The California Public Employees’ Retirement Systems last week unveiled a $700 million investment program to invest in U.S. health care companies and to seek ways to improve the health care system, which CalPERS’ CIO Russell Read called “fragmented and inefficient.”
Under terms of the deal, CalPERS will initially commit up to $500 million to a new initiative for direct investments and co-investments in health care companies. It also will earmark up to $200 million for health care-focused private equity funds and strategic joint ventures.
The initiative will be advised exclusively by San Francisco-based Health Evolution Partners, a private equity firm formed last month by Dr. David Brailer. Brailer previously founded a health care data analysis company, CareScience, which was sold in 2003 to Quovadx. President Bush tapped Brailer to head the newly created Office of the National Coordinator for Health Information Technology in May 2004. He stepped down from that post last summer, but continued to do consulting work with the U.S. Department of Health and Human Services.
Brailer says that he expects the firm to employ about two dozen, including three to five seasoned “senior investment partners.” Health Evolution Partners also plans to raise its own fund, in which CalPERS is expected to be the sole investor in the first fund.
“Our first goal is, obviously, to make money for CalPERS. But we want to find new and innovative ways to improve health care for our 1.2 million enrollees,” said CalPERS CEO Fred Buenrostro during a press conference in Sacramento, Calif., last week.
CalPERS is the nation’s largest pension fund and third-largest purchaser of health benefits. —Dan Primack and Alastair Goldfisher