Modern Healthcare | Venture Firm: Health System Investing Better in Numbers

By Tara Bannow |  McLaren Health Care’s chief financial officer always asks himself the same question before throwing his system’s money into a healthcare venture: Is this something we’d use?

“Why do you want to invest in a company with products that you have no desire to ever want to use?” Dave Mazurkiewicz said.

In that spirit, Mazurkiewicz is giving McLaren’s support—in the form of an undisclosed financial investment—to a healthcare venture platform that won’t necessarily call upon outside experts to vet potential ideas. Rather, it’ll call upon its own investors—mostly health systems, but also insurers and healthcare vendors—to learn about what works in the industry.

LRVHealth planned to announce Monday it seeks to raise $100 million in venture capital that will go toward early-stage digital health, medical devices and diagnostics companies—whatever ideas its investors think show promise in fixing some of healthcare’s most pressuring challenges.

Keith Figlioli, a general partner with LRVHealth and a leader on the new project, declined to say how much LRVHealth has raised so far, but said it’s “a good amount” toward the $100 million goal, which the group plans to hit by early fall.

So far, eight health systems have signed on as investors, all undisclosed other than McLaren, a 12-hospital system based in Grand Blanc, Mich., which he said is one of the fund’s largest investors. McLaren reported $3.7 billion in net revenue in fiscal 2016.

LRVHealth is actively marketing the fund to other potential investors, and Figlioli said he hopes to get 10 to 12 health systems, two to three insurers, and two to three healthcare vendors.

Another big player in the new fund is the Innovation Institute, a for-profit company owned by six not-for-profit health systems: Avera Health, Sioux Falls, S.D.; Bon Secours Health System, Marriottsville, Md.; Children’s Hospital of Orange County, Orange, Calif.; Franciscan Missionaries of Our Lady Health System, Baton Rouge, La.; Mercy Health, Cincinnati; and Providence St. Joseph Health, Renton, Wash. The institute was looking for a partner for its new venture platform and decided on LRVHealth.

Innovation Institute CEO Joe Randolph said he likes that LRVHealth will make his company an “insider” in the decisionmaking process and would give his health system owners the chance to be early adopters of the concepts or products that are funded.

“It’s kind of like the providers, the ones that are in the industry, are the ones that are evaluating and making the decisions,” he said, “versus a financial type that’s looking at it just from an outsider’s perspective.” More…