JPMorgan launches new venture to again grapple with health care

JPMorgan Chase is taking another shot at trying to make health care less expensive for companies and better for workers in the U.S.

The largest U.S. bank is launching a business called Morgan Health aimed at improving employee benefits and promoting health equity, first for JPMorgan’s workers and then for other large companies.

With a $250 million investment arm and a remit to accelerate innovation in employer coverage, Morgan Health is a sign that large companies still want to influence a U.S. health care system notorious for high costs and lagging outcomes.

Michael Nagle/Bloomberg

Companies have a mixed track record in trying to tame health care costs and make benefits work better for their employees. The announcement follows the wind-down earlier this year of Haven, JPMorgan’s joint venture with Amazon.com and Berkshire Hathaway that sought to reinvent employer-based health care. Even with their economic might, the three companies were unable to generate much momentum to reorder health plans.

JPMorgan is betting that by trying new ideas inside the bank, it could find solutions that might work for others.

“We have an opportunity here to not only provide enormous benefit to our firm, our employees and their families, but ultimately create solutions that can be brought to bear throughout the United States,” Peter Scher, vice chairman of JPMorgan, who will oversee the venture, said in an interview.

Employer plans in the U.S. cover 158 million people, half of all Americans. About a third of health consumption spending flows through private health insurance paid for by employers and households.

High premiums

Typical premiums for a family health plan now exceed $21,000 annually, close to one-third of the median household income in the U.S.

Despite their role in financing so much of health care, big U.S. companies have had limited influence in shaping what they’re ultimately paying for. Innovations in care delivery and linking payments to health outcomes in the past decade have largely been in response to policy changes from Washington, not private markets.

“We’re looking to drive meaningful innovation in quality, and in health equity, and in keeping costs under control,” Dan Mendelson, who joined the bank recently to lead Morgan Health as chief executive officer, said in an interview.

Mendelson is a health care veteran. He worked in the Office of Management and Budget during the Clinton administration, founded the consultancy Avalere Health and was most recently an operating partner at the private equity firm Welsh, Carson, Anderson & Stowe.

Reporting to Scher, he’ll lead an initial team of about 20 people, based in Washington, and collaborate with the JPMorgan’s benefits team and bankers.

JPMorgan said it’s looking to partner with startups and existing companies, including its insurance carriers, CVS Health’s Aetna unit and Cigna. It will invest in innovative businesses of all sizes, Mendelson said.

Clinical outcomes

Morgan Health will take time to figure out its targets and plans to measure success against specific clinical outcomes, such as improvements in biomarkers for diabetes or cardiovascular health, he said. The venture will build on changes that COVID-19 accelerated in how people access health care and the needs the pandemic highlighted.

“The pandemic has accelerated focus on digital care, it has accelerated focus on health equity, it has accelerated focus on really repairing the fragmentation of the health care delivery system,” Mendelson said.

As an example of potential improvements, Mendelson cited advanced primary care models that have been tested in Medicare. Those consist of “integrated teams that have nurses and pharmacists and other health care professionals working with the physician to deliver the best care for the individual,” he said. “We want that kind of model for our employees.”

The project is picking up where Haven left off, Scher said. “I don’t think there would be Morgan Health without Haven,” he said.