Archive for January, 2011

Gambling on change (David A. Jones, Jr.)

Monday, January 31st, 2011

Article published January 31, 2011

Five big systems buy into a venture capital fund to try to reap profits from the transformation of healthcare

By Melanie Evans

Five major health systems have put up to $50 million behind their faith that executives can pick the winners as emerging companies vie for business during the sweeping regulatory and market changes expected under healthcare reform.

Health systems in Tennessee, Michigan and Iowa said last week they had formed a healthcare venture capital fund with the investment and consulting company the Heritage Group. Behind the fund are Rock Morphis and David McClellan, who founded Heritage in Nashville’s closely knit and entrepreneurial healthcare market more than two decades ago (March 5, 2007, p. 30).

Not surprisingly, for-profit hospital giants headquartered in Nashville or nearby are among the fund’s early investors. Community Health Systems, Franklin, Tenn.; LifePoint Hospitals, Brentwood, Tenn.; and Vanguard Health Systems, Nashville, are three of the five health systems named as Heritage fund partners.

The two other investors are Trinity Health, a large Catholic system based in Novi, Mich., and Iowa Health System, based in Des Moines, which owns 10 hospitals and manages another 13 across Iowa.

Entry into the Heritage fund requires an investment of at least $1 million, but each of the five health systems agreed to commit up to $10 million. The fund has raised at least $78 million since mid-January and will seek up to $200 million, according to a notice filed with the Securities and Exchange Commission.

Iowa Health and Trinity Health reviewed the fund as they would any other investment, executives for the not-for-profit systems said. An investment committee on Iowa Health’s governing board approved the investment from the system’s portfolio, President and CEO William Leaver said. Trinity ran the deal past an investment consultant, said James Bosscher, chief investment officer at Trinity Health. The $10 million accounts for one-third of the venture capital in Trinity’s two investment portfolios, which total $7.8 billion.

The fund promises more than a potential financial return, the investors said. The systems expect to gain exposure to new technology and be able influence product development. “This is a very experienced group of people with a lot of expertise,” said Wayne Smith, president and CEO of Community Health Systems, which owns or leases 125 hospitals in 29 states.

Venture capital investment—with its promise of higher returns, but the certainty of greater risk—is limited among not-for-profit hospitals.

Investment manager Commonfund reported 4% of alternative investments in portfolios of 85 not-for-profit hospitals and systems surveyed last year was venture capital. Alternatives accounted for 15% of the survey’s combined $76.8 billion in assets of all kinds. Venture capital investments were most often found in portfolios of systems with at least $1 billion in annual revenue.

Less common are health system-backed funds that target financing for healthcare entrepreneurs, such as the Heritage fund. “I would say it’s unusual,” said Susan McDermott, senior vice president and chief investment officer for the Stratford Advisory Group, a Chicago-based investment consulting firm, which vetted the fund for one of its investors.

The nation’s largest Catholic health system, St. Louis-based Ascension Health, launched a $125 million venture capital fund in 2001 and partnered with three other Catholic systems to create a second $200 million fund. Kaiser Permanente, based in Oakland, Calif., operates a venture arm that has backed more than two dozen companies since it was founded in the late 1990s. Partners HealthCare System created its own venture pool four years ago to finance entrepreneurs within the Boston-based system.

Heritage Group founder Morphis said through a spokesman that efforts to slow healthcare spending among providers led the financiers to launch the fund. Indeed, the managers have touted the far-reaching healthcare law to promote the fund.

“The Patient Protection and Affordability Act passed by Congress last year contemplates and encourages innovation in numerous ways,” the fund’s Web page says, and investors consider health systems “the real-world laboratory for developing solutions in a rapidly changing operating environment.”

Heritage spokesman David Jarrard said Morphis and McClellan were not available for interviews during fundraising.

The Affordable Care Act, enacted last March, includes significant insurance expansion and regulatory oversight and some alternative reimbursement models for hospitals and physicians that will be tested in coming years.

The Partners Innovation Fund, which was financed by Boston’s Massachusetts General Hospital and Brigham and Women’s Hospital, joins with outside venture capitalists to back technology or products developed by Partners HealthCare. Bob Creeden, the managing partner of the fund, said outside investors have been slightly more hesitant since the healthcare law, which has raised concerns that reimbursement may change under the law.

But the change that accompanies the law also creates a potentially favorable market for the startups and upstarts that draw venture capital.

Established companies struggle to adapt to major demographic shifts, such as the wave of retiring baby boomers, technological evolution or significant regulatory changes, said Michael Roberts, executive director of the Arthur Rock Center for Entrepreneurship at Harvard University.

“The reason for that is that existing incumbents in any industry have a very developed and entrenched set of practices and investments that have all been carefully designed to give them an advantage in the existing environment or the status quo,” Roberts said.

“We know from lots of experience that these incumbent players have a hard time changing those practices and making dramatic new investment that cuts against their existing strategy. Almost by definition, if they’re incumbents and they’ve been around for a while, the things they’re doing are reinforced because they worked,” he said.

More opportunity

The nation’s fractured and inefficient health system is ripe for innovation, said David Jones Jr., the chairman and managing director of Chrysalis Ventures, a Louisville, Ky.-based venture capital firm with $400 million under management.

For venture capitalists, new regulation under the Affordable Care Act offers further opportunity, said Jones, who founded Chrysalis, which invests in healthcare and technology, more than 15 years.

“Change is a certain outcome of the law,” said Jones, who stepped down in August after roughly five years as chairman of Humana, the insurer his father founded. “Change is good, for us. We cannot win in a world of stasis.”

Jones said the risky nature of venture capital requires funds to have diverse enough investments to offset those that fail. “You have to have enough at bats to get what you’re looking for in your overall average return,” he said.

Trinity Health’s Bosscher said Heritage fund investments will target health information technology.

Healthcare has lagged behind other industries in use of information technology, and Congress included roughly $27 billion to promote use of electronic health records in the 2009 law to boost the economy, the American Recovery and Reinvestment Act. Federal officials awarded the first incentive payments in January.

Bosscher said the system will gain greater exposure to new technology as a limited partner, rather than a passive investor with an asset manager. Partners sit on the Heritage fund investment committee to review companies that seek funding. Bosscher said Trinity, which owns 33 hospitals and manages another 14, will vet products or software and will learn more as other partners do the same. “That’s where, to me, the real value is,” he said.

The Heritage fund will finance early- and growth-stage companies—those either testing products or just introducing them. Those areas are where Bosscher said investors have the most to gain. Managers will also seek out entrepreneurs to develop what the Heritage Group describes as “purpose built” companies to tackle issues identified by investors.

Separately, the Heritage Group announced funding in mid-January for a newly created Nashville-based company, Precedent Health, to develop and manage provider networks, such as accountable-care groups. Morphis was named as Precedent Health’s chairman.

Ascension Health’s venture funds target expanding or more mature medical device, information technology and service companies. Kaiser invests in all development stages.

William Carpenter III, chairman and CEO of LifePoint Hospitals, which owns or leases 47 hospitals, said the pooled fund allows hospital operators to combine resources for a better opportunity to produce meaningful innovation.

Iowa Health’s Leaver said health systems face pressure from the reform law and commercial insurers to improve quality and efficiency, and entrepreneurs may be best-suited to supply some needed expertise in technology or other services. “We have to recognize there’s an independent company … that can fill those voids more effectively and more efficiently than we can, and probably more quickly than we can,” he said.

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VCs Healthcare Tendencies Toward Devices, Away from Services (Alan Ying)

Tuesday, January 25th, 2011
PEHub
Posted on: January 25th, 2011

Healthcare has always been an area of focus in venture capital. In particular, over the last several years, healthcare IT has received a lot of public attention. The recent J.P. Morgan Healthcare Conference in San Francisco– focusing on public companies – offers a timely snapshot to compare the healthcare interests of public markets versus venture capitalists.

Interest level in device and equipment companies is significantly higher from VCs than from public markets, and the interest level in healthcare companies is significantly lower by VCs than the public markets. Negative sentiment has recently surrounded the device industry and new regulations and backlash on costs have dampened enthusiasm around the business models and efficacy (perceived long-term financial and clinical impact) of medical devices. The public markets have apparently adjusted their interest, focusing more on healthcare services.

The VC industry, however, is still focused on medical devices. Perhaps VCs know something public markets do not. Or perhaps human nature has made VCs slow to change embedded investment styles. Or maybe industry fund structure is the explanation.

The flipside of this device disparity is the relatively high interest in healthcare services companies by the public markets compared to VCs. One possible explanation is that the public markets expect industry upheaval to impact the earnings of healthcare services companies more immediately than companies in other sectors. Whatever the actual reasons for this disparity, investment returns will eventually determine whether the VCs or public markets are focused on the right areas.

Healthcare IT, however, has not attracted substantial investor interest.

For example, one of the most anticipated keynotes at the J.P. Morgan event was “Innovation Opportunities for the Health IT Market.” In the 29-year history of the conference, this was the first session ever on healthcare IT, and it featured a high-energy panel including John Doerr of KPCB, Eric Schmidt of Google, and two of the most senior healthcare IT leaders in the federal government, Todd Park and Aneesh Chopra.

At one point Doerr asked the packed audience how many were active healthcare IT investors – and over 1/3 of those present raised their hands. This is particularly surprising given the nearly negligible public or private investment activity in the segment.

Of the many possible explanations for this disparity, I’ll mention one that I refer to as the “Elephant Gun in the Rain Forest Problem” with venture capital and healthcare IT.

Average VC fund size has increased at a CAGR of 7.25% over the last 20 years, faster than both U.S. GDP (4.7%) and national healthcare expenditures (6.7%). Assuming similar numbers of companies per fund, larger absolute exit proceeds per company are required to achieve satisfactory returns.

Because of this trend, healthcare investors have become like hunters on the African safari, stalking fewer “big game” deals with bigger “elephant gun”-sized investment minimums and exit requirements. One reason that this has been possible is that certain segments of healthcare – the pharma market, for example, at a CAGR of 10.1% – have expanded even faster than VC fund size.

Healthcare IT, however, is less like the African safari and more like the Amazon rain forest – a dense ecosystem filled with a huge number of small animals. The market isn’t suited to produce elephant-sized absolute returns – it is suited to have a high volume of smaller companies that produce more frequent and smaller returns than device or biotech.

Thus, you get the problem of the elephant gun in the rain forest: firms and funds are structured for fewer and larger investments to yield large absolute returns in markets like devices and biotech, but the healthcare IT market is suited for more numerous investments that yield high relative returns but relatively small absolute returns.

Alan Ying is a Houston-based Venture Partner with Chrysalis Ventures. Chrysalis manages one of Mid-America’s largest funds for early-stage and growth investments with approximately $400 million under management. Since 1993, the firm has invested in over 65 companies, primarily in the healthcare and technology sectors. With headquarters in Louisville, Kentucky, Chrysalis has offices in Cleveland, Pittsburgh, Ann Arbor and Houston. Contact Alan here.

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Technology advances, cost pressures fuel rise of national radiology groups

Monday, January 24th, 2011

By Brandon Glenn, MedCity News

January 24, 2011

http://www.medcitynews.com/2011/01/technology-advances-cost-pressures-fuel-rise-of-national-radiology-groups/

The radiology outsourcing market was once was dominated by disparate, local groups, but in recent years national and regional players have begun gobbling up more and more customers.

And that’s made radiology outsourcing companies – which typically perform radiological services both on-site at hospitals and remotely in what’s known as teleradiology — an increasingly attractive target for investors.

The trend is being driven largely by technology advances and healthcare cost pressures, which have combined to create a lucrative market for the companies stepping up to provide radiology services as hospitals look to save cash any way they can.

The global market for teleradiology, which refers to off-location reading of images like x-rays, MRI and CAT scans, was valued at $6 billion in 2008, and is growing at double-digit annual rates, according to a London research firm.

“We’re at a tipping point of a pretty major transformation in this business,” said Koleman Karleski, a managing director with Chrysalis Ventures in Louisville, Kentucky. Karleski has good reason to be a radiology outsourcing enthusiast: Chrysalis backs Pittsburgh-based Foundation Radiology Group, which raised $9.5 million last year to fuel its expansion.

The 75-employee company has 20 clients in five states: Pennsylvania, New York, Virginia, Kentucky and Michigan, said Barbara Beaudin, Foundation’s chief financial officer. Nationally, the field is led by Minnesota-based Virtual Radiologic, which last year bought rival NightHawk Radiology for $170 million. Other national and regional radiology players include Alabama-based Optimal Readings, California-based Imaging Advantage, and Cleveland-area Radisphere National Radiology Group, which raised a $27.5 million investment round last year.

Karleski estimates the U.S. market for radiology services at about $3 billion annually.

Most of the national and regional players contract with smaller, community hospitals, whose radiology groups might not have a wide range of expertise in the field’s numerous subspecialties, like muscoskeletal and neuroradiology. And even if the hospitals could find radiologists with a range of subspecialty expertise, they can’t afford to pay several of those subspecialists to be on the clock all day. That’s where teleradiology comes in.

Much of the reason for the rise of teleradiology simply stems from the nature of radiology work. Radiologists can analyze images any time and anywhere (as long as the technology allows it) because there doesn’t need to be a direct, physical doctor-patient relationship, said Susan Luria, a vice president with Cleveland-based biomedical business development group BioEnterprise.

“You don’t know the radiologist who’s reading your films, you just want to know that somebody highly capable is reading them,” Luria said.

As new, more powerful technology has come on the market, it’s become easier and cheaper to outsource radiology services. The widespread availability of broadband, plus radiology outsourcing companies’ investment in their own technology, has made sending images over the Internet simple and fast. It also allows companies like Foundation to make radiologists of any subspecialty available to clients around the clock, Karleski said.

“The technology and workflow enables productivity enhancement like no other service business that I’ve seen,” Karleski said.

Radisphere has invested massively in its own, proprietary software, and considers its technology a big point of differentiation between it and its competitors, said Clay Larsen, the company’s senior vice president of client and network development. When the company announced its $27.5 million investment round, it said it would use much of the cash to enhance its “radii” technology platform. In addition to image sharing, the technology helps users manage workflow, licensing, credentialing and other functions, Larsen said.

Radisphere employs about 100 full- and part-time radiologists throughout the country, about 130 support staff, and services 35 community hospital clients. The company splits its work between on-site and remote services for clients, according to Larsen.

While the national and regional players like Radisphere and Foundation appear on their way to carving out a lucrative niche, the technological progress that fueled their rise could be followed by new advances that further change and disrupt the market for radiological services. So if the past holds any lessons, it’s likely that radiology outsourcing companies will need to keep investing in their technology while they simultaneously fight for market share.

“I’d expect when you wake up five years from now the delivery of radiology services will look very different than what it does today,” Karleski said. “And it certainly looks very different today than it did five or 10 years ago.”

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Startup capital funding slips in fourth quarter, but increases in 2010

Saturday, January 22nd, 2011
  By Staff and wire reports

Saturday, January 22, 2011Funding to startup companies sagged a bit in the fourth quarter of 2010 as venture capitalists funneled less money into fewer companies, with biotechnology taking the brunt of the drop-off, according to a study released Friday.

For the full year, however, overall investments rose 19 percent from their 2009 level.

And in Pittsburgh, investments totaled just over $158 million for 51 companies last year, up 77 percent after a plunge in 2009.

“You are starting to see venture capital investing come back now,” said Koleman Karleski, managing director of Chrysalis Ventures, which has an office in Pittsburgh.

The city is one of Chrysalis’s focus markets. “We view the middle part of the country as overlooked from a venture capital standpoint,” said Karleski, a Pittsburgh native who is on the board at Foundation Radiology Group.

Chrysalis invests in the Downtown-based company, which contracts with hospitals to provide next-generation radiology services.

Typically, new companies in regions east of the Rocky Mountains and southwest of New York City get 15 percent of the available dollars, while the rest goes to the east and west coasts.

Nationally, startup investments fell 7 percent to $5 billion in the October-December quarter, compared with $5.4 billion invested in the same quarter in 2009, according to the study. A total of 765 startups snagged funding, a drop of nearly 12 percent from the fourth quarter of 2009.

The study was conducted by PriceWaterHouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. It indicated that fourth-quarter drop was due in large part from a decline in funding to biotechnology companies. Biotech funding rose in the first half of the year, but declined in the third and fourth quarters.

In the last three months of the year, slightly more funding went to companies in the expansion and later stages of development than in the same quarter in 2009 — $3.4 billion — and that was split among 400 companies, down from 458. As usual, those companies received the bulk of venture capital funds distributed during the quarter.

The environment for acquisitions and initial public offerings for mature startups is still somewhat rough, meaning in many cases venture capitalists will likely have to wait quite some time before profiting from their investments.

The number of companies receiving seed funding fell 21 percent to 80 in the quarter, and the amount of funding dropped 38 percent to $243 million. The study said $1.4 billion in investments was split among 285 early-stage startups in the October-December period; $1.6 billion went to 305 early-stage startups in the year-ago quarter. Investors are clearly being cautious about which companies they finance, but interest remains in working with young startups.

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Reproduction or reuse prohibited without written consent.

Read more: Startup capital funding slips in fourth quarter, but increases in 2010 – Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsburghtrib/business/print_719348.html#ixzz1BzYSkn9e

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Foundation Radiology Group raises $3.5 million, plans infrastructure upgrade

Friday, January 14th, 2011

by Kris B. Mamula, Pittsburgh Business Times
January 14, 2011

http://www.bizjournals.com/pittsburgh/print-edition/2011/01/14/foundation-radiology-group-raises-35m.html

Downtown-based Foundation Radiology Group has received $3.5 million from investors in recent weeks, bringing the total money raised by the imaging outsourcing company during the past year to $9.5 million, according to CEO Tom Skelton.

The money will fund operations and help upgrade infrastructure, Skelton said. Investors included Chrysalis Ventures LLC of Louisville, Ky., and San Francisco-based Health Evolution Partners Inc. The investors have promised an additional $1.5 million in 2011.

“We’re pretty excited,” Skelton said. “It’s about putting some money in infrastructure.”

The technology improvements will make it easier for radiologists to process scans, but the company isn’t planning to expand its Downtown headquarters, Skelton said. The company has three open positions, including a director of marketing, but no other hiring is planned.

Foundation is positioned to grow at a time when Medicare reimbursement to hospitals is declining and the demand for quality medical scan interpretation is rising, Skelton said. The company is a one-stop shop for smaller hospitals seeking to hold down medical imaging costs while providing interpretations for sophisticated scans such as MRI, CT and PET.

Foundation staffs client hospitals and uses high-speed computer links for additional support from offices Downtown.

Technology has been driving changes in radiology for several years, and Foundation is well positioned to profit, said Koleman Karleski, managing director at Chrysalis, which became Foundation’s first institutional investor in 2009.

“The goal of companies like Foundation is to use technology and better workflow to drive higher levels of productivity,” he said. “… All of health care is trying to find out how to be more productive.”

Foundation’s market strengths include low-error interpretations and a wide range of specialist radiologists for such areas as pediatrics. The company’s error rate is 4 percent, Skelton said, a fraction of the national rate of 25 percent.

“The economics are certainly favorable to the hospital,” he said. “We’re able to make a difference on the quality side.”

Foundation’s first client nearly four years ago was Jefferson Regional Medical Center, a 373-bed facility in Jefferson Hills. Dr. Richard Collins, vice president of medical affairs and chief medical officer, said most community hospitals could not afford to hire radiologists with the expertise Foundation offers.

“There’s nothing we don’t have available to us,” Collins said. “They’ve been very responsive.”

Radiology, like all medicine, continues to specialize, and teleradiology allows subspecialist expertise to be available in small communities, said Dr. Arl Van Moore, chairman of the America College of Radiology task force on international radiology.

“When you have one or two radiologists to do everything, it’s difficult for them to be experts in everything,” Moore said.

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Chronicity Raises $1.5M for Working Capital

Sunday, January 9th, 2011

January 9, 2011

Chrysalis Ventures Backs Texas Health-Care Service Provider

By citybizlist Staff

HOUSTON – Chronicity Inc. has raised $1.5 million of a $9 million share offering, according to an SEC filing.

The Addison, Texas-headquartered company provides health-care services for people with learning disabilities, attention-deficit hyperactivity disorder, chronic fatigue and fibromyalgia.

Principals named in the filing include Chairman and CEO Robert Baurys; Susan Hrim, who is COO and chief clinical officer; CFO Francis Chow; and fellow executive officer Roy McKinley.

Also named in the filing are the following directors: Chrysalis Ventures‘ Managing Director Koleman Karleski and Operating Partner Richard Vance; John Prior, formerly of Nashua, N.H.-based Critical Care Systems; Wilson Orr of Memphis, Tenn.-based SSM Partners; and Jan Bruce. Chrysalis, which is headquartered in Louisville, Ky., has offices Houston and Pittsburgh.

Chronicity said it would use the proceeds for working capital.

Last year, Chronicity raised a total of $3.75 million in two rounds. Besides Chrysalis and SSM Partners, the company’s backers include Chicago’s Crobern Partners and Reservoir Venture Partners of Columbus, Ohio.

Reg D filing: http://tinyurl.com/33dgg48

 

Bios from Chronicity’s website:

Robert S. Baurys II
Chairman of the Board and Chief Executive Officer

Mr. Baurys, a serial entrepreneur, has been involved in both the technology and health care industries in various business adventures over the past 20 years; including becoming the CEO of an incubator that launched companies for FedEx and others around the nation. Prior to joining Chronicity, Inc., Bob, with his clinical partner Sue Hrim, RN, built several companies including Fibromyalgia & Fatigue Centers, ADD Health & Wellness Centers, Triad Medical, and several other health care companies.

As CEO of Chronicity’s health care facilities, Bob will direct the company’s continued growth and development of new opportunities within the consumer-directed health care industry.

From 1981 to 1985 Bob attended College Misericordia in Pennsylvania earning degrees in Finance and Marketing.

Susan Hrim
Chief Clinical Officer and Chief Operating Officer

Ms. Hrim is responsible for the clinical development, implementation, and quality assurance initiatives for Chronicity, Inc. Sue has been a principal of several health care organizations, a clinical legal consultant, and long-term care industry consultant. Licensed in New York and Pennsylvania, she obtained her RN from Mohawk Valley and continued with the New York State Regents College. A Registered Nurse with over 20 years experience in healthcare management, Sue brings executive leadership, strategic planning and implementation with a proven history of success to Chronicity’s health care facilities.

Francis Chow
Chief Financial Officer

Mr. Chow graduated from Southern Methodist University and began his career as a Supervising Senior Accountant. After four years, he and his family moved to Orlando where he became the Director of Finance at Triton. Eventually finding his way back to Dallas, Texas, Francis moved into the role of Vice President of Finance for Timera, tripling their valuation in 3 years. In 2004, he became an Individual Consultant for initial stage and growth companies, wearing a plethora of hats for each. Francis joins Chronicity, Inc. with over 13 years experience in finance and oversees the company’s financials aspects of their health care facilities.
Francis, a Certified Public Accountant, earned a Bachelors of Business Administration, majoring in Accounting and Organizational Behavior and Business Policy, and minoring in Economics.

Bios from Chrysalis’ site:

Koleman Karleski
Managing Director, Chrysalis Ventures

Koleman joined Chrysalis in 1997 and is currently a Managing Director. His focus is on investment opportunities in healthcare. At Chrysalis, Koleman has worked with HealthMedia (sold to Johnson & Johnson), MedServe (sold to Stericycle, Inc.), Aperture Credentialing (sold to a subsidiary of UnitedHealth Group), Manorhouse Assisted Living (sold to LifeTrust Assisted Living), Primis (sold to LandAmerica Financial Group) and TechRepublic (sold to Gartner Group, Inc.). He currently serves on the Board of AfterBOT, Cervilenz, Chronicity, Foundation Radiology Group, HealthTeacher and NextImage Medical. He also spearheads Chrysalis’ fundraising efforts.

Prior to Chrysalis, Koleman worked for Providian Corporation’s Capital Management business unit where he focused on strategic planning and business development.
A native of Pittsburgh, Koleman earned a BSE from Princeton University where he concentrated on operations research and financial engineering.

Richard Vance
Operating Partner, Chrysalis Ventures

Richard joined Chrysalis in 2007, initially as Executive-in-Residence and six months later as Operating Partner. As part of Chrysalis’ hand on approach, he brings operational expertise and assists current portfolio companies within the healthcare and technology sectors.

Richard has over 20 years of experience in healthcare analytics and modeling, health services research, product development and healthcare IT, and has published more than 80 articles in national and industry publications. He was CEO and President of CorSolutions from 2001 to 2005, the nation’s second largest disease management company, until it was acquired by Matria Healthcare. In 2004, he was recognized as one of the top 10 disease management executives by Managed Healthcare Magazine. Prior to CorSolutions, Richard was Vice President for Population Health Improvement at Humana Inc., an internal consulting function which oversaw disease management program development and investments. Previously, he led Wake Forest University Medical Center’s Resource Utilization and Outcomes Management Department in the development of programs to improve efficiency for integrated delivery systems while also serving as Associate Professor of Pathology and as Associate Director of the Health Services Research Center.
Richard has a BA from Wake Forest University, an MA from University of Chicago and an MD from Wake Forest University.

Bio from SSM Partners:

Wilson Orr
Managing Partner

Mr. Orr joined SSM in 1988 and has been significantly engaged in all aspects of the Firm’s activities. Together with Mr. Witherington, he was instrumental in SSM’s transition into principal investing in 1990. Mr. Orr has worked with companies in a wide variety of industries and currently focuses on business services companies and any consumer services transactions considered by the firm.

Prior to joining SSM, Mr. Orr worked at JP Morgan in New York and Dallas concentrating on leveraged finance transactions. He received his bachelor’s degree in Economics and Business Administration from Vanderbilt University. In addition to his service with other local organizations, Mr. Orr recently served as Board Chairman for Presbyterian Day School in Memphis

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Frank Stellato Joins MyHealthDIRECT As Chief Financial Officer

Wednesday, January 5th, 2011

BROOKFIELD, WI—January 5, 2011
MyHealthDIRECT (MHD) is pleased to formerly announce an important addition to its executive team. In July of 2010, Frank Stellato joined the company as Chief Financial Officer. Founded in 2006, MHD is an innovative healthcare technology service solution provider. The company offers a web-based access management solution that broadly and seamlessly connects patients to healthcare appointments throughout a community or network. It is used by hospitals, managed care organizations, and State Agency and Health Information Exchange initiatives, resulting in cost containment and better care delivery.

In his new position, Frank will have functional responsibility for the financial and human resource areas of the company. These areas include financial reporting, expense and cash management, establishing standard operating procedures and controls, forecasting and budgeting, finance and capital raise activities and managing the company financial relationships. As a senior member of the organization, Frank will also participate in setting MyHealthDIRECT’s strategic direction.

“Frank’s proven abilities in financial management will be instrumental at MyHealthDIRECT as we continue to grow,” says Jay Mason, CEO of MyHealthDIRECT. “We are extremely fortunate to have Frank on our team and look forward to the impact he will have on the whole organization.”

“I am delighted to join the team at MyHealthDIRECT,” said Stellato. “I am very excited to participate in commercializing the MHD value proposition which addresses the core issue facing today’s healthcare environment, cost containment and enhanced patient care.”

Mr. Stellato comes to the organization with 30 years of healthcare industry experience in start up, mid size and Fortune 100 companies. Prior to joining MyHealthDIRECT, Frank was the Chief Financial Officer of MedAssist Incorporated, a leading provider of revenue cycle management solutions to the healthcare provider market. He was instrumental in the 2007 sale of MedAssist to Firstsource Solutions Limited for $330 million in cash. Post sale, Frank was appointed to the North American CFO role for Firstsource. Mumbai-based Firstsource is among India’s leading business processing outsourcing companies, providing business process management services to global leaders in the Banking, Financial, Telecom and Healthcare industries. Frank also spent 15 years at Baxter International Inc. with various cross functional role responsibilities, including director level experience in Accounting/Finance, Marketing and Operations. Mr. Stellato holds a Bachelor degree from DePaul University, Chicago Illinois and holds a CPA certificate from the state of Illinois.

Company hires seasoned business development leader to direct growth into managed care and other markets

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Doug Cobb of Chrysalis Ventures Joins MyHealthDIRECT

Wednesday, January 5th, 2011

Brookfield, WI, January 5, 2011 – MyHealthDIRECT (MHD) is pleased to announce the addition of Doug Cobb to the company’s Board of Directors.  Cobb is a successful Software-as-a-Service entrepreneur and entrepreneur-in-residence at Chrysalis Ventures, a Louisville, KY-based venture capital firm investing primarily in early-and growth-stage healthcare and technology companies.   Cobb joined the MHD Board of Directors, effective December 22, 2010.

One of the most successful CEOs in the Chrysalis portfolio, Cobb was most recently CEO of Appriss Inc., a Louisville, KY-based provider of innovative information technology solutions for state and municipal agencies.  In 2007, Cobb sold Appriss to an investor group led by Bain Capital, resulting in one of the largest cash-on-cash returns in Chrysalis’ history.

“I am thrilled that Doug will be joining MHD as a new Board member,” said Jay Mason, CEO and co-founder of MHD. “Doug’s experience in bringing advanced technology solutions to public service agencies is relevant to MHD’s mission to transform the delivery of healthcare by seamlessly connecting people with providers.  In addition, his track record as an entrepreneur makes him a positive addition to our Board.”

“The company offers an important and innovative service that helps realign supply and demand of healthcare services so that patients are seen by the right physician at the right time,” said Cobb.  “MHD’s positive growth trajectory and industry demand, along with its alignment with strategic partners, will only enhance MHD’s market visibility.  I am excited to be a member of this team,” said Cobb.

MHD provides an on-demand, web-based patient scheduling utility for the entire healthcare ecosystem.  With the ability to read practice scheduling systems, this service solution enables hospitals, health plans and managed care organizations to direct patients to the right healthcare professional at the right time and location. Since 2006, MHD has scheduled thousands of healthcare appointments.  Additionally, third-party studies have shown that the use of the MHD solution helps reduce unnecessary emergency room visits by redirecting patients to a personally selected primary medical home.

Cobb has a successful 25-year history as a serial entrepreneur.  From 1997 to 2000, Cobb served as the founding president and CEO of Greater Louisville Inc., Louisville’s leading economic development organization.  Before joining Greater Louisville Inc., Cobb was a co-founder and managing director of Chrysalis Ventures from 1993 to 1997.  Prior to Chrysalis, he was the founder and CEO of The Cobb Group, the world’s leading publisher of newsletters for personal computer users that were successfully sold to publisher Ziff-Davis in 1991.

About MHD

MyHealthDIRECT (MHD), a national company, is an innovative healthcare technology service solution provider. Since 2006, MHD has been delivering real-time scheduling solutions that help clients achieve their goals for cost containment and better care delivery.  Hospitals and healthcare systems, Medicaid managed care plans, and commercial insurers can apply its service solution in a broad spectrum of use cases aimed at facilitating care management, improving access to healthcare, reducing costs, and positively impacting quality measures. MHD is headquartered in Brookfield, Wisconsin. For more information on MHD, please visit www.myhealthdirect.com.

About Chrysalis Ventures

Chrysalis Ventures manages one of Mid-America’s largest funds for early-stage and growth investments with approximately $400 million under management. Since 1993, the firm has invested in over 65 companies, primarily in the healthcare and technology sectors. With headquarters in Louisville, Kentucky, Chrysalis has offices in Cleveland, Pittsburgh, Ann Arbor and Houston. The firm seeks to partner with entrepreneurs to build enduring businesses in industries undergoing significant transformation. For more information, please visit www.chrysalisventures.com.

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