CHI launches private equity fund
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.