JPMorgan Chase's new healthcare venture unit has a mission to revolutionize employer-sponsored healthcare - not just for the investment bank's massive workforce, but ultimately for the 150 million Americans who get insurance through their jobs. However, for a small business unit called Morgan Health, this is an ambitious goal. The unit launched at the end of May, amid widespread skepticism about large employers trying to shake up the entrenched and complex healthcare industry.

Similar high-profile attempts in the past have publicly faltered, often colliding with entrenched interests and failing due to a lack of precise vision.

Morgan Health is, in some ways, the "spiritual successor" to another effort: Haven, a joint venture backed by Amazon, Berkshire Hathaway, and JPMorgan Chase itself. Haven collapsed earlier this year, announcing it would cease operations, despite the deep pockets of its parent companies, a large population base, and three years of operation, 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 said in an interview with Healthcare Dive.

Mendelson insists that Washington, D.C.-based Morgan Health is "a different beast," with a better understanding of the "buy-in" needed to disrupt the healthcare benefits space. He is the founder of healthcare consulting firm Avalere.

The unit has three clear areas of focus: accelerating healthcare system improvements through capital deployment, enhancing JPMorgan 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 downfall, including a "partner, don't build" mindset, a more streamlined structure, and a focused, disciplined plan to lower employer healthcare costs.

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

Mendelson said that in the four months since its inception, Morgan Health has had a "fast and productive" journey.

In addition to clarifying its strategic focus and completing its first major investment, the unit is also expanding its team, bringing in two senior figures 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, Mendelson said.

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

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

But the team's first deep dive is into advanced primary care, which combines capabilities like data analytics, home-based care, and virtual care into team-based, 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 equity 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 and ultimately give 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. healthcare delivery and has been particularly hard hit by the COVID-19 pandemic. But advocates say the silver lining is that the pandemic has highlighted the need for a comprehensive primary care system and may lead to broader acceptance by payers and patients, as well as more supportive policies in Washington.

Employers are also refocusing on primary care now, hoping to improve preventive care while reducing costs. According to Rock Health, in the first quarter of 2021, startups offering primary care raised the second-highest amount of funding among all digital health startups.

Morgan Health is also interested in care navigation, pharmaceutical distribution compliance, drug costs, and areas like musculoskeletal conditions and fertility that can improve clinical quality.

But "broadly speaking, we believe many other issues can be addressed through excellent coordinated care models," Mendelson said, citing the advantage of physical therapy before disc herniation surgery, or the benefit of accountable care organizations (ACOs) ensuring patients receive regular cancer screenings.

"If you can deploy this in a sensible way, you can really address many other issues down the road," he said.

2. Morgan Health's "partner, 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 seeks 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 underwriters.

Mendelson said Morgan Health looks for "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 variety of companies because the interest in working with us is very broad," Mendelson said.

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

Although Morgan Health aims to eventually roll out its products and findings to JPMorgan employees nationwide, Mendelson also emphasized the importance of engaging with local health systems. Along with data, these are two areas where Morgan Health seeks to deepen partnerships.

"To achieve meaningful engagement, health systems need to be involved at the local level. So that's a major area of focus for us. Additionally, on the technology side - we firmly believe in the power of data and analytics to drive healthcare improvement, so those are also relationships we are actively developing," Mendelson said.

Morgan Health also believes its efforts can align with similar initiatives in Washington. According to the CEO, the unit is in talks with the federal government to align on injecting more value into the U.S. healthcare system.

"We think our efforts are very synergistic with those of the CMS Innovation Center (CMMI)," 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, and at the same time, we want to be a useful partner to the government."

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

3. Leveraging insurer relationships as a pillar 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. In primary care, CVS is testing new digitally enabled programs and, beyond insurance, has a broad footprint in pharmacy benefit management, pharmacies, and retail clinics. Partnering with CVS on new initiatives could be a significant asset for Morgan Health.

"We have a good relationship with them... I think like most employers, we want to see innovation driven through our insurer relationships. That's 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 impatience" on the Morgan Health side. Large organizations often move more slowly than smaller, more agile ones, and Morgan Health wants to drive more accountability across its population in a short time.

"I think we are at a stage where we really need and must drive more experimentation to see what works and what doesn't," Mendelson said.

For example, Morgan Health is working with Aetna and Cigna, using their networks as a backbone for Vera's products, but wants to incentivize value creation independently of the payers.

"We are building capabilities, tools, and technology to support a comprehensive primary care view that will exist independently of these two underwriters," Mendelson said. "We work with them, but in this case, we don't rely on them to achieve the level of accountability we demand in that market."

The executive said Morgan Health sees significant potential in partnering with venture arms of other healthcare companies that are also looking for future products to disrupt the space.

"We would be happy to co-invest with companies like Cigna," Mendelson said. "We will also co-invest with some private equity firms involved in these markets," such as Sandbox Industries, a fund controlled by Blue Cross Blue Shield plans.

Mendelson said Morgan Health is also in talks with venture arms of several hospitals.

"These partnerships are great because they are closer to the clinical and provider 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 will 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 1, transitioning 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 immediately becomes 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 to encourage healthier behaviors, and teams of primary care physicians and nurses supported by clinics.

Primary care clinics partnering with Morgan Health will be accountable for the total cost of care for their covered population through capitation.

According to a report the unit released in September with Duke University's Margolis Center for Health Policy, Morgan Health is banking on this capitated structure to support the more comprehensive capabilities of advanced primary care models while funding long-term investments in comprehensive 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 dependents.

Additionally, the employer has a high-quality provider partner locally - Central Ohio Primary Care, a large physician-owned primary care group that treats about a quarter of JPMorgan's employees in the region and 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 high employee concentration, have top-tier providers that can serve as the backbone of a 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, both as a healthcare purchaser and as a unit of a company committed to racial equality, and by leveraging data to ensure more insights on these issues are available in the market.

"We fundamentally believe that taking an approach of 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.

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 the populations it covers.

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 describe the extent of the gaps we see, or even whether gaps exist in our population," the executive noted. "But setting up financial incentives for the care we purchase is the primary aspect of this strategy."

Morgan Health is also trying to place its health equity initiatives in the context of parallel efforts underway within JPMorgan. In October, the investment bank committed $30 billion to achieve racial equity in the United States.

CEO Jamie Dimon has said the company aims to dismantle systems that fuel racism and economic inequality, particularly for Black, Hispanic, and Latino populations.

Mendelson said part of that effort involves working with nonprofit organizations in the space, which is something Morgan Health is advancing.

But collecting and leveraging data is a critical first step, which experts say is essential for addressing health equity in a targeted way.

Disparities in healthcare access and outcomes are a long-standing problem in the U.S. healthcare system, but they became more prominent in public consciousness during the COVID-19 pandemic, as the virus disproportionately impacted underserved communities across the country.

Mendelson said Morgan Health will remain open to any findings about 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's something you can expect from us."