JPMorgan Chase's newly formed healthcare unit, Morgan Health, has a mission to revolutionize employer-sponsored healthcare, serving not only the investment bank's vast employee base but ultimately aiming to benefit the 150 million Americans who receive health insurance through their jobs. However, this is an ambitious goal for a small business unit called Morgan Health. The unit launched at the end of May, and there is much skepticism about efforts by large employers to disrupt the entrenched and complex healthcare industry.

Similar high-profile attempts in the past have publicly stumbled, run into entrenched interests, and failed due to a lack of clear goals.

Morgan Health is, in some ways, the spiritual successor to such attempts: Haven—the joint venture supported by Amazon, Berkshire Hathaway, and JPMorgan Chase itself. Haven was declared defunct earlier this year, announcing it would cease operations, despite having three years of operation, the deep pockets of its parent companies, and a vast population base, yielding almost no concrete results.

Haven's experience helped Morgan Health narrow its focus to primary care, digital health, and targeted population interventions, but "frankly, we've moved on from that experience," Morgan Health CEO Dan Mendelson told Healthcare Dive in an interview.

Based in Washington, D.C., Morgan Health is a different entity, and Mendelson—the former founder of health consultancy Avalere—insists the unit better understands the buy-in needed to disrupt the health benefits space.

The unit has three clear focus areas: accelerating healthcare system improvements through capital deployment, enhancing JPMorgan's employee health benefits through strategic initiatives, and promoting health equity.

In a conversation, Mendelson outlined his vision for Morgan Health and how the new business will avoid the pitfalls that led to Haven's failure, including a collaborate-don't-build mentality, a more streamlined structure, and a focused and disciplined plan to lower employer healthcare costs.

1. Morgan Health focuses on primary care first, but its vision is broader

Mendelson said Morgan Health has had a "fast and productive" journey in the four months since its inception. In addition to identifying strategic priorities and making its first major investment, the unit is expanding its team, bringing in two senior officials from the Centers for Medicare and Medicaid Services (CMS)—former Chief Strategy Officer Dawn Alley and former CMS Innovation Center State and Population Health Group Director Rivka Friedman—as well as "several" former Haven employees.

Currently, Morgan Health has 12 full-time employees and is approved for a total headcount that can expand to 30. "We want to be careful about bringing in the right people," but "the talent base is building nicely as we move forward," Mendelson said.

Overall, Morgan Health has $250 million available to invest in companies looking to improve employer-sponsored healthcare at the intersection of care delivery, insurance, prevention, and health. But the team first delved into advanced primary care, which combines capabilities like data analytics, home-based treatment, and virtual care, and employs team-based and value-based models. As part of this effort, Morgan Health made its first investment in August, injecting $50 million into primary care company Vera Whole Health.

Seattle-based Vera, also backed by private investment firm Clayton, Dubilier & Rice, offers a value-based primary care model with 26 clinics across 10 states. The partnership with Morgan Health will help it scale, while ultimately giving JPMorgan's approximately 285,000 employees and their dependents access to a fully risk-bearing primary care network.

Morgan Health plans to eventually extend its model to other employers. The unit plans to first focus on preventive care in maternal health, cardiovascular disease, and diabetes. "We will have a range of other targets at Morgan Health, but we are focusing on primary care first because it is so important," Mendelson said.

Primary care is a chronically underfunded area of U.S. care delivery, and it has been particularly hard hit by the COVID-19 pandemic. But advocates say that, on the bright side, the pandemic has highlighted the need for a comprehensive primary care system, potentially leading to broader buy-in from payers and patients, as well as more supportive policies in Washington.

Employers are also currently refocusing on primary care, hoping to lower costs while improving preventive care. According to Rock Health, in the first quarter of 2021, startups offering primary care received the second-highest funding among all digital health startups.

Morgan Health is also interested in care navigation, pharmaceutical distribution compliance, drug costs, and a range of areas that can improve clinical quality, such as musculoskeletal conditions and fertility. But "on the whole, we believe many other issues can be addressed through excellent coordinated care models," Mendelson said, citing the benefits of physical therapy before spinal disc surgery or the advantages of accountable care organizations ensuring patients receive regular cancer screenings. "If you can deploy this in a sensible way, you can really address many other issues downstream," he said.

2. Morgan Health's collaborate-don't-build strategy is attracting 'broad interest' from the industry

From the outset, Morgan Health has emphasized that it does not intend to create things from scratch but rather to partner with a wide range of healthcare organizations. But so far, the unit has only publicly stated that it is working with JPMorgan's health benefits team and the investment bank's health insurance carriers.

Mendelson said Morgan Health is looking for a "shared vision" in potential future partners and investments, including putting patients in control of their own health while achieving accountability for outcomes and costs. "We want to ensure we can work with these organizations over the long term. Since our launch, we have had conversations with a range of companies because the interest in working with us is very broad," Mendelson said.

The CEO said Morgan Health is receiving interest from a variety of organizations, including other payers, pharmaceutical companies, provider groups, data players, and startups. Mendelson—a former operating partner at healthcare and technology private equity firm Welsh, Carson, Anderson & Stowe—also noted that the unit is a minority investor and does not seek majority control in other companies.

Although Morgan Health ultimately aims to extend its products and findings to JPMorgan employees nationwide, Mendelson also emphasized the importance of engaging with local delivery systems. Data and local delivery systems are two areas where Morgan Health hopes to deepen partnerships further. "To achieve meaningful engagement, delivery systems need to be involved at the local level. So that is a major area of focus for us. Additionally, technology—we fundamentally believe in the power of data and data analytics to drive healthcare improvement, so these are also relationships we are actively seeking to develop," Mendelson said.

Morgan Health also believes its efforts can align with similar initiatives in Washington. According to the CEO, the unit is in conversations with the federal government to align on injecting more value into the U.S. healthcare system. "We see our efforts as very synergistic with the CMS Innovation Center's work," Mendelson said. "In the public sector, we are having conversations with different people in government about how our work can thematically amplify what they are trying to do, while we want to be a helpful partner to the government."

The government is also a key source of valuable data guiding Morgan Health's agenda. Specifically, much of the knowledge about risk-based capitation in primary care practice comes from Medicare, which Morgan Health frequently references, Mendelson said.

3. Leveraging insurer relationships as a backbone for testing new products, but open to other entities

One of Morgan Health's partners is CVS Health, the parent company of major insurer Aetna. Partnering with CVS on new initiatives could be a significant asset for Morgan Health, as the payer is currently testing new digital programs in primary care and, beyond insurance, has a broad footprint in pharmacy benefit management, pharmacies, and retail clinics.

"We have a good relationship with them... I imagine like most employers, we want to see innovation driven through our insurer relationships. This is very interesting. We have been in discussions with them about a range of innovations they plan to bring to market," Mendelson said.

However, according to the executive, there is a "certain level of urgency" on the Morgan Health side. Large organizations often move more slowly than smaller, more agile ones, and Morgan Health wants to push its population to take on more responsibility in a short time. "I think we are at a stage where we really need to drive more experimentation to see what works and what doesn't," Mendelson said.

For example, Morgan Health is working with Aetna and Cigna to use their networks as a backbone for its Vera product, but wants to incentivize value independently of payers. "We are building capabilities and tools and technology to support a holistic view of primary care that will exist independently of these two carriers," Mendelson said. "We work with them, but in this case, we don't rely on them to achieve the level of accountability we are demanding in that market."

The executive said Morgan Health sees great potential in partnering with venture arms of other healthcare companies that are also looking for future products to disrupt the field. "We would be happy to co-invest with companies like Cigna," Mendelson said. "We would also co-invest with some of the private equity firms involved in these markets," such as Sandbox Industries—a fund controlled by Blue Cross Blue Shield plans. Morgan Health is also in conversations with several hospital venture arms, Mendelson said. "These partnerships are great because they are closer to the clinical and care delivery side, while we are closer to the payer side. So by working together, we can drive more knowledge and accelerate company progress," he said.

4. Morgan's Vera pilot to launch in Columbus in January, then expand to other similar regions

Mendelson said Morgan plans to launch the Vera product in Columbus, Ohio, on January 1st and move to a full-risk model after one year. Columbus is the first market, and Morgan Health plans to expand from there to other regions—and potentially to new clients. "I would say this is immediately a model applicable to a range of employers, not just JPMorgan," Mendelson said.

Vera's value-based model revolves around whole-person care, including a technology platform, coaching that encourages healthier behaviors, and teams of primary care physicians and nurses supported by clinics. Primary care practices partnering with Morgan Health will be responsible for the total cost of care for their population through capitation.

According to a report jointly released by the unit in September with Duke University's Margolis Center for Health Policy, Morgan Health is betting that this capitation structure can support the more comprehensive capabilities of advanced primary care models while funding long-term investments in integrated care.

Morgan Health decided to pilot the model first in Columbus because it is a highly concentrated area for JPMorgan, with 38,000 employees and their dependents. Additionally, the employer has a high-quality provider partner in Central Ohio Primary Care—a large physician-owned primary care group that treats about a quarter of JPMorgan employees in the region—which will serve as the primary provider of advanced primary care services.

Morgan Health is currently evaluating all its markets to determine where the Vera model should expand next. "We are thinking about this a lot right now," Mendelson said. "We will go into markets where we have a high concentration of employees, have top-tier providers that can serve as a backbone for the primary care strategy, and where we believe the model is viable."

5. Relying on data to drive health equity

The final branch of Morgan Health's mission is improving health equity. The unit plans to view all its initiatives through this lens, as a healthcare purchaser, as part of a company committed to racial equity, and by engaging with data to ensure more insights into these issues enter the market.

"We fundamentally believe that taking an approach—analyzing our population, identifying any gaps that exist, and then setting up financial incentives for our payers and providers to close those gaps—is very important," Mendelson said.

For example, in the case of Vera, Morgan Health's agreement with the team is that by 2023, financial incentives will be established to drive equity among its population. Mendelson emphasized that providing these incentives to providers and self-insured employers is key to closing health gaps among different populations. "We are just beginning to look at the data. We have work to do to characterize the level of gaps we see, or even whether gaps exist in our population," the executive noted. "But setting up economic incentives for the healthcare we purchase is the first aspect of the strategy."

Morgan Health is also trying to connect its health equity efforts with parallel efforts underway within JPMorgan. In October, the investment bank committed $30 billion to achieve racial equity in the U.S. CEO Jamie Dimon said the company aims to break down systems that perpetuate racism and economic inequality, particularly for Black, Hispanic, and Latino populations. Part of that effort involves partnering with nonprofit organizations in the field, which is also what Morgan Health is pursuing, Mendelson said.

But collecting and engaging with data is a critical first step, experts point out, as it is necessary to address health equity in a targeted way. Disparities in healthcare access and outcomes are a long-standing problem in U.S. healthcare, but they grew in public awareness during the COVID-19 pandemic, which disproportionately impacted underserved communities in the U.S.

Mendelson said Morgan Health will remain open to any findings of potential health inequities among its members. "One thing we are very committed to is being open about what we see and find, and transparently communicating our experiences," he said. "That is what you can expect to see from us."