HEP raises $188 mln for third healthcare fund

Health Enterprise Partners has closed its third fund at a hard cap of $188 million. HEP III will invest in healthcare IT and healthcare services companies.


NEW YORK, July 9, 2018 /PRNewswire/ — Backed by some of the largest healthcare organizations in the country, Health Enterprise Partners (“HEP”) today announced the final close of its oversubscribed third fund, reaching its hard cap and raising $188 million.

Strategic Investor Base
Following the same strategy as its predecessor funds, HEP III will focus on making growth equity and buy-and-build investments in innovative healthcare IT and healthcare services companies. Among the key distinguishing features of HEP is its base of strategic limited partners.

Across its three funds, HEP has aggregated capital from an extensive network of payers, providers and healthcare organizations. Together, this group of 40 industry participants represents 300 hospitals and 125 million covered lives and employs 850,000 people throughout the United States. The fund also claims a number of financial investors as limited partners.

“HEP’s industry connectivity is strong and broad. We view HEP’s model of identifying investment opportunities that map to critical pain points affecting healthcare stakeholders as an important component of our innovation and business development efforts,” said Bert Zimmerli, EVP and CFO of Intermountain Healthcare.

Cecil Kost, Chairman & CEO of InDemand Interpreting further elaborated, “We operate in an environment where strategic value of private equity firms differs greatly and is frequently overstated. The HEP team has developed a unique model of driving quantifiable value through its relationships—and holding itself accountable for helping its portfolio companies produce enhanced results post-investment. We view HEP as a true extension of our management team.”

Proven Strategy & Team
“In the decade since HEP I was launched, we have invested across industry cycles, regulatory uncertainty, and a significant restructuring of our delivery system. Across this period, we have maintained a consistent investment strategy and been fortunate to partner with some of the leading management teams and organizations in our industry,” said Dave Tamburri of HEP.

Discussing the relationship with HEP, Mark Bartlett, Executive Vice President and Chief Financial Officer of Blue Cross Blue Shield of Michigan, said, “Like running a company, executing a successful investment strategy begins and ends with the team. To this end, in selecting HEP as an investment partner, we looked closely at the rich experience set of the core group in scaling and exiting healthcare IT and services platforms.”

Acquired HEP companies include Applied Pathways (acquired by Anthem), Behavioral Centers of America (acquired by Acadia), HealthQX (acquired by Change Healthcare) MobileMD (acquired by Siemens Healthcare), Privia Health (acquired by Brighton Health), SHYFT Analytics (acquired by Medidata) and SCIO Health Analytics (acquired by EXL).

“We are grateful for the support of our new and existing investors in HEP III. With this fund, we will continue to target healthcare IT and healthcare services companies that are solving the most important problems affecting payers, providers, and employers,” said Peter Tedesco of HEP.

Thought Leadership
As the healthcare sector rapidly transforms itself, HEP has worked to contribute to the intellectual development of the industry. “UCHealth engages with HEP in a rich and productive dialogue on the future of healthcare. We look to both the HEP team and their portfolio companies as a source of innovative ideas on how to solve our most pressing issues and ultimately improve the care and experience of our patients,” said Elizabeth B. Concordia, UCHealth President and CEO.

“The pace of change in our industry is only accelerating. To stay ahead of the curve, we have worked hard to cement a position at the nexus of investing, entrepreneurship, and policy. In this effort, we are fortunate to surround ourselves with those stakeholders who are most directly shaping the future of healthcare: our LPs and our portfolio companies,” said Ezra Mehlman of HEP.

HEP’s investment professionals regularly publish their insights in publications such as The American Journal of Accountable Care, Hospital and Health Networks Magazine, and Futurescan. This commitment to furthering the discourse on healthcare innovation is reinforced by a Healthcare Investment and Entrepreneurship class, which Ezra Mehlman and David Tamburri have co-taught at Columbia Business School for the last five years.

“In a competitive fundraising process, HEP’s invaluable industry connections, subject matter knowledge and deep experience in scaling healthcare companies were instrumental to our decision to raise money from them. It has been a fantastic partnership,” said Leah Sparks, CEO of Wildflower Health.

About Health Enterprise Partners
Health Enterprise Partners, formed in 2006, is based in New York City and invests throughout the United States in growth equity and small buy-outs in healthcare services and information technology companies. The firm’s first fund had committed capital of $91 million and the second, raised in 2012, had $148 million. HEP III, described above, has $188 million. HEP’s team includes those quoted above and also Founders Robert Schulz and Richard Stowe, as well as Senior Associate Elizabeth Colonna.