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The Healthcare Investor Insights on Issues & Trends that Impact Investments in Healthcare & Life Science Businesses

Private Equity Investing in the Dialysis Sector – Part II

Posted in Healthcare Services Investing

Part II of our series on private equity investing in dialysis discusses other dialysis companies backed by private equity and highlights some key considerations for investors and companies.

Funded in 2000, U.S. Renal Care (USRC), is another dialysis company (generally considered an “MDO” or mid-sized dialysis organization) that involves private equity investors.   URSC comprises a network of 85 dialysis centers as well as home and specialty hospital dialysis programs, with facilities in Arkansas, Georgia, Maryland, New Jersey, Ohio, Oklahoma, Pennsylvania, South Carolina, Texas and Virginia.   Like many other SDOs, MDOs and LDOs, the company also manages a number of acute-setting dialysis programs in conjunction with community hospitals.  USRC includes among its financial partners Cressey & Company, SV Life Sciences, Salix Ventures and Select Capital Ventures. 

Chicago-based Cressey & Company is a private investment firm focused on the healthcare industry, whose principals have been healthcare investors for nearly three decades.  They have recently completed transactions in such other healthcare-related companies as Innerchange, Homecare Homebase and Regency Hospital. 

SV Life Sciences, previously Schroder Ventures LifeSciences, is a venture capital adviser and manager for companies requiring funding within the human life sciences sector, including biotechnology and pharmaceuticals, medical devices and instruments, healthcare IT and services.  The company, established in 1993, advises or manages four funds with total capital of approximately $900 million.

Select Capital Ventures is a private equity investment firm focused on the healthcare industry. The company has invested in more than 30 healthcare companies, many of which have completed public offerings. Members of their investment team have personally led four companies to IPO’s, including two NYSE traded companies that achieved revenues in excess of $1 billion.

Salix Ventures is a Nashville-based venture fund founded in 1997 to pursue high growth investment opportunities in health care services companies (including health care information technology).   In 2011, Salix exited several investments, including surgery center company Titan Health (sold to United Surgical Partners International) and Pathology Partners (sold to Caris Diagnostics).

Investors in the dialysis industry should understand the key regulatory issues and reimbursement pressures facing the dialysis industry, from transition to the Medicare bundled payment system (now thirteen months “old”), to the role of nephrologists and dialysis programs in integrated delivery systems such as ACOs, to physician compensation and other regulatory risk issues.   We have addressed many of these issues in more detail in prior blog posts.  

 

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