CHI launches pri­vate eq­uity fund

Modern Healthcare - - FRONT PAGE - Me­lanie Evans

Catholic Health Ini­tia­tives, the na­tion’s sec­ond-largest Catholic health sys­tem, will in­vest as much as $200 mil­lion through a newly cre­ated ven­ture cap­i­tal group. The Englewood, Colo.-based sys­tem will seek to in­vest in com­ing years in biotech­nol­ogy, in­for­ma­tion tech­nol­ogy, rev­enue cy­cle and clin­i­cal engi­neer­ing, and in com­pa­nies that sup­port man­age­ment of risk and pop­u­la­tion health. Sys­tem ex­ec­u­tives see the ven­ture as an op­por­tu­nity to in­vest in com­pa­nies that sup­port CHI strate­gies as the U.S. health sys­tem un­der­goes change, said Ni­cholas Barto, who joined CHI in June as manag­ing di­rec­tor of its ven­ture cap­i­tal group, which will op­er­ate as a sub­sidiary of the sys­tem.

CHI will look to com­pa­nies with which it al­ready does busi­ness and those work­ing with its In­sti­tute for Re­search and In­no­va­tion, he said. In­deed, the group’s first in­vest­ment— an undis­closed amount in the Seattle-based telemedicine com­pany Carena—will pro­vide fi­nanc­ing for a com­pany that pre­vi­ously worked with CHI fa­cil­i­ties in the Pa­cific North­west, Barto said. The ven­ture cap­i­tal strat­egy gives CHI some influence over com­pa­nies in which it in­vests with­out a full ac­qui­si­tion, he said.

Barto said CHI would fi­nance the fund though cash and a grad­ual and slight shift in its in­vest­ment port­fo­lio’s as­set al­lo­ca­tion.

The en­deavor is not the sys­tem’s or the in­dus­try’s first foray into provider-led ven­ture cap­i­tal. CHI this year in­vested for a sec­ond time in a fund over­seen by As­cen­sion Health Ven­tures, the ven­ture cap­i­tal arm of As­cen­sion Health, St. Louis. CHI in 2007 had joined As­cen­sion, Catholic Health East, New­ton Square, Pa., and Catholic Health­care West, now known as Dig­nity Health, San Fran­cisco, in a $200 mil­lion fund also over­seen by As­cen­sion Health Ven­tures. CHI will continue to make in­vest­ments with As­cen­sion, and will seek other op­por­tu­ni­ties, Barto said.

In Jan­uary 2011, Community Health Sys­tems, Franklin, Tenn.; Iowa Health Sys­tem, Des Moines; Life­Point Hos­pi­tals, Brent­wood, Tenn.; Trin­ity Health, Novi, Mich.; and Van­guard Health Sys­tems, Nashville, launched a pri­vate-eq­uity fund, now with $157 mil­lion in as­sets.

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