Large national insurers have gotten lots of attention for investing in new technology and acquiring startups, but as it happens the Blues are making some of the biggest waves in the digital health space.
BlueCross BlueShield Venture Partners has been the third most active digital health investor since 2010, after Merck's Global Health Innovation Fund and Qualcomm Ventures, according to CB Insights.
BlueCross BlueShield Venture Partners was founded in 2008 by the Blue Cross and Blue Shield Association in a partnership with Chicago-based investment house Sandbox Industries, and started out with $116 million from 11 Blue insurers.
Now headed by Sandbox managing director Matt Downs, BlueCross BlueShield Venture Partners has $300 million split into two funds, with capital contributions from 24 Blue Cross insurers, and has nurtured a portfolio of 22 companies -- spanning everything from private exchanges and workplace wellness to medical practice scheduling and non-invasive cardiology diagnostics.
While Silicon Valley tech players might associate Blue Cross and Blue Shield insurers with their parent's employer-based health plan, BCBSVP has actually offered a huge market advantage to healthcare startups -- insurers paying for the healthcare of 100 million Americans -- which may be one reason why the venture fund is the third most active since the dawn of health reform.
"Healthcare companies need to evolve and pivot to take advantage of new opportunities in this rapidly evolving environment," according to Sandbox Industries, which tries to "work in the intersection between entrepreneurial thinking and large corporate enterprises."
BCBSVP's investments have covered a diverse spectrum of healthcare transformation -- financial management, population health, patient engagement, analytics.
The first investment in 2008 was in Initiate Systems, a data management and information exchange platform that was acquired by IBM in 2010. Second to get support, in 2009, was Phreesia, a self-service patient check-in tool for providers that's received a total of $72 million in investments, from BCBSVP and others, including the investment arm of Ascension Health, the nation's largest nonprofit health system.
The third company to get the Blues' investment was Bloom Health, a private exchange and employee benefits software maker that Health Care Services Corp, WellPoint and Blue Cross and Blue Shield of Michigan jointly purchased in 2011.
In the past few years, the investments have diversified into other areas of healthcare that nonetheless could prove beneficial for Blue Cross payers.
One such investment -- albeit of an uncertain amount -- is in Palo Alto-based HeartFlow, whose cardiology diagnostics software analyzes blood flow detected in CT scans with the aim of ruling out the need for costly, risky and often overused diagnostic and therapeutic cardiac catheterizations.
This year, BCBSVP has joined in six investments totaling at least $90 million, pooling funds with the likes of Kleiner, Perkins, Caufield and Byers, as well as Camden Partners.
Among those companies are Lumiata, specializing in clinical data analytics; Axial Healthcare, specializing in clinical decision support systems; Aspire Health, a provider of chronic condition management; MedSave, maker of managed care administrative software; AbilTo, an online video conferencing platform for behavioral and mental health; and Essence Group, whose flagship Lumeris company is specializing in accountable care platforms.