Healthcare Matters

Ascension Health, the nation’s largest Catholic health system –and the nation’s largest nonprofit—is staying in the news. It launched its own GPO in mid-March of this year and its venture arm, Ascension Health Ventures (AHV), has just announced the formation of yet a third fund which is expected to grow from its initial commitments up to about $225 million.

AHV is the general partner in each of the three funds. It carries out the investment strategies of its limited partners that notably include Catholic Healthcare East, Catholic Healthcare Initiatives and Catholic Healthcare West. Like the other two funds, this third fund will target later stage medical device, healthcare technology and service companies. A portion of this third fund will also be made available to other similarly focused venture companies.

To date, AHV has placed about $325 million and from the looks of its long list of portfolio companies, the company doesn’t always take the lead. By the way, right at the top of that list is Accretive Health, a company whose business practices are under investigation by the AG of Minnesota and whose recent financial ties to Mayor Emanuel of the City of Chicago we recently covered here at Healthcare Matters.

Although health information management companies received most of the disclosed venture capital funding in 2011, (totaling $336 million in 30 deals), AHV is not overly concentrated in any single sector. It seems to have spread the wealth between device, software and service companies alike, perhaps mirroring its own demand (across more than 200 facilities)?

Entities like AHV and the dozens of others that exist throughout the industry not only have the cash, but they offer the proving grounds and market opportunities for their portfolio companies. Kind of a “can’t miss” virtuous loop. Remarkably, while their hit rates are better, they’re not off the charts by any means. Successful technology transfers require full compliance throughout the management hierarchy and a rock solid process that rewards those who make it happen.

Alas, the cash is always the easy part.

—Tom Finn