BRK/JPM/AMZN healthcare tie up

[Cigarbutt]

Not sure where to link this, but Warren did an event sponsored by newly acquired MLMIC, New York's largest medical malpractice insurer - where he had a public conversation with Dr. James Reed, CEO of St. Peter's Health Partners.  (if you've reached your 'free limit' for reading the article, open the link in private or incognito mode to read)

 

https://www.bizjournals.com/albany/news/2018/10/18/warren-buffett-health-care-st-peters-reed.html

Thank you for the link which I just reviewed.

Also led me to the following conversation:

https://www.mlmic.com/blog/physicians/warren-buffett-on-protecting-physicians

 

On the expectations about the joint venture (It feels like Columbus looking for a continent... and we don't really know where we're going...expect failures) I find that it's the good 'ole way to manage expectations. It feels the same when one reads the early partnership letters concerning investment return expectations...

 

Atul Gawande also shares this capacity to hide the drive behind humility. But it's there.

 

Also interesting because, during the interview, Mr. Buffett clearly said that the cash cushion at BH was still 20B. Something I had not heard for some time and expected to be higher as insurance operations have grown somewhat in the last few years.

[Gamecock-YT]

new yorker article by the new CEO

 

https://www.newyorker.com/magazine/2018/11/12/why-doctors-hate-their-computers

[John Hjorth]

Posted by dcollon a few days ago in the "Buffett/Berkshire - general news" topic :

 

Discussion about Health Care and Malpractice

 

https://www.valuewalk.com/2018/11/malpractice-insurance-warren-buffett/

[DooDiligence]

Posted by dcollon a few days ago in the "Buffett/Berkshire - general news" topic :

 

Discussion about Health Care and Malpractice

 

https://www.valuewalk.com/2018/11/malpractice-insurance-warren-buffett/

 

What a great resource to identify physicians that they do & DON'T want in the BRK/JPM/AZN system.

Are they only operating in NY?

 

Seems like insurance, in general, is a great business to own, for identifying risky businesses to avoid.

[Cigarbutt]

Posted by dcollon a few days ago in the "Buffett/Berkshire - general news" topic :

 

Discussion about Health Care and Malpractice

 

https://www.valuewalk.com/2018/11/malpractice-insurance-warren-buffett/

 

What a great resource to identify physicians that they do & DON'T want in the BRK/JPM/AZN system.

Are they only operating in NY?

 

Seems like insurance, in general, is a great business to own, for identifying risky businesses to avoid.

Even if the emphasis was on the positives and the synergies, the point you make is interesting because the stick component may be just as important as the carrot (in the UK, there is a car insurer named Carrot Insurance that rewards "good" drivers).

 

-comment on the presence in NY State

New York State appears to be the largest market for malpractice insurance in the US.

https://www.diederichhealthcare.com/the-standard/2018-medical-malpractice-payout-analysis/

MLMIC is AFAIK only writing business in the NY State and, in 2008, had 40% market share (in 2017, 26% and MedPro, another BRK sub, 10%). The MLMIC transaction is a classic Buffett one because the NY market has been challenged by new players, including some risk rentention groups, that have clearly shown less than ideal discipline. In this market, the typical delay for payout is about 7 years which may give an unusually long and apparent period of growth and profitability before hitting the wall (see Oceanus Insurance recent liquidating experience that happens with surplus depletion and the tide going out). When looking at the incredibly instructive cycle of reserve releases in this specific market, it seems that shit is about to hit the fan and, as usual, BRK businesses will be there to pick up the pieces and continue to build the masterpiece.

 

-comment on the opportunity to share knowledge with the venture

Healthcare liability insurers want to keep premiums low and the incentives behind that aim correlates well with an improved quality of care to cost ratio. They have built a huge database and tools that help to identify "deviant" outcomes. In the positive sense, they can identify groups or areas that have somehow put together a format of care giving superior results. They can also spot relative negative outcomes and are ideally placed to define strategies to improve results (constructive feedback, education but also other "unpleasant" measures).

 

Just in case you have time, here's an example of "cooperation" between the liability insurer and the clinical world:

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2725304/

 

Take-home message: companies like MLMIC can identify areas of unusual costs, can help define the costs and their causes and can help define a cost effective way to improve the quality to cost ratio. Sponges left inside a cavity is an extremely rare event (about 0,01%) but when it's you, it's a 100%. This study and others have shown that there are simple and cost-effective strategies (including a systematic method and a checklist) that can reduce the risk of "forgotten" items in human cavities. With this mindset, imagine the potential for people going to the emergency room with a heart attack or even for more mundane conditions as people going to primary care for eye styes.

[Cigarbutt]

The project is taking form with one more addition.

https://www.healthcareitnews.com/news/amazon-berkshire-jpmorgan-venture-hires-bcbs-it-exec-dana-safran-data-driven-position

https://aboutus.bluecrossma.com/affordability-quality/alternative-quality-contract-aqc

https://nam.edu/wp-content/uploads/2018/07/5.3-Safran.pdf

 

Her title could have been chief of incentives alignment and she could be seen as capitation with a smile.

Her task will be to try to tackle the price/value proposition.

[Jurgis]

https://qz.com/work/1481224/the-most-screwed-up-employee-perk-in-america-and-the-man-who-just-might-fix-it/ - Longish article about Gawande and BRK/JPM/AMZN healthcare effort (no details). Lots of links to other articles.

[Cigarbutt]

https://qz.com/work/1481224/the-most-screwed-up-employee-perk-in-america-and-the-man-who-just-might-fix-it/ - Longish article about Gawande and BRK/JPM/AMZN healthcare effort (no details). Lots of links to other articles.

That was an interesting summary. Thank you.

The reference to Francis Moore is quite revealing, a pioneer who, especially in early life, pushed for innovative reforms in a pro-active way, causing some painful transition issues along the way but he was a man of prodigious memory and energy, and never hesitated to overthrow dogma.

The trigger for Dr. Moore, which eventually led to memoirs titled A Miracle and a Privilege was, in 1942, when he had to deal with the arrival of 114 burn victims from the catastrophic Cocoanut Grove nightclub fire.

 

A reminder that "we" have gotten quite poor at handling tipping points.

But, even if forced to, we'll get there somehow.

[investmd]

https://qz.com/work/1481224/the-most-screwed-up-employee-perk-in-america-and-the-man-who-just-might-fix-it/ - Longish article about Gawande and BRK/JPM/AMZN healthcare effort (no details). Lots of links to other articles.

Thanks for the good article. The merging of a healthcare system for Amazon, BRK & JPM is a neat experiment in US healthcare models. Purpose clearly seems to be to see if healthcare quality can be improved, whilst simultaneously cutting cost and waste. Premise is that healthcare in US is inexplicably tied to employment and that universal healthcare (like Canada, UK and much of Europe) is not an option. Thus, it's up to employers to change it. This "experiment" has a great Principle Investigator in Gawande, a good population base of 1.5 million individuals and support/resources of  3 of the strongest companies in the US. I'm excited to see where this goes.

[DooDiligence]

https://www.wsj.com/articles/new-details-on-amazon-berkshire-hathaway-jpmorgan-health-venture-emerge-in-court-battle-11548899146

[Guest longinvestor]

https://www.wsj.com/articles/new-details-on-amazon-berkshire-hathaway-jpmorgan-health-venture-emerge-in-court-battle-11548899146

 

 

Must be very high $takes.

[John Hjorth]

Attached is the 2.1 note from NVO financials YE2018, released today, for perspective of diabetes and [less] obesity.

 

What does that tell you? [From an investment angle: Who may be on their way under the bus here?]

[DooDiligence]

Attached is the 2.1 note from NVO financials YE2018, released today, for perspective of diabetes and [less] obesity.

 

What does that tell you? [From an investment angle: Who may be on their way under the bus here?]

 

P B M s & other non-innovative supply chain participants.

 

I'm not worried about NVO

 

edit: I sold ABC - $625m settlement over illegal compounding. What else is management missing?

(Cash will go to ???)

[gfp]

https://www.havenhealthcare.com

[Dynamic]

https://www.havenhealthcare.com

 

And here's today's press release. Below are a couple of excerpts:

 

“We want to change the way people experience health care so that it is simpler, better, and lower cost,” explained Haven CEO Atul Gawande, MD, MPH. “We’ll start small, learn from the experience of patients, and continue to expand to meet their needs.”

 

“The good news is the best results are not the most complicated or expensive. The right care in the right place is often more effective and less costly than what we get today,” explained Dr. Gawande.

 

As Haven scales up its operations, the organization is focused on recruiting a range of talented individuals, including software engineers, data scientists, and clinicians to join its team. The company is headquartered in Boston and also has an office in New York.

[DooDiligence]

https://www.havenhealthcare.com

 

And here's today's press release. Below are a couple of excerpts:

 

“We want to change the way people experience health care so that it is simpler, better, and lower cost,” explained Haven CEO Atul Gawande, MD, MPH. “We’ll start small, learn from the experience of patients, and continue to expand to meet their needs.”

 

“The good news is the best results are not the most complicated or expensive. The right care in the right place is often more effective and less costly than what we get today,” explained Dr. Gawande.

 

As Haven scales up its operations, the organization is focused on recruiting a range of talented individuals, including software engineers, data scientists, and clinicians to join its team. The company is headquartered in Boston and also has an office in New York.

 

I really like this in principle & we obviously need some altruism in healthcare (hell, everywhere for that matter.)

 

Just to play devils advocate though, how will patients feel about this in our "have it your way" society?

 

I can almost hear the neo-con spin.

 

"They're won't let your Grandma have her meds & are trying to kill her"

 

----

 

I do believe that initiatives like this could force players / payers to act on a value based framework.

 

How well it will be received initially (by many) seems obvious too.

 

CVS over the next 2 decades? I understand all the bearish arguments but don't see an existential threat to them.

[John Hjorth]

CNN Business [May 17^th 2019] : Haven, the Amazon-Berkshire-JPMorgan health care company, has already lost its No. 2 executive.

[Jurgis]

I wonder if this is going to close down without delivering much (or anything).

[John Hjorth]

 

I wonder if this is going to close down without delivering much (or anything).

 

Somehow, I understand your line of thinking, Jurgis,

 

But then again, I don't think so. A [bunch of] real enthusiast(s) & activist(s), having the task at hand as a real calling, backed by an enormous amount of patient capital is to me the only way forward - to create the changes needed. [i don't think the US political system will ever get this solved.]  -And yes, they are to me needed [based on what I've read about it here on CoBF].

[fareastwarriors]

Amazon, Berkshire Hathaway and J.P. Morgan’s joint venture to revamp health care loses its CEO

 

https://www.cnbc.com/2020/05/13/haven-ceo-atul-gawande-steps-down.html

[Jurgis]

I wonder if this is going to close down without delivering much (or anything).

 

As predicted: https://havenhealthcare.com/

 

Haven will end its independent operations at the end of February 2021.

[LC]

Thanks for the update.

 

What does it say when Berkshire, Amazon, and JPM cannot "disrupt" a certain industry?

 

[Jurgis]

Thanks for the update.

 

What does it say when Berkshire, Amazon, and JPM cannot "disrupt" a certain industry?

 

Not necessarily much. Joint ventures frequently don't work out. There's usually not a lot of support from parent companies. And the structure is not necessarily beneficial for getting the take up.

 

Edit: Also IMO Haven had a wide and not very clear mandate. One way to make JVs work is to have a narrow mandate and forcibly transfer the business to JV. E.g. if BRK/JPM/AMZN would have forcefully transferred the medical insurance/benefits of all their employees to Haven, then Haven would have had heft and a real mandate to minimize costs and to maximize benefits to work with.

[LearningMachine]

Looks like Mr. Buffett ended up realizing how strong the pricing power was of the drug companies, and decided to invest in them, instead of fighting with them :-)

 

However, it is hard to price the drug pipelines and predict which companies will be able to continue to get new income streams as old ones expire.  So, he decided to let the market price the pipelines for him.

 

However, since then, a risk has developed to the pricing power with Trump's executive order, which the drug companies will fight, but it will be hard for the house and senate to ignore. 

 

Still hard to predict the risk to pricing power here because you can follow the money and see lawmakers from both parties getting paid by pharma.  Legalized bribery!  However, those who are not getting paid might not ignore this when Trump's executive order is fought by big pharma.

[alpha]

According to the CNBC article it sounds like most of the recommendations from Haven were implemented individually by the 3 companies rather than cooperatively.  Strange that they weren't able to leverage the economics of scale by pooling the 3 companies purchasing power...