Where Hospitals Are Investing And Acquiring In Private Markets

New technologies are proliferating to help patients manage their health, and hospitals are taking notice. A combination of regulatory changes and market pressures are seeing more hospitals consolidate but also look for new ways to manage patients’ health in the hospital and after treatment.

To that end we used CB Insights data to map where some of the largest hospital groups (by number of hospitals) are investing. Specifically, we looked at where the following hospitals were investing in private markets through either direct investments or their associated investment vehicles:

• Ascension
• Ascension Ventures
• Catholic Health Initiatives
• Community Health Systems
• Kaiser Permanente
• Kaiser Permanente Ventures
• New York Presbyterian
• NYP Ventures
• Trinity Health
• Health Insight Capital
• Dignity Health
• Heritage Group
• Hospital Corporation of America
• Tenet Health
• Lifepoint Health

Click on the image to enlarge.

Looking at the graph, some takeaways:

• Since 2012, these hospitals and investment vehicles were involved in 167 investment or M&A deals. Of those, 55 were in digital health companies. Some large digital health deals with hospital participation include Health Catalyst‘s $70M Series D and Series E in 2015 and 2016, respectively, and Doctor on Demand‘s $50M Series B in 2015.
• When it comes to investing, hospitals have been the most active in the mid stage, participating in 41 Series B or C deals during this time. There have also been some notable earlier stage deals as well, including NeuroLotions (seed, Q1’15), Avizia (Series A), and Zipnosis (Series A).
• Kaiser Permanente Ventures, the venture arm of the integrated care provider, was the most active investor with 38 deals between Q1’12 and Q1’17. Ascension Ventures was a close second with 34 deals during this time period.
• Several hospitals have dedicated venture arms, including Ascension and Kaiser as mentioned before, as well as some newly established venture units like NYP Ventures. In addition, Tenet, CHS, and Trinity Health all invest through Heritage Group as strategic investors/limited partners.
• Some hospitals are focused almost entirely on consolidation. Community Health Systems acquired 15 hospitals in this time period, and Tenet Health also acquired 10 practices. Tenet had the largest acquisition deal between these hospitals, acquiring public company Vanguard Health System for $4B+. It has made several large private acquisitions too, including United Surgical Partners International for $850M and Aspen Healthcare for $215M.
• Other areas where we’ve seen investments have been in the medical device space (Vapotherm, Bardy Diagnostics), diagnostics (Guardant Health, Astute Medical) and CRISPR (Caribou Biosciences).

Want more data on where hospitals are investing? Check out our private market database below.