Two months after launching, Morgan Health made its first investment, investing $ 50 million in Vera Whole Health on Thursday.
The new venture represents the first step for JPMorgan Chase & Co.’s medical division, according to CEO Dan Mendelssohn, who was the founder and former CEO of health consulting firm Avalere Health. in the Office of Management and Budgeting of the White House under the Clinton administration.
Morgan Health represents JPMorgan’s second attempt to reform the employer-sponsored insurance market – the company launched just three months after the closure of Haven, JPMorgan’s joint venture with Amazon and Berkshire Hathaway. Three years later, Haven has failed to deliver on its promise to destroy the healthcare system.
The New York-based investment bank now seems determined to learn from Haven’s mistakes. Just months after its launch, Morgan Health has already found a way to spend some of its $ 250 million investment unit, and Mendelssohn said Vera will eventually be available to JPMorgan employees in certain markets.
“There are too many point solutions for specific clinical conditions that are addressed by specific programs, and they can really make an employer dizzy. For example: “How many of them do you want to try to integrate? How do you integrate them? will they all end up in conflict with each other? “- said Mendelssohn. “Think of it from the employer’s point of view: you want a medical clinic to be responsible for the health of your employees. You can add other tools and methods on top of this. ”
Founded in 2008, Seattle-based Vera offers employers integrated, on-site, local primary health care and virtual services. His clients include the Bill & Melinda Gates Foundation, Seattle Children’s Hospital and Baylor College of Medicine. Companies pay a flat monthly fee per member for using their services, which include primary care, mental health care, and health advice from nutritionists and other professionals. Unlike most startups, Vera is entirely at risk of caring for its members, which means that the company must return money to the employer if their total care costs exceed a certain amount, but can also retain any cost savings achieved.
Private equity firm Clayton Dubilier & Rice paid an undisclosed amount to acquire a controlling stake in Vera in late June, after which it valued the startup at $ 400 million. With Morgan Health’s investment, the company has raised nearly $ 100 million in venture funding. Promising primary care that is more affordable, technologically advanced, and more patient-friendly than traditional care, Vera joins a cohort of other startups competing for a share of the $ 260 billion US primary care market.
“Employers recognize that primary health care is critical for employees, causes a host of other costs, and is an important way to address social and emotional health issues,” Mendelssohn said.
By 2023, 72% of large companies are expected to offer general medical clinics, up from roughly 60% today, according to data from Business Group on Health. Employers are also increasingly relying on digital primary health care and other health care tools to keep staff in a competitive job market, with 68% of US companies saying they plan to increase investment in digital health over the next five years, according to Mercer. … Rising demand has prompted venture capitalists to open up their wallets. Tech startups offering primary health care ranked second in terms of funding in the first quarter of 2021, according to consultancy Rock Health.
In addition to primary health care services, Vera will also help employers identify the health equity needs of their workers, another area of growing demand among companies. UnitedHealthcare recently introduced a predictive analytics tool to screen workers for the social determinants of health needs, and Humana and Anthem are also investing in this area. Mendelssohn said he expects Vera to help Morgan Health bridge racial differences in diabetes care, cardiovascular health and cancer screening. Mendelssohn said Morgan Health is interested in navigating healthcare for its next investment.
“When you look at an employer’s space, there are a number of things that employers do to try to improve health care, and many of them are very detailed, disease-specific and / or condition-specific,” he said. … “Rather than trying to tackle some health problems based on specific diseases, we decided to focus very specifically on more holistic ways to improve the care of our populations.”