A Tale of Two Employer-Based Healthcare Models: RosenCare vs. Haven

A Tale of Two Employer-Based Healthcare Models: RosenCare vs. Haven

Back in 2016, I became aware of RosenCare at a conference held in Orlando, Florida that focused on employer-sponsored on-site or near-site clinics. Rosen Hotels & Resorts gave a presentation about its healthcare delivery model, and I was very much impressed by its effectiveness and efficiency, wondering why no formal peer-reviewed studies were published to examine its accomplishment (still none as I write this article).

Six years later, RosenCare is still going strong, with its annual healthcare cost per covered life at about $5,500, nearly 30% lower than the national average of $7,700. Yet, their members have only a co-pay of $5 for primary care visits and $20 for specialist visits, zero deductibles, zero co-insurance, no co-pays for 90% of medications, and a maximum out-of-pocket cost of $750, among others.

Something incredible must be behind the huge success of the RosenCare model.

In stark contrast, in 2018, three mega corporations––Amazon, Berkshire Hathaway, and JP Morgan––put together a joint venture to disrupt the healthcare industry. It was given a nice name: Haven Healthcare (hereafter Haven). On the day they announced the venture, the stocks of major health insurance lost billions of dollars in their market value. There was some fear in the air, apparently because of the deep pockets and technological superiority of these companies.

Three years later, Haven put out a statement, saying that it had “explored a wide range of health care solutions, as well as piloted new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable”, and its operation would cease in a month.

Something must have gone terribly wrong with Haven.

What is Haven Healthcare?

When Haven was formed as a no-profit, it had a lofty mission: to “create simpler, high-quality healthcare at lower costs” for the industry. It was tasked to experiment with new ways to deliver healthcare to the combined 1.2 million employees of the three parent companies, lower cost of care, and improve patient experience.

Based on potential savings, it makes sense for the three corporations to launch this initiative. Assuming 50% of their employees have children under 18 years who need family coverage and using the 2021 employer health insurance premium of $22k for family coverage and $7.7k for single coverage, the total premium would amount to $17.8 billion per year, equivalent to a sizable company. The three companies would save $1.8 billion if their healthcare costs decreased by 10%.

Six months after Haven was announced, Atul Gawande, a famed surgeon, author, and professor at Harvard Medical School was hired as the CEO, although he maintained his position at Harvard. Other industry veterans also joined Haven.

Haven operated mostly in a stealth mode. The expectation was that Haven would be able to leverage Amazon’s technology (e.g., machine learning, artificial intelligence, and Alexa’s healthcare functionality) to advance Telehealth. Amazon Pharmacy (PillPack) and the onsite clinics already established by Amazon and JP Morgan would enable Haven to become a care provider.

In 2019, Haven established a new health insurance plan to test wellness incentives, free preventive care, zero deductibles, and the availability of cost-sharing information before receiving care. Haven decided to partner with Cigna and CVS/Aetna to pilot test these initiatives among Amazon and JP Morgan employees.

There was secrecy around the venture, and not much information was available in the public domain prior to its dissolution.

What is RosenCare?

In 1991, Harris Rosen, the founder of Orlando, Flordia-based Rosen Hotels & Resorts, was furious when he learned from his health insurer that the premium would increase despite his company’s healthcare costs decreasing by 20%. He decided to take charge of his employees’ healthcare, became self-insured, and converted his accounting office building into a primary care clinic. He purchased second-hand medical equipment, hired a physician, a nurse assistant, and an administrative assistant, and negotiated rates with specialists and hospitals. In the following year, his company’s healthcare costs decreased further by 50%.

In the last 30 years, RosenCare has been able to spend 30% to 50% less on healthcare than the national average and according to the company, has saved $450 million (note: no formal studies have been published to verify the amount of savings). Its employees have minimal cost-sharing, same-day appointments, free transportation to and from the clinic (not via hotel vans but Cadillac Escalades), and paid time off for all doctor visits.

You might think, well, maybe health outcomes are compromised because of cost-cutting. On the contrary, the quality of care is far above the national or regional average. For example, despite over 50% of the pregnancies among its employees being high-risk, its premature delivery rate is 7% compared to 10.5% in the Orlando area, according to Mr. Rosen. The medication adherence rate is 96% among diabetic patients and 92% among those with cardiovascular conditions.

Why has RosenCare succeeded while Haven Healthcare failed?

Being different

There are two pre-conditions for a new business model to succeed: it has to be different and must generate economic benefits.

In traditional terms, RosenCare is a health maintenance organization (HMO). The premiums are collected to cover the care needed, i.e., an insurance function, and members have to seek care within its network of providers.

But RosenCare is more than a traditional HMO for two reasons. First, it owns the primary care facility; second, the beneficiaries are also the employees of the owner. These two characteristics are critical because they affect how financial incentives work and how the management behaves.

A typical HMO is incentivized to save cost and to the extent market competition (or regulatory requirements) dictates, offer quality care. For Rosen Hotels & Resorts, it is different. The care is offered to assure employee wellbeing and facilitate recruiting and retaining talents. RosenCare has incentives to control cost (it is one of the biggest expense items that affect the bottom line) and promote employee health to ensure a productive workforce.

In comparison, few “disruptive” innovations were proposed by Haven, although the expectations were high. The features of their pilot test, including wellness incentives, zero deductibles, and information on cost-sharing prior to receiving care, had all been tried, tested, and adopted (except for zero deductibles) by many private insurers. There was not much new.

In addition, Haven partnered with Cigna and CVS/Aetna to pilot-test the initiative. It is not that these insurers are bad, but the way Haven conducted business did not seem to be different from business as usual. It is possible that they did consider an HMO or even something similar to RosenCare––we would probably never know.

Being efficient

Healthcare is not cheap. Rosen Hotels & Resorts was motivated to reduce healthcare costs in order to survive in the hospitality industry. It bought second-hand medical equipment to reduce expenses. It created a tiny network of providers so that it can gain an upper hand in rate negotiations.

Haven was established as a non-profit. Some observers thought that was a mistake: “Non-profit structures are not fast and disruptive. Ironically, it’s the for-profit entity that has ended up cracking the industry and innovating, which is Amazon Care.”

Compared to business as usual, no big savings should be expected from Haven because, again, they were not doing things different from the existing delivery system. We would never know how much Haven could save because the organization has been dissolved.

Treating people well

There is something that makes RosenCare different from a typical HMO. On the one hand, at Rosen Hotels & Resorts, no employees are allowed to smoke both at and off work, and the policy is enforced using random drug testing. On the other hand, they offer services and products based on employees’ needs. For instance, they are one of the early adopters of medical marijuana and offer vitamins and nutritional supplements that are generally not covered by typical health plans. To avoid emergency room visits, they sign contracts with specialists who would provide “urgent care” to employees, and a physician or nurse would visit an employee’s home if needed. They even pay for medical travel for employees and their families to obtain quality care such as trips to Boston Children’s Hospital, Mayo Clinic, and other centers of excellence.

All these have demonstrated that Mr. Rosen treats employees as his own people, who have and will continue to propel his business’ growth. Maybe this is something behind the success of RosenCare that we won’t be able to find in our healthcare system.

We don’t have information about how Haven treated its employees or those of its parent companies. Given the fast staff turnover at Haven, something was going on.

Other considerations

Haven had an unwieldy task at hand because of the diversity of the employees of its parent companies who are scattered throughout the country. It must be hard to prioritize and get their hands on a specific problem.

There were also internal conflicts that Haven had to grapple with. Amazon had already set up its own Amazon Care, Amazon Pharmacy, and on-site clinics at locations with a large number of employees. Berkshire Hathaway has so many different companies, each with its own benefit structure and management team.

Some argued that Haven didn’t have the right CEO. Dr. Gawande, though respected by many in the industry, didn’t have any experience running a business. Also, it seems he was working part-time at Haven.

Rosen Hotels & Resorts didn’t have all these problems when they started creating the model in 1991. Of course, their team was new to healthcare and had to start from scratch, but they were motivated and determined to solve the problem.


In summary, RosenCare has achieved the triple aim of healthcare that most delivery models have not: better care, better health, and lower cost. Despite their (deceptive) simplicity, being different, being efficient, and treating people well are the drivers behind the huge success of RosenCare. Needless to say, these drivers are not easy to come by but urgently needed in our healthcare system.

That being said, many questions remain unanswered. If the RosenCare model is effective, why has it not been widely adopted?

Is it because it cannot be replicated by other employers? Is it because employers are concerned about the model’s effects on talent recruitment and retention? For the workforce with a higher income than that of hotel associates, would they prefer a wider choice of providers and be willing to pay more? Are there alternative models that could potentially generate similar savings? What will be the implications for the private healthcare market?

These questions will be explored in our future articles.

Stay tuned.