The mission of JPMorgan's new healthcare venture is to innovate employer-sponsored healthcare, not just for the investment bank's massive employee base but eventually for all 150 million Americans receiving coverage through their job. But it's a lofty goal for the small business unit, called Morgan Health, launched late May, and there are many skeptics of efforts from major employers looking to disrupt the deep-rooted and complex healthcare industry.

Similar high-profile efforts in the past have very publicly crashed and burned, bumping up against entrenched interests and a lack of a targeted vision.

Morgan Health is a bit of a spiritual successor to one such effort: Haven, a joint venture backed by giants Amazon, Berkshire Hathaway and JPMorgan itself. Haven flopped earlier this year, announcing it was suspending operations with very little concrete to show despite a three-year tenure and the deep pockets and massive populations of its parent companies.

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

And Washington, D.C.-based Morgan Health is a different beast with better knowledge of the buy-in needed to disrupt the health benefits space, Mendelson, ex-founder of health advisory firm Avalere, maintains.

The unit has three distinct focus areas: accelerating health system improvements through capital allocation, 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 contributed to Haven's demise, including a partner-not-build mentality, a more simplified structure and a focused, disciplined plan for lowering employer healthcare costs.

1. Morgan Health is focusing on primary care first, but the scope of its vision is larger

   Morgan Health has had a "rapid and productive" journey in the four months since it's been launched, Mendelson said.

   Along with outlining its strategic priorities and making its first major investment, the division has been building out its team with two senior personnel out of CMS — former Chief Strategy Officer Dawn Alley and former CMS innovation center state and population health group director Rivka Friedman — and "a couple" of ex-Haven employees, Mendelson said.

   Currently, Morgan Health has 12 full-time employees, and space to grow with a total headcount of 30 approved for the unit.

   "We want to be prudent in bringing on the right people" but "the talent base is also building out nicely as we move forward," Mendelson said.

   Overall, Morgan Health has $250 million to invest in companies looking to improve employer-sponsored healthcare at the intersection of care delivery, insurance, prevention and wellness.

   But the team is first diving into advanced primary care, which combines capabilities like data analytics, home-based treatment and virtual care in a team- and value-based model. As part of this drive, Morgan Health made its first investment in August, funneling $50 million into primary care company Vera Whole Health.

   Seattle-based Vera, which is also backed by private investment firm Clayton, Dubilier & Rice, offers a value-based primary care model with 26 clinics in 10 states. The partnership with Morgan Health will help it to scale, while eventually granting JPMorgan's some 285,000 employees and dependents access to a wholly at-risk primary care network.

   Morgan Health plans to eventually branch its model out to other employers. The unit plans to focus first on preventative care in maternal health, cardiovascular disease and diabetes.

   "We will have a range of other targets at Morgan Health, but we're focusing on [primary care] first because it's very important," Mendelson said.

   Primary care is a chronically underfunded sector of care delivery in the U.S. that has been particularly hard-hit by the COVID-19. But, in a bright spot, the pandemic has highlighted the need for a comprehensive primary care system and could result in greater buy-in from payers and patients alike, and additional policies from Washington propping up the sector, advocates say.

   Employers as well are currently giving primary care renewed attention as they look to reduce costs while improving preventative care. In the first quarter of 2021, startups offering primary care brought in the second-highest funding of all digital health startups, according to Rock Health.

   Morgan Health is also interested in the areas of care navigation, pharmaceutical distribution compliance, the cost of drugs and a range of areas where clinical quality can be improved, such as musculoskeletal disorders, fertility and the like.

   But "holistically, we believe a lot of those other things can be addressed through an outstanding coordinated care model," Mendelson said, calling out the advantages of physical therapy before a herniated disk surgery, or an accountable care organization ensuring a patient receives regular cancer screenings. 

   "If you can field that in a way that makes sense, you really address a lot of those other issues down the line," he said.

2. Morgan Health's partner-not-build strategy is attracting 'wide interest' in the sector

   From the jump, Morgan Health has stressed it's not looking to create things from scratch, but instead to partner with a wide range of healthcare organizations. But so far, the unit has only shared publicly that its 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 the desire to put the patient in control of their own health while enabling accountability for outcomes and costs.

   "We want to make sure that we can work with these organizations over the long term. And we've had conversations with a whole range of companies since the beginning of the launch, because there's a very wide level of interest in partnering with us," Mendelson said.

   The CEO said Morgan Health is fielding interest from a range of organizations, including other payers, pharma 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 the unit is a minority interest and not looking to take majority control positions in other companies.

   Though Morgan Health aims to eventually scale its products and findings to JPMorgan employees nationwide, Mendelson also stressed the importance of engaging with the local delivery system. That, along with data, are two areas where Morgan Health is looking to flesh out partnerships further.

   "In order to have meaningful engagement, the delivery system needs to be engaged locally. And so that's a major area of focus for us. And then I'd say that technology — we believe fundamentally in the power of data and analytics to drive healthcare improvement, and so those are also relationships that we're actively looking to develop," Mendelson said.

   Morgan Health also believes its efforts can jibe with similar endeavors out of Washington. According to the CEO, the unit is in conversations with the federal government in a bid to sing off the same sheet of music when it comes to injecting more value into the U.S. healthcare system.

   "We see our efforts as very synergistic with those particularly of [the CMS innovation center, " Mendelson said. "On the public sector, we are engaged in conversations with various folks in the government about how our work can amplify thematically what they're trying to do as well as, we want to be a helpful partner to the government."

   The government is also a key source of the data so valuable to guiding Morgan Health's agenda as it moves forward. Specifically, a lot of the knowledge that primary care practices have about risk capitation comes from Medicare, and that's something Morgan Health references frequently, Mendelson said.

3. Using insurer relationships as a backbone to test new products, but open to other entities

   One of Morgan Health's partners is CVS Health, the behemoth parent company of major insurer Aetna. Linking with CVS on new initiatives could be a major asset to Morgan Health, as the payer is currently testing new digitally enabled plans in the primary care space and, beyond insurance, also has a broad footprint in the pharmaceutical benefit management, pharmacy and retail clinic sectors.

   "We have great relationships with them ... I think like most employers, we would love to see innovation being driven through our insurer relationships. It's very interesting. We've been in conversations with them about a range of innovations that they plan to bring to the market," Mendelson said.

   However, there's a "degree of impatience" from Morgan Health's side, according to the executive. Larger organizations often move more slowly than their smaller and more nimble counterparts, and Morgan Health is looking to drive more accountability into its populations within a quick time frame.

   "I think we're at a point where we really want to and need to drive more experimentation where we can 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 separate from the payers.

   "We are in the process of building out capacity and tools and technologies that will support a holistic view of primary care that will live independently of those two carriers," Mendelson said. "We're collaborating with them, but we're not in that instance relying on them to achieve the level of accountability that we are demanding in that market."

   The executive said Morgan Health sees a lot of potential in engaging with the venture arms of other healthcare companies that are also looking for future products to shake up the space.

   "We would love to co-invest along with, you know, Cigna and the like," Mendelson said. "We would also co-invest with some of the private equity firms that are engaged in these markets," such as Sandbox Industries, a fund controlled by the Blues plans.

   Morgan Health is also in conversations with a number of hospital venture arms, Mendelson said.

   "Those partnerships are great because they're closer to the clinical, the healthcare delivery side, and we are closer to the payer side. And so working together we can drive even more knowledge and acceleration of the progress of the company," he said.

4. Morgan's Vera pilot will be rolled out in Columbus in January, before scaling to other like regions

   Morgan plans to launch the Vera product in Columbus, Ohio, on Jan. 1 and move to full risk a year later, Mendelson said. Columbus is the first market, and Morgan Health plans to scale from there to other regions — and potentially new clients.

   "I would say that this is immediately a model that is applicable to a range of employers, not just JPMC," Mendelson said.

   Vera's value-based model revolves around whole-person care, including a technology platform, coaching to encourage healthier behaviors and a team of primary care physicians and nurses backed by clinics.

   The primary care practices partnering with Morgan Health will be accountable for their population's total cost of care through capitated payments.

   Morgan Health is banking on that per-person payment structure supporting the more comprehensive capabilities of the advanced primary care model while funding more long-term investments in comprehensive care, according to a report from the unit released in September in tandem with the Duke Margolis Center for Health Policy.

   Morgan Health decided to trial the model in Columbus first, as it's a highly concentrated region for J.P. Morgan, with 38,000 employees and dependents.

   Additionally, the employer has a high-quality provider partner in Central Ohio Primary Care, a large physician-owned primary care group that treats roughly a quarter of JPMorgan's employees in that area, which will serve as the primary provider of the advanced primary care services.

   Morgan Health is currently evaluating all of its markets to figure out where Vera's model should be scaled to next.

   "We're doing a lot of thinking about that right now," Mendelson said. "We will go to markets where we have a high concentration of employees, where we have class-leading providers who can serve as a backbone for a primary care strategy and where we believe this model can work."

5. Banking on data to drive health equity

   The last prong of Morgan Health's mission is to improve health equity. The unit plans to look at all its initiatives through that lens, tackling it as a healthcare purchaser, as a unit of a company committed to racial equity, and through engaging data to make sure there's more insight coming to market on these issues.

   "We believe fundamentally that taking an approach where we analyze our population, identify any gaps that exist, and then put in place financial incentives for our payers and providers to close those gaps is very important," Mendelson said.

   When it comes to Vera, for example, Morgan Health's agreement with that team is, come 2023, there will be financial incentives in place to drive parity across their populations.

   Delivering those incentives for providers and self-funding employers alike is key to closing health gaps across diverse populations, Mendelson stressed.

   "We're just beginning to look at the data. We have work to do to characterize the level of disparities that we see and even if there are disparities in our populations," the executive noted. "But putting in place economic incentives for the healthcare that we buy is the first aspect of the strategy."

   Morgan Health is also trying to contextualize its health equity bids within parallel efforts happening at JPMorgan now. In October, the investment bank made a $30 billion commitment to accomplishing racial equity in the U.S.

   CEO Jamie Dimon has said the company aims to break down the systems that have propagated racism and economic inequality, especially for Black, Hispanic and Latino people.

   Part of that bid involves partnering with nonprofits in the space, something Morgan Health is also pursuing, Mendelson said.

   But it's a key first step to collect and engage with data, something experts note is integral to addressing health equity in a targeted manner.

   Disparities in medical access and outcomes are a perennial problem in American healthcare, but have grown in the public consciousness during the coronavirus pandemic, which hit underserved communities in the U.S. disproportionately hard.

   Mendelson said Morgan Health would be open with any discoveries about potential health inequities in its members.

   "One of the things that we are very committed to is being very open about what we see and what we find and messaging publicly about what our experience has been," he said. "That's something you can expect to see from us."