True to form, GTCR used the firm’s “The Leaders Strategy” to handpick longtime healthcare executive Kelly McCrann to form Avryo Healthcare. The PE firm will now look to build the platform by acquiring companies and assets in the healthcare services industry.
The firm has a “new vehicle” as Sean Cunningham, managing director and co-head of healthcare at GTCR, put it – GTCR’s strategic growth fund. It’s a $2 billion fund that spawned the Avryo partnership.
One might view the firm’s strategy as being similar to a deconstructed menu item often seen at fine dining establishments.
“We have a unique approach to PE, as more than half of our businesses start like this: where we identify a space that we think is interesting within one of our four core industry verticals, which are healthcare; business and consumer services; financial services and technology; and technology, media and telecommunications,” Cunningham told PE Hub. “We develop a thesis in that area and then establish a relationship with a CEO and/or management team and then we set up a company, commit capital to that team and then start building that new company up.”
GTCR has been employing this strategy since the early 1980s. GTCR’s The Leaders Strategy “is something we are known for,” he added.
Investing in healthcare services is nothing new for the Chicago-based firm founded in 1980.
“We are casting a wide net with Avryo Healthcare, but Kelly McCrann is spending a lot of time looking at dental businesses and mental health business – we are not limited to those areas but we are doing more work there,” he said. “The broader play is in multi-site healthcare services.”
When asked why they identified McCrann as the right person, Cunningham said the firm has known him for years and that “his track record of success in this sector of creating value was something they could not ignore.” McCrann has over 30 years of experience in the healthcare services industry, serving most recently as CEO of EyeCare Partners.
“That is the profile of the individual that we tend to do these management start-up partnerships with The Leaders Strategy – we will spend as much or more time looking for a world-class team with whom to partner as we will just scout for good businesses,” he said.
Because GTCR are growth investors, the first step is to find the first platform acquisition.
“We tend to target areas and opportunities that have organic growth levers where we can put in more capital over time, whether that is de novo or geographical expansion as well as inorganic opportunities,” he said.
In general, the firm participates across the entire healthcare landscape and as of right now, GTCT has 15 either active or pending investments in healthcare.
“On the healthcare services side in the US, you continue to have a very fragmented base of service providers where consolidation and investment in the infrastructure can make a big difference not only in terms of delivering better clinical services and outcomes, but a big part of the plan is changing the patient experience.”
According to Cunningham, McCrann feels like healthcare services is “still outdated and behind the curve in the way that clinicians and providers engage with patients.”
“So, we are looking for businesses that have unique patient engagement models and that cater to making healthcare high quality, convenient and affordable,” Cunningham said.