbersome and inefficient in the private payor environment.
3) Medicare needs to be allowed to negotiate costs for prescription drugs. America has the highest per capital costs at $1,000, followed by Switzerland $800, Canada and Germany $700, France $550, UK $500, Australia $400 and Sweden $250 (Approximate costs-Source Financial Times).