Private equity firm, Welsh, Carson, Anderson & Stowe, launched a platform Tuesday that funnels money into healthcare providers and payers using value-based care payment models.
The firm has invested an initial $300 million in the portfolio company named Valtruis.
“We believe Valtruis is well positioned to leverage WCAS’s longstanding relationships and history of building market-leading healthcare businesses… to accelerate the adoption of value-based care,” said David Caluori, general partner at WCAS, in a statement.
The firm did not say if they had initial investment targets.
“Companies thinking differently about areas of healthcare … so those working with really complex conditions like oncology, nephrology, substance use disorder, cardiac care where patients have multiple co-morbidities and benefit from direct engagement with their care team and using data analytics to engage the care earlier and more effectively,” said Tracy Bahl, managing partner at Valtruis.
Other managing partners include Anna Haghgooie, who managed the $575 million Blue Venture Fund, which comprised 29 Blue Cross Blue Shield entities. She also worked for venture capital firm, Sandbox Industries.
Karey Witty was executive vice president of health plans at CVS and chief operating officer of Envision Healthcare, a provider of physician and advanced practice services to healthcare facilities.
“We look forward to continuing, with Valtruis, supporting companies that are focused on long-term growth and thedrive to reduce costs, expand access and increase quality with our capital and expertise,” Haghgooie said in a statement.
WCAS’s history in healthcare spans 40 years and $10 billion. Its 13 private equity funds have invested into 90 healthcare companies. Their portfolio includes CenterWell and InnovAge, which focus on Medicare Advantage.
Many private equity firms are investing in startups that facilitate the move away from fee-for-service.
“On the private side you’re seeing health plans shift more of the financial risk to providers and other care delivery organizations through fixed payments,” said Ari Gottlieb, a principal at A2 Strategy Group.
Primary care providers like Oak Street Health are receiving public evaluations of up to $9.5 billion, due to investors looking to profit off industry trends toward value-based care.
“Clearly there are ways for folks to make money in this space, but to me right now it seems like [WCAS] is just dedicating money to go after a macro trend,” he said.
Other experts are optimistic about WCAS push toward value-based care.
“The focus on promoting companies that have a longer term focus on improving health outcomes… is exactly the right strategy,” said Lili Brillstein, CEO of Brillstein Collaborative Consulting, in a statement.
Clinician acceptance of value-based care is increasing, with 75% of clinicians polled in a May 2021 Journal of the American Medical Association report saying that they do not believe fee-for-service contracts should account for the majority of primary care payment.