BlueCross BlueShield Venture Partners makes its first investment in a identity and data management software vendor. The venture fund was created to finance technologies that will improve health informatics, health wellness and disease management means, back-office tools and transparency processes.
BlueCross BlueShield Venture Partners LP, a new venture fund created to introduce innovative technologies to the healthcare industry, is making its first investment-$5 million-in a Chicago-based vendor of data management and identity software.
The $116 million venture fund was launched in August through capital committed by 11 different Blue plans. Paul Brown, managing director of the venture fund, says with the growing need for hospitals, clinics and other healthcare sites to beef up their health IT systems, the fund is a viable source for investing.
The first is Initiate Systems, a master data management software provider, which allows health plans to manage provider information across multiple systems, and pull together data while enabling a single view of each provider and patient claim.
However, the Chicago tech company isn’t the last recipient, as the fund-boosted by the prominence of Blue Cross name-is attracting scores of technology companies in need of venture capital.
“We have 200 companies right now in the pipeline that we are looking at,” Brown says.
He explains the fund isn’t meant to finance pharmaceuticals or medical equipment, but rather technologies that will improve health informatics, wellness and disease management means, back-office tools, and transparency processes.
Such upgrades combine to increase an organization’s efficiency and keep costs down-both for providers and insurers such as Blue Cross.
The fund is managed jointly by BlueCross and Chicago-based Sandbox Industries LLC, an early stage venture capital firm that works in the healthcare and technology industries.
Sandbox also is the fund manager of Venture Partners.Initiate received $5 million from Blue Cross Blue Shield Venture Partners, well within the fund’s target investment range of $3 million to $15 million, Brown says.
Another benefit is that Blue Cross provides “strategic value” for such technology companies through its prominent market presence, he says.
Dan Koffman, Initiate Systems’ chief financial officer, believes the venture fund is a great idea to assist emerging technology companies that serve the healthcare industry.
“They basically made a $5 million bet on us,” Koffman says, referring to the investment. “This is sure to get the attention of Blue Cross’ sister plans.”
Koffman is referring to Blue Cross’ remaining 34 health companies that operate nationwide. Currently, Initiate Solutions lists five Blue plans as clients.