PE Hub’s new series on private equity firms investing in healthcare continues today with insights from Robb Vorhoff, managing director and global head of healthcare at General Atlantic. Before joining GA in 2003, Robb worked at Greenhill & Co, first in the mergers and acquisitions and restructuring advisory group, then in the private equity group, Greenhill Capital Partners. Robb outlined GA’s approach to healthcare investing.
Investment strategy
“We focus on picking the right spaces where there are going to be tailwinds, where there is a rising tide lifting all boats, and where we have done a lot of research on that market,” Vorhoff explained. “We aim to partner with the strongest management teams, that are building what we believe to be the best companies focused on the themes we’re investing behind, so they have the ability to capture market share, getting the benefits of that rising tide.”
As a thematic investor, General Atlantic focuses on key themes in healthcare including: Value-based care enablement (with portfolio companies including Stellar Health, Equality Health and Oak Street Health); virtual care and care navigation (Vida Health, Conexa and Included Health); and behavioral health (Marathon Health and Alignment Healthcare).
Why healthcare is so appealing
“Healthcare is 20 percent of the economy, and we believe it is economically resilient, hyper-fragmented and behind in tech adoption,” he said. “And increasingly, people want to be involved in something that has a real impact and changing the world for the better. All of that makes healthcare very attractive for the investment community.”
Vorhoff pointed to the inefficiency and fragmentation of the healthcare world as main reasons for investing in the space.
“In our opinion, the current system has a lot of inefficiencies,” he said. “Cost levels are unsustainable for the taxpayer. Many investors are not only focused on areas of innovation in the sector, but also where businesses can drive value: improving outcomes at lower costs for the system.”
“We believe that there is a misalignment among stakeholders. The entity paying for the care is rarely the beneficiary of that care. We believe that fragmentation is not an efficient marketplace.”
Why healthcare is slow to embrace technology
“More recently, some of the challenges center around taxpayer-funded massive adoption of electronic health records. While those have now been deployed largely across the delivery infrastructure, there has been resistance to open data exchange, and that slows down the adoption of technology in the entire space.”
Trends to keep an eye on in 2022
“Quality of employee experience is very important to us,” he said. “In this labor market, employee engagement and retention is a critical competitive advantage and critical to the ability to scale.”
“Virtual care was tiny before the global pandemic, but there is an enormous number of players now. That industry is getting to the next stage of maturation, and we believe there will be a big consolidation trend in that space.”
Firm facts
Founded in 1980 and based in New York City, General Atlantic is a global growth equity firm providing capital and strategic support for growth companies. In addition to healthcare, the firm invests in consumer, financial services, life sciences and technology.
Recent investments
GA invested in PT Solutions in December 2021. PT Solutions is based in Atlanta and is a physical therapy solution for hospitals. GA invested in Stellar Health in May 2021. Stellar Health is a healthcare technology company focused on enabling success across the value-based care continuum by bridging the incentive gap between providers and payors.
Recent exits
GA exited Landmark Health in April 2021 after making a strategic investment back in 2018. It exited eviCore in December 2017 as well as MedExpress in April 2015.
General Atlantic’s healthcare portfolio highlights:
(Dates refer to initial investments.)
ACES: Provider of applied behavioral analysis and ancillary services to individuals and families impacted with autism or other special needs (February 2020)
Alignment Healthcare: Partners with providers, health plans and hospitals to create seamless, fast and easy-to-navigate continuous care programs, including clinical-care coordination, risk management capabilities and IT enablement (May 2014)
Alternate Solutions Health Network: Provider of post-acute care solutions that offers an innovative, value-based model that drives collaboration with payers, hospitals and care providers (September 2017)
A Place for Mom: Senior services network providing families with resources and personalized assistance in finding senior living options (August 2017)
Asia Medical: Healthcare services provider and hospital operator specializing in cardiology (August 2018)
CareMetx: Technology-enabled hub services company dedicated to improving patient access to specialty medications (February 2021)
Conexa: Virtual care platform in Brazil offering a full range of urgent, specialty, chronic and mental health care (July 2020)
Equality Health: Provider of technology, services and support for value-based care, serving the Medicaid, Medicare and ACA Exchange populations (February 2021)
Included Health: Integrated virtual care and navigation company, formerly known as Doctor On Demand (July 2020)
KIMS Hospitals: Integrated private healthcare services provider in southern India, operating a chain of multispecialty hospitals with a focus on delivering low-cost and affordable tertiary and quaternary care (June 2018)
Marathon Health: Provider of primary care and population health management solutions for US employers (October 2019)
Oak Street Health: Network of value-based primary care centers for adults on Medicare (December 2015)
OneOncology: Empowers community oncology practices with advanced tools and capabilities to help physicians deliver higher-quality cancer care to their patients, close to home, amidst a rapidly evolving cancer care ecosystem (September 2018)
PT Solutions: Physical therapy solution for hospitals (December 2021)
Sonendo: Dental technology company (July 2017)
Stellar Health: Healthcare technology company focused on enabling success across the value-based care continuum by bridging the incentive gap between providers and payors (May 2021)
Vida Health: Polychronic virtual care platform for payors and employers, offering a full range of chronic, mental health, and lifestyle treatment options (March 2021)
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