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JPMorgan Chase is going it alone.
After the healthcare joint venture formed by Amazon, Berkshire Hathaway and the biggest U.S. bank by assets was disbanded earlier this year, the companies each vowed to continue to push forward in their attempts to lower costs and improve outcomes for their employees.
Now, JPMorgan is launching Morgan Health to improve the quality of medical care for the bank’s 165,000 U.S. employees and their families, the firm said Thursday in a statement. The business is led by Dan Mendelson, a healthcare consultant who served in the Clinton administration, and will be based in Washington D.C.
The new unit will also have $250 million to make venture investments in companies with “promising healthcare solutions,” the firm said.
“We have the best healthcare in the world in terms of doctors, hospitals, pharmaceutical and medical device companies, but we certainly do not have the best outcomes,” CEO Jamie Dimon said in the statement. “There are ways we can make significant improvements and we intend to take a disciplined approach to solving some of these issues in a meaningful way.”
The American healthcare system has proven to be a difficult nut to crack: It’s a complicated network of entrenched players including insurers, drug makers, physicians and middlemen that cost the country $3.8 trillion in 2019, according to the Centers for Medicare and Medicaid Services. In its three-year run, Haven, the joint venture that folded in January, had little to show in terms of concrete results.
JPMorgan is betting that it will have better success on its own, in part by focusing on local providers and partnering directly with provider groups, insurers and other organizations.
The bank, which spends $1.3 billion annually on healthcare for its employees, will seek to improve the way primary care is delivered and enhance the ability of patients to navigate their own care, Mendelson said Wednesday in a phone interview. It will also focus on preventative care in maternal health, cardiovascular disease and diabetes, he said.
The new business struck a more collaborative tone than its predecessor; in its release the bank included a statement from the CEO of CVS Health, one of the healthcare companies whose stock was punished when Haven first made headlines in 2018.
“Everything we do, we expect to be doing in partnership with other organizations,” Mendelson said. “We’re not looking to build tools and technologies from scratch, but rather to deploy the best in healthcare to work for us.”
Like its predecessor, Morgan Health isn’t being run to generate a profit, according to Peter Scher, the bank’s vice chairman who has ultimate oversight of the effort.
That makes it somewhat unique as a business within JPMorgan, a powerhouse in both retail and Wall Street banking activities. Instead of being included in one of JPMorgan’s four main revenue-generating divisions, Morgan Health’s results will be reported under the bank’s corporate reporting line.
While the bank will initially focus on employees and their dependents, it aspires to be a model for other employers to emulate and will seek to improve access to healthcare in the communities the bank serves, Scher said.
“The work that we did with Haven reinforced both the opportunities and challenges and we think it was an important step,” Scher said. “If we can capture the innovation happening right now and scale it in a way that benefits our employees and their families, that will be an enormous boost for JPMorgan, and ultimately could be an enormous boost for the country.”
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