Morgan Health is looking for partners to bulk up its portfolio, CEO Dan Mendelson said.
Launched in 2021, Morgan is drawing on capital support from J.P. Morgan Chase to invest in healthcare companies focused on data and analytics, accountable care and digital health, among other priorities. The goal is to invest in companies that support more accessible and affordable employer-sponsored healthcare, Mendelson said.
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Morgan has eight portfolio companies, including insurer Centivo, autistic child care provider Cortica, technology company Merative and fertility clinic benefits provider Kindbody. The venture marks J.P. Morgan's second attempt at disrupting employer-sponsored coverage. Morgan launched only a few months after J.P. Morgan, Amazon and Berkshire Hathaway walked away from their Haven joint venture.
In the interview, Mendelson said Morgan has deployed about $210 million in capital and wants to keep building partnerships with payers and providers through its investments. There is more work to do around quality improvement and healthcare cost control, he said. The interview has been edited for length and clarity.
How does the Morgan Health model work?
We always come in as a partner to another investor. We always take a minority interest in the company, and we’re very collaborative. It’s in our nature that we want to work with other investors and other companies. The mission is to drive innovation in employer-sponsored healthcare.
We’ve gotten very specific about performance indicators to track that double bottom line. It’s very easy to track the financial performance of a company, and it’s less easy to say, "OK, this is what we’re doing with the investment. This is what we hope to accomplish," and then to track that over time.
We agree with our portfolio companies as to what we’re going to track. Whether it’s trying to improve quality measures for our population, or cholesterol or diabetes, or whether it’s with our recent investment in Merative where we’re increasing access to data for the Fortune 500 companies, it’s always a different metric. But we’re very conscious of that.
For more than half of our portfolio companies, we are working with them in the context of the J.P. Morgan Chase benefit. We are a strategic investor. We are also an employer. What that means is that we can work with them and be completely honest with them about what is working and what is not. We can help them troubleshoot.
What does the portfolio look like?
We’re about three years into this, and we’ve made eight investments and deployed about $210 million in capital.
The portfolio right now is focused on primary care and prevention, the use of data and digital analytics to drive employee health and cost reduction. … The last category is what I’ll call special populations. For example, late last year we closed an investment called Cortica, which is focused on kids with autism. This is a population that needs a lot of specialized care. They need coordinated care, and so it’s a system where once you come into the Cortica network, you have access to a full range of modalities — gastrointestinal care and psychological care and primary care.
Is there a timeline for new investments?
We will screen about 400 companies a year. We’ll make about three investments a year with an average of about $25 million per investment. We’re eager to continue placing bets at that pace.
What kind of partners are you seeking, and in what focus areas?
We’re opportunistic in the sense that, like any investment shop, stuff comes up and we look at it. You have to be resilient and opportunistic to a degree to say, “If it improves employer-sponsored healthcare, we’re going to look at it.” … We will partner with anyone who is interested in improving the experience for employees. To date we’ve partnered with the major health plans. We’ve partnered with Aetna, Cigna, United/Optum and Elevance. We would love to partner more with health systems.
We think there is so much room left in the application of artificial intelligence and the use of data. The more an employer and an employee know about what they’re buying, the better off everybody is. We’re very interested in the consumer applications. The typical health plan does not have an interface that really speaks to the consumer, and that’s something that we’re interested in helping to develop.
There are many areas, particularly specialty care, where we have a lot of opportunity to bring more rational care into the environment. We’re looking carefully right now at oncology and a range of other conditions that are very important for cost control and for quality improvement for the typical Fortune 500 company.
We’re looking at genomics. This is a place where if you have genomic information and the employee authorizes it, you can do more to help them proactively take control of their healthcare. We’re looking at cell and gene therapy. It’s very expensive. It’s the kind of thing where you need to concentrate the business in health systems that really know how to do it.
What do partnerships with providers look like?
We’ve been speaking with a number of investment shops that are run by health systems. If we end up having a more direct relationship with the provider, that’s only a good thing. One example of that is what we’re doing in Columbus, Ohio, where we have a primary care clinic within our building. We’re doing that in partnership with Central Ohio Primary Care.
We’re partnering right now with Baylor and our portfolio company Centivo. For us, the primary relationship is through Centivo, but Baylor is the primary provider for J.P. Morgan employees with Centivo plans in the Dallas market.
Centivo will have to go out and develop similar relationships with other health systems and that’s the work they need to do, but it’s a nice example of a place where we have an intermediary. They will develop that relationship with the health system and then we can scale it into other geographies to improve care.
What’s next as far as investments?
More data and analytics and AI and companies that deploy those technologies to benefit the employee experience. We’re not going to go invest in hospital efficiency management. That’s not our focus. We really want to accelerate companies that focus on the employee.
There are going to be other clinical areas like oncology that we’re interested in. Cell and gene therapy is a place where we’d really love to do some work on over time. And then tools to help small businesses more efficiently purchase care. I’d say that those are really the four areas where I anticipate more activity.