Cambia Health Solutions calls for reboot of strategic investing in healthcare

Cambia Health Solutions is not a typical corporate investor. It often invests in technology that its payer division Regence Blue Cross Blue Shield won’t necessarily adopt but reflects the broader ambitions of healthcare reform. So a new charter published on the company’s website is more like a formalization of its own investment philosophy and one […]

Cambia Health Solutions is not a typical corporate investor. It often invests in technology that its payer division Regence Blue Cross Blue Shield won’t necessarily adopt but reflects the broader ambitions of healthcare reform. So a new charter published on the company’s website is more like a formalization of its own investment philosophy and one that it hopes will be embraced by other investment firms tied to corporations.

The goal is to get away from short-term, self-interested investment strategies in favor of a more sustainable approach that encourages a long-term investing strategy. It advocates helping advance companies’ development and test the effectiveness of experimental technologies.

Here’s a sample of some of the highlights of the charter:

Our investments should be pushing the industry forward, not just investing in our vendors.

We are active investors and believe it is essential to achieving our cause to be deeply engaged with our companies and their management teams.

We need to cultivate strong, portfolio-wide business development capabilities that truly deliver on the strategic value of our market position, including but not limited to our health
plans

We draw bold lines between our strategic investment program and any procurement or corporate development effort. Our goal is to invest in great, cause-consistent companies built for long-term sustainability, not for quick flips.

We will maximize the value of our portfolio companies by supporting the active exchange  of information and cultivating effective distribution partnerships between them when appropriate.

In a phone interview with Rob Coppedge, senior vice president of strategic investments and corporate development, he talked about the need for investors to give up practices that turned off entrepreneurs. “The industry has become so dependent on strategic investors providing risk capital – either as limited partners or direct venture investors. We need to develop new structures for our investment programs that are unique to the long term needs of strategic investors. Dabbling isn’t the best way; we can’t be weekend warriors. We have to develop the right capability to support innovation in the healthcare industry in a long-term fashion.”

Cambia’s portfolio companies are a mix of businesses that grew out of projects developed in-house and outside of the business. They tend to support Affordable Care Act goals such as tools designed to help the transition from fee-for-service to outcomes-based care, helping patients better manage their health and provider-patient transaction services.

Coppedge has been an investor in the healthcare industry for 20 years. “I’ve seen what’s worked and what hasn’t worked,” he said. “Entrepreneurs have been reticent to engage with corporate investors because they view us as an acquisition path rather than strategic investment.”

He added that the longterm success of healthcare entrepreneurs depends on investors helping them create attachment points for their technology in the healthcare system. “We have to help them prove their solutions can plug into delivery systems and fit into workflows,” Coppedge said. “The side of the road is littered with better mousetraps” that just didn’t fit.”

[Photo credit: Image from stock.xchng user duchessa]