The gist: Lafayette General Health announced the launch of a new $10 million innovation fund with investments from Acadian Companies, LHC Group, Ochsner and the Schumacher Family Foundation. The goal of this fund is to make investments in health care startups that can deliver good return and improve services for the system and its partners.
This is Healthcare Innovation Fund II. Was there a Healthcare Innovation Fund I? Yes, it deployed $3 million of LGH’s investment capital along with a match from the state into seven companies. All of those companies are still operating, and one of them, HealthLoop, was purchased by GetWell last year.
The investments have been successful. LGH is actively using products from five of the companies and working on the other two. The funds provide LGH an opportunity to earn income as an investor, supporting the organization as a whole, but also gives the system access to new concepts and innovations in health care.
Now LGH is taking its investing to a whole new level. For the new fund, LGH is increasing the size of its investment pool to $10 million and is bringing along some heavy hitter investment partners in Acadian, LHC, Ochsner and Schumacher.
“You’ve got a billion dollar not-for-profit health system in Lafayette General, a publicly traded home health company worth almost four billion dollars, one of the largest employee-owned company and ambulance service providers in the country, the guy who started one of the largest emergency room management companies in the country, and another $3 billion statewide not-for-profit health system in Ochsner,” says Cian Robinson, LGH’s executive director of innovation, research, and real estate investments. “So you’ve got some really smart people, subject matter experts, sitting around the table that are very quickly able to vet if this is good for their company,” he adds. “For me what that does is lessen risk, in particular execution risk.”
This fund will make investments ranging from $250,000 to $1 million per startup. LGH is looking for startups that offer solutions that drastically improve patient care/experience, accelerate the move toward value-based payments, innovate backend automation/productivity, or use data or deep learning to affect health care delivery.
But LGH and its investment partners aren’t just providing cash. “All of the folks mentioned as investors have agreed to open up their ecosystems,” says Robinson. “So the startups we invest in get to work with our CIOs and senior VPs to help them with product-market fit. And we help them with going into the market. It’s truly a sandbox for health care startups to thrive in.”
LGH is also looking for additional investors. Robinson says they’ve raised $6 million of the fund’s $10 million target, so there’s still $4 million available. Minimum buy in is $250,000 with the maximum investment being $2 million. LGH charges no management fees, as it’s covering the cost of operating the fund. Interested investors can reach Robinson at firstname.lastname@example.org, as can startups seeking investment.
The system is also running a real estate fund that’s actively investing and in the coming months is planning to launch a $50 million Opportunity Zone Fund, which will primarily focus on developing real estate on LGH’s campuses located in Opportunity Zones, like the Oil Center.
Why this matters: LGH is Acadiana’s largest not-for-profit health system, so these funds are important just from the perspective of strengthening its bottom line while providing access to innovations that improve operations. But it’s also important because it’s an opportunity for Lafayette to leverage its economic strengths by combining the efforts of some of its most significant employers. And all this energy is focused on health care, one of Lafayette’s industries with the greatest potential to make up for the billions in GDP lost in the oil and gas industry.