Dan Mendelson had some reservations before signing on to lead JPMorgan's new health venture.
The last, Haven, a joint effort between JPMorgan, Amazon, and Berkshire Hathaway, shut down earlier this year about three years after it was conceived in 2018. It aimed to lower the cost of healthcare in the US, but its leader Dr. Atul Gawande struggled to carve out a strategy that the three very different companies could agree on.
Just three months after Haven disbanded, JPMorgan launched a new internal initiative called Morgan Health focused specifically on JPMorgan's employee population. Before taking the leap, Mendelson, a former consultant of 20 years, worked part-time with the unit for several months to gauge the firm's commitment to improving healthcare and iron out its game plan, he told Insider.
The new health venture decided on three elements in those months that gave him confidence:
- First, Morgan Health set up a $250 million investment fund to put money behind startups and partnerships, giving the bank a means to invest in new ways to provide care that could benefit its employees.
- It organized a small committee to oversee those investments, giving Morgan Health a straightforward way to have its ideas come to fruition. It's staffed by Mendelson; Peter Scher, JPMorgan's vice chairman; Robin Leopold, who leads human resources; and Ana Capella, head of strategic investments.
- The venture's governance structure is simplified. Whereas Gawande essentially had three groups of bosses across the founding companies, Mendelson reports to Scher, who's also a member of JPMorgan's operating committee.
"Haven was an organization that was trying to bridge the interests of three very disparate organizations, and we don't have that problem," Mendelson said.
Morgan Health wants to improve its workers' health and lower their costs
Like its predecessor Haven, Morgan Health wants to improve the quality and cost of employer-based healthcare. About 157 million Americans get health coverage through their jobs. JPMorgan provides health coverage to 285,000 employees and their families, and Mendelson said the company spends $1.6 billion on healthcare each year.
It's a lofty goal for the small business unit, which Mendelson said will have about 30 employees by the end of 2022.
The venture will judge its success on whether it can drive better health outcomes and healthy equity while tamping down on increases in healthcare costs, which eat into the paychecks of American workers, he said, adding that it'd be unrealistic to think the venture could reduce the total cost of care.
Morgan Health's approach is to move fast by partnering with existing healthcare providers and health insurers to meet its goals rather than building new solutions from scratch.
"Our goal is to find great operators and work with them so that they're engaged and helping us to accomplish our objectives at the same time we're helping them," Mendelson said.
In August, Morgan Health wrote its first check, betting $50 million on Vera Whole Health, which operates primary-care clinics and is moving toward getting paid set amounts to take care of groups of patients. Traditionally, doctors have been paid based on how many patients they can get in the door or services they can provide.
Morgan Health is launching a program with Vera in Columbus, Ohio, where JPMorgan has more than 19,000 workers and their families. Starting in January, those employees can opt to get their care from Vera. The partnership could expand to other markets around the country, per JPMorgan.
Morgan Health's partnership with Kaiser Permanente aims to find new ways to deliver care
Morgan Health has also partnered with Kaiser Permanente, allowing JPMorgan's California employees and their families to get care from the healthcare group. They'll be looking at a variety of ways to help patients, like using data to see whether they're getting routine care in a timely fashion, according to the firm.
The collaboration aims in part to unearth racial and ethnic healthcare disparities among JPMorgan workers. Mendelson said Morgan Health ultimately wants to hold healthcare groups financially accountable for eliminating those disparities, he said.
Employers are increasingly striking up "value-based" payment arrangements with healthcare providers that reward them when patients stay healthy and costs are lowered, Mendelson said.
Those arrangements are more common among companies operating in Medicare Advantage, which provides health coverage to older people. But as healthcare costs soar and crush employers, more are looking for ways to bring the concept to the rest of the market.
"Providers follow the incentives," he said.
