Provider venture funds are more active than ever before and their perspectives were a topic of discussion at the newest megaconference on the healthcare block — HLTH — which kicked off Sunday at the Aria hotel in Las Vegas.
In the session entitled “Role of Strategic Investment Groups Within Payers and Providers,” an important question arose: what percentage of their total investments are eventually adopted in the health system? This is, of course, relevant in the context of health tech startups that go from pilot-to-pilot-to-pilot never experiencing the warm embrace of a full adoption.
Sam Brasch, senior managing director, Kaiser Permanente Ventures, said that 70 percent of portfolio companies have seen “some level of adoption.” For context, he added that 70 percent of KP Ventures’ portfolio companies have an FDA-approved/cleared product.
But when it comes to wide adoption across the integrated health system, then it’s about 30 or 40 percent, Brasch noted. KP Ventures is in its fourth fund worth $150 million, and in all the fund manages $400 million. It invests in diagnostics, medical device, health IT or digital health startups but not biotech.
The high level of adoption is especially interesting given Brasch declared later that the venture arm of the Oakland, California-based integrated system makes zero commitment to having a customer relationship with the startup company they are investing in.
Next to Brasch was Jeffrey Ries, vice president with consulting firm Healthbox in Chicago, which helps manage a $35 million fund for Intermountain Healthcare based in Utah. He said for us “it’s about 60 percent at this point.”
Finally, Jon Gordon, director of New York Presbyterian Ventures that got started just a couple of years ago, said five out of the six health IT companies the group has invested in thus far has found adoption in the health system.
“That’s actually higher than I thought it was going to be,” said Conor Green, a partner at TripleTree Capital Partners, after all three panelists had their say.
Meanwhile, Gordon was very clear about what is off-putting when companies do approach him for investment: entrepreneurs who don’t do their homework.
For instance, they keep pitching him solutions that will help New York Presbyterian physicians “sell their stuff.”
“Well, OK if they did their research, they would know that we don’t employ physicians,” Gordon declared. “Figure out what our priorities are and come to us with something specifically focused on what we’re interested in.”
Along those lines, please don’t pitch a population health tool to New York Presbyterian.
They are just not that into it.
Photo: 9amstock, Getty Images
