Health Care Is the Economy: A Perspective
The market was terrified when Warren Buffett, Jamie Dimon, and Jeff Bezos got together to disrupt health care 3 years ago with the launch of Haven—in response to that news, health care stocks1 comprising a significant chunk of the $4 trillion health economy in the United States shed billions in value overnight. CVS Health, Walmart, Cardinal Health, and Express Scripts were among those affected.
Few details2 about Haven emerged after the new venture was announced to the public in January 2018 (to be technically accurate, the Haven brand name did not appear until about a year later in March 2019; and before that, the business was initially referred to by the initials of its partners: ABC or ABJ). Haven kept its cards close to its chest, saying only that it was going to “explore a wide range of health care solutions, as well as pilot new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable.”
The fact that three companies have come together to say that they have had enough with the status quo is a big deal, argued Matthew Holt, a managing director who specializes in health at private equity firm New Mountain Capital, at the time. “These execs have influence in the market by simply standing up and talking about inefficiency and cost,” he explained in an interview2 with CNBC.
At JP Morgan’s annual health care conference in January 2018, Mr Dimon hosted a private dinner for about 25 top executives from pharmaceutical companies—the simple target—and advocated for lower drug prices. He told3 his dinner guests, “We are not happy with health care costs and want to help.”
The complex reality of the current chaos of collapse, including that of Haven, is that we all are going to have to reexamine some of our dearest shibboleths. The rules governing and constraining mindsets no longer work for multiple shifting paradigms. The unmet need is a new science of synthesis, a new conceptual frame to solve for market fragmentation.
“We learned a lot about the difficulty of changing around an industry that is 17% of the gross domestic product (GDP),” Warren Buffett said at the Berkshire Hathaway annual shareholder meeting earlier this month, where he discussed the failure of Haven. “We were fighting a tapeworm in the American economy, and the tapeworm won,” he added, using his favorite metaphor for health care.
But the metaphors we use are like a map. They can guide us or lead us astray. It is entirely possible we are stuck trying to solve the wrong problem.
“Warren Buffett is hardly alone among corporate executives in throwing up his hands at controlling health care costs. Even the biggest and most powerful companies in the country don’t really have the leverage to go up against the health care system,” Larry Levitt, executive vice president of health policy at the Kaiser Family Foundation, told Yahoo Finance.
If we learned anything in 2020, it should be that public health is not separate from economic health. Health care is the economy, a meta-market around which $142 trillion in global GDP is linked and flows.
It has system value that matters. This is why China is moving away from GDP4 as a measure of strategic success, instead introducing the concept of gross ecosystem product—the total value of final ecosystem goods and services supplied to human well-being—as a new standard. The organizing idea is not cost, but the production of health as a new narrative.
Or to put it another way, the transformational remit for today’s health market leaders is the ability to creatively explore and conceptualize a new context for outcomes, quickly assemble the intellectual viewpoint, and then stand-up the new infrastructure for outcomes or the nervous system to own the space. The only story that matters is the one in which a new system is designed to produce better health.
Outcomes from the new context, not inputs from niche impacts, becomes the axis for competition. Advantage derives from how common sources of information are pieced together and analyzed. You either know things others don’t or interpret what others do in a better way. The shift to make is from data crunching to context crunching.
We are failing to reshape the American way of health care because the storyline of cost and price is perpetuating feedback loops that have not changed in more than 50 years.
If the ambition is to disrupt the status quo, to transcend the current state and leap into a new orbit for action and imagination, we need different words to think different thoughts. Quoting Martin Amis, “We’re at war with the cliché, not just clichés of the pen, but clichés of the mind.
The unmet need is a modern strategy positioned with systems thinking. Which is to say “The Strategy That Will Fix Health Care” has little to do with fixing health care; it has more to do with new market narratives with outcomes as an end state vision. Cost is not the problem; the production of health is.
About the Author
John G Singer, executive director of Blue Spoon Consulting—a leader in strategy and innovation at a system level—advises business and government on large-scale system change. Blue Spoon was the first to apply systems thinking to solve complex market access and integration challenges in the pharmaceutical industry.
References:
- Court E. Amazon, Berkshire Hathaway and JPMorgan health initiative sends industry shares plummeting. Market Watch. January 31, 2018. Accessed July 26, 2021. https://www.marketwatch.com/story/amazon-berkshire-hathaway-and-jpmorgan-health-initiative-send-industry-shares-plummeting-2018-01-30
- Farr C. Everything we know about Haven, the Amazon joint venture to revamp health care. CNBC. March 13, 2019. Updated March 14, 2019. Accessed July 26, 2021. https://www.cnbc.com/2019/03/13/what-is-haven-amazon-jpmorgan-berkshire-revamp-health-care.html
- Farr C, LaVito A. JP Morgan’s Dimon hosted a private dinner for pharma executives, and a major topic was Amazon. CNBC. January 9, 2019. Accessed July 26, 2021. https://www.cnbc.com/2019/01/09/jp-morgan-ceo-jamie-dimon-talks-amazon-at-jpm-2019-private-dinner.htm
- China’s tech hub Shenzhen moves ahead with GDP alternative that measures value of ecosystem goods and services. China Macro Economy. March 24, 2021. Accessed July 26, 2021. https://www.scmp.com/economy/china-economy/article/3126757/chinas-tech-hub-shenzhen-moves-ahead-gdp-alternative-measures
