Banking & Finance, Health Care, and Technology

Health system creates venture fund

March 14, 2017
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Roger Jansen
Roger Jansen. Courtesy Spectrum Health

A local health system plans to invest $100 million over the next decade in health care and health technology-related companies.

Grand Rapids-based Spectrum Health said last week it created an investment fund called Spectrum Health Ventures to partner with other health systems and companies to spur innovation and technology.

Roger Jansen, chief strategy officer at Spectrum Health, said Spectrum created the fund to do more than it currently can on its own.

“We want to be at the forefront of innovation and technology in the health care space and that means you can’t build everything,” Jansen said. “You have to partner and invest in those spaces, so you have to get involved with those trying to innovate to help do that.”

Investment approach

Jansen said Spectrum Health Ventures will make growth equity and private equity investments in the health and wellness space, using funds from Spectrum Health’s existing investment portfolio.

He said the fund will invest in established companies, rather than startups, to minimize risk and spend Spectrum’s assets responsibly.

“When we find a business we’re interested in, we’ll take funds from our existing portfolio and assets and invest them a little differently than the way we already are,” Jansen said.

Areas of focus

“We’re looking at genomics, precision medicine, artificial intelligence, population health issues, like prevention and wellness, and digital and monitoring technology — things like adjustable wearables, like the Fitbit,” Jansen said.

He emphasized that although Spectrum Health plans to use “90 to 100 percent” of the products produced from the fund’s investments, the products will be available to the wider market as well.

“The plan is to co-invest with other health systems, collectively, and say which product services and technology make sense and then co-invest with them to bring products they and we see as viable to the marketplace, so everybody wins,” Jansen said.

Deals reviewed

Jansen said since the fund opened on Jan. 17, it has received more than 50 or 60 deal applications to review.

Of those, the fund has taken one to the next stage “and even that one we’re not sure we’re going to fund.”

“Everybody has a deal they want to show you as soon as they hear you are investing $100 million,” Jansen said. “They’re really across the spectrum — from people who think they are able to work on a genomics level, to someone who has a new towel they want to try out in a medical environment.”

Investment managers

Spectrum Health Ventures hired Scott McLean as the fund’s investment manager.

McLean is a CPA and former acting CFO of several companies owned by the Grand Rapids-based private equity group Falding Capital.

The investment fund is also working with Chicago-based Avia, an innovation network, to help manage the process.

Part of a trend

Spectrum Health is joining about 45 health care systems that have established venture funds.

Jansen said Spectrum consulted with the leadership of many of those funds before establishing Spectrum Health Ventures, but ultimately it is charting its own course.

“There’s not really a template for this type of thing,” Jansen said. “We want to do what’s right for Spectrum and the communities we serve and that’s different for every organization.

“We’re not early to the game or late. We’re coming in at the right point.”

Spectrum Health

Spectrum Health employs 23,500 people and has annual revenue of $5 billion.

The West Michigan system’s subsidiaries include hospitals, treatment facilities, urgent-care facilities and physician practices.

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