A framework for investing in and building high-quality healthcare companies
Investing in Better Healthcare A FRAMEWORK FOR INVESTING IN AND BUILDING HIGH-QUALITY HEALTHCARE COMPANIES
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Who we are
We are proud to make private equity less private and more transparent. Throughout this report, we share the principles that guide how we evaluate investment opportunities; work with portfolio companies and partners to build sustainable industry leaders; and measure performance and quality data which demonstrate our longstanding, effective, and ongoing positive impact in healthcare.
Since 1979, WCAS has invested more than $11 billion in 100+ healthcare companies across payor services, healthcare delivery, healthcare technology, medical technology, and the pharmaceutical value chain. The healthcare sector needs private capital partners. Our track record of better outcomes, values-based leadership, support for innovation, and dedication to growth uniquely positions us as the partner of choice. In partnership with founders, management teams, physicians, health systems, and public healthcare companies, we have cultivated a differentiated approach to investing, governance, creative exit strategies, and knowledge exchanges that result in better outcomes.
$ 11 billion INVESTED
100 + HEALTHCARE COMPANIES
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Leadership Our General Partners lead an integrated team of investment professionals and operating partners. This collective expertise, coupled with our comprehensive understanding of the regulatory landscape, helps WCAS anticipate future trends and pathways that align with the outcomes public, non-profit, and private sector leaders aspire to achieve.
>150 years of healthcare investing experience by WCAS General Partners
Brian T. Regan GENERAL PARTNER
D. Scott Mackesy MANAGING PARTNER
David Caluori GENERAL PARTNER
Nicholas O’Leary GENERAL PARTNER
Click here to see the entire WCAS Healthcare team
Edward P. Sobol GENERAL PARTNER
Thomas A. Scully GENERAL PARTNER
Sean M. Traynor GENERAL PARTNER
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>50% of portfolio companies include repeat managers who have worked at other WCAS companies
We are true partners
We are accountable to our partners not only for results, but to achieve those results in alignment with their values, missions, and enduring roles in healthcare. We know diversity of thought and experience are critical determinants of good decision making, so we create strong, independent boards and support high-integrity management teams with resources, expertise, relationships, and advice.
Examples of WCAS partnerships across health systems, public strategies, and physician practices
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~70% of our investments have been made alongside health systems, physicians, and publicly traded companies
Click here for WCAS website page featuring physician, health system, and strategic partners
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50% of the investments in our latest fund came from pension funds, the majority of which were public pension funds
Our investors We invest capital on behalf of Limited Partners that include public and private pension funds representing millions of public servants . We also invest on behalf of sovereign wealth funds, insurance companies, and other sophisticated investors. How we invest Responsible companies with strong value propositions will outperform over time with lower risk. Our investment process identifies focused priorities, as well as sub-sectors and businesses that are excluded from investment consideration. We avoid unsustainable dynamics that cannot be changed through our ownership, such as care models that do not meet the needs of patients or caregivers, or payment models that take advantage of regulatory discontinuities. We bring differentiated resources to our portfolio companies. At events like the annual WCAS Clinical Quality Forum, we convene leaders across our portfolio to share experiences and promulgate best practices. We bring expertise and support in areas like regulatory policy, health system strategy, value-based care, talent, and technology.
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Good care is good business From patient care to novel drugs, and
To do this, we focus on outcomes that matter. The companies we invest in rigorously measure quality, safety, and stakeholder satisfaction. One common measure of satisfaction is the Net Promoter Score (NPS), which has a demonstrated impact on reputation and growth.
healthcare technology to medical devices, our philosophy is simple – good care is good business. The healthcare industry is capital intensive and needs private investment to innovate and meet patient needs. We help overcome the challenges in today’s healthcare system to expand access to care and grow improved models of care delivery – which require both capital and innovation.
Current and former portfolio company NPS
+84
+90
+60
+91
+91
+50
+43
+58
+51
+96
+62
100
80
60
40
20
0
Resurgens Clinics
Resurgens ASCs
Springstone Telehealth
Springstone Hospitals
USRS Centers
Liberty
Shields
USRS
EnableComp
Leiters
MMIT*
Referral Sources
Patients
Business Customers
* A Norstella business
NPS is the result of a simple question: on a scale from zero to ten, how likely are you to recommend this product/company to a friend or colleague? The NPS is then calculated by subtracting the percentage of detractors (scores 0-6) from promoters (scores 9-10). Scores can range from -100 to +100.
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A framework for investing in and building high-quality healthcare companies
Across our portfolio, our companies differentiate themselves along eight dimensions of quality.
Deliver outstanding clinical quality and patient outcomes 1
Drive innovation 5 efficiency 6 compliance 7
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Provide positive economic value to clients and healthcare systems
Build operational excellence and
Increase capacity and access to care 3
Ensure strong cultures of
experiences 4
Create durability and resiliency in everything we do 8
Deliver positive stakeholder
Deliver outstanding clinical quality and patient outcomes 1 8 | INVESTING IN BETTER HEALTHCARE
clinicians to grow provider capacity and promote the standard of care across specialties. WCAS understands that quality care delivery is an iterative process of learning, adaptation, tracking, and reporting. All of our portfolio companies engage in a core set of clinical quality processes. Our commitment to quality goes beyond our internal processes to include the engagement of nationally Our boards use balanced scorecards to align management incentives to operational objectives, quality outcomes, and compliance measures – not just financial performance – that are measured against industry standards. This aligns owners and management teams to deliver differentiated quality for the long term. recognized experts who conduct objective assessments of quality processes and results.
All physicians who partner with our portfolio companies retain clinical autonomy and decision-making authority to independently direct the practice of medicine and control decision making in their care models. This arrangement is legally protected in perpetuity, surviving after we have exited our investments. Physicians at our portfolio companies are almost all subspecialty trained from major training programs. They are national leaders within their subspecialties, sit on program committees, and hold leadership positions in professional societies and state organizations that set national standards of care. They also invest significant personal time and enterprise resources to conduct medical research and help train residents and other
Every practice that joined U.S. Anesthesia Partners improved their performance on CMS’ Merit-Based Incentive Payment System (MIPS)
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100
80
60
40
20
0
Practice One
Practice Two
Practice Three
Practice Four
Practice Six
Practice Eight
Practice Five
Practice Seven
MIPS is CMS’ national Quality Payment Program that measures performance across quality, improvement activities, promoting interoperability, and cost.
Before USAP
After USAP
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USAP achieves lower length of stay, fewer complications, and safer pain management AVERAGE HOSPITAL LENGTH OF STAY BY SERVICE LINE
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Non USAP
USAP
-37%
-64%
-57%
22.1
19.0
15.3
-50%
11.9
8.0
7.8
6.6
3.9
Upper Abdominal
Wound Incision and Drainage
Major Chest
Spine
U.S. Radiology Specialists delivers a 21% higher cancer detection rate (per 1,000 exams) despite an 11% lower recall rate for mammograms vs. BCSC benchmarks
Shields provides better clinical outcomes and patient experience
PATIENT NPS
THERAPY ADHERANCE
+58
+30~40%
100 80 60 40 20 0
100 80 60 40 20 0
92%
84
50~60%
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Industry Benchmark
Industry Benchmark
Shields
Shields
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Provide positive economic value to clients and the healthcare system From business customers to health system customers, and payors (including the U.S. government and taxpayers) to individual patients, each of our portfolio companies delivers economic value to its stakeholders. Some meaningful examples include: • Direct financial return on investment for business customers • Innovation, cost savings, and quicker patient access to new pharmaceuticals • Reduced downstream healthcare utilization and associated costs • In-network contracting strategies that facilitate access to care • The use of appropriate sites of care
Shields delivers $1,100 – $1,200 savings per member per month
U.S. Radiology Specialists’ expansive network of imaging centers helps provide better access to high-quality imaging services at 60–80% lower cost than hospital-based outpatient imaging
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3 Increase capacity and access to care
We invest in building capacity and increasing access to clinical care and drug therapies – vital elements that enable equitable health outcomes. For example, investments in the pharmaceutical supply chain improve patient outcomes and save lives by delivering new, more targeted therapies to patients. Current and recent WCAS portfolio companies have invested billions of dollars to build and expand a wide array of facilities and care sites.
Examples of recent investments that increase access to care
4 PACE centers 10 inpatient rehab facilities
25 community
hospitals 24 outpatient imaging centers
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4 Deliver positive stakeholder experiences Our companies measure stakeholder satisfaction rigorously and continuously. By doing so, we gain insights into trends and early indicators of impact so that management teams can respond quickly. This requires a culture oriented around service to others and supported by committed leadership and investments in systems and processes.
EnableComp client satisfaction + 91 NPS
92 KLAS score
56% Increase in Net Promotor Score within one year of WCAS investment
50
+50
40
+32
30
20
Competitor Survey +10
0
Q1 2022
Q4 2022
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KINICITI , a platform built to support innovation and development of cell and gene therapies, can replicate actual human cells through induced pluripotent stem cells, allowing researchers to assess performance against relevant human biology before conducting clinical trials
5 Drive innovation Innovation is critical to improving quality and creating
differentiation in healthcare. While all portfolio companies are continually innovating to enhance their value proposition and differentiate themselves, some companies are innovating at the leading edge of life sciences. Current portfolio examples include cell and gene therapies, manufacturing services for biologics, and antibody drug conjugates. As another example, we also incorporate value-based care (VBC) models into investment and business strategies to achieve better outcomes. These models align provider incentives with health outcomes by paying for quality of care rather than the quantity of services rendered.
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6 Build operational excellence and efficiency
Kindred at Home invested more than $60 million to upgrade and standardize disparate, aged clinical systems, driving improvements in clinical care and reduced clinician time spent on administrative tasks
Our companies reinvest productivity improvements to drive innovation, expand capacity, and serve more customers. For example, our investments in revenue- cycle management (RCM) have demonstrated improvement in operational effectiveness and have led to increased revenue yields of 5-10%, reduced costs up to 40%, and improved compliance in coding accuracy.
Emerus achieves shorter time to emergency care which drives better outcomes and higher patient satisfaction
TIME FROM ARRIVAL TO CARE
TIME FROM ARRIVAL TO DISCHARGE
-66%
-37%
142 mins
30 mins
89 mins
10 mins
National Average
Emerus Average
National Average
Emerus Average
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7 Ensure strong cultures of compliance
Shields delivers 100% compliance with physician care programs
Every company in the WCAS portfolio invests significant resources into audit and compliance programs, and each board regularly reviews the key indicators of quality and compliance to ensure companies are operating responsibly. In addition, all our portfolio companies conduct external audits of their cybersecurity posture and compromise assessments of their systems to protect operations, customers, and patients from cyber threats. As a trusted partner to some of the nation’s most respected health systems and public healthcare companies, we are accountable to them for demonstrating high levels of compliance. These partners are careful guardians of their reputations and trust WCAS to help achieve their long-term strategic goals as joint owners of private healthcare companies. “The quality structure at U.S. Anesthesia Partners is robust, contemporary, and clearly sets the standard for quality programs at the national level.” — Dr. Roberta Hines, Chair of the Dartmouth-Hitchcock Board, Chair Emeritus of the Yale School of Medicine Department of Anesthesia, and Chair Emeritus of Anesthesia at Yale New Haven Hospital
Leiters Health’s
drug compounding quality track record with the FDA is at the top decile for the 503B outsourcing industry and highly-distinguished among others in the industry
8 Create durability and resiliency in everything we do We build durable and resilient companies where investors see long-term potential. Our management teams continually reinvest in the long-term success of their businesses because we know quality is only sustained when a company maintains a strong culture, engaged employees, and continued investment in systems, processes, and talent. 16 | INVESTING IN BETTER HEALTHCARE
WCAS is a signatory to the United Nations Principles for Responsible Investing and the ESG Data Convergence Initiative, and we are a founding signatory of the International Limited Partners Association (ILPA) Diversity in Action Initiative For the past three years, Shields was named one of Fortune’s Best Workplaces in Healthcare, and last year it also made the list of Best Places to Work for Millennials. With a 95% employee satisfaction rate, the company grew tenfold in four years while maintaining a “culture of kindness”
USAP provides 20+ leadership training programs to its clinicians and employees, as well as physician residents and student registered nurse anesthetists
Current Portfolio
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WCAS is the partner of choice for: • Innovative healthcare companies seeking capital partners to grow • High-integrity founders and executives looking to improve the healthcare system • Physicians, health systems, and public companies seeking capital partners who share their values and mission for better healthcare We are proud of our team, our approach, and our portfolio companies. For more information, visit www.wcas.com , or reach out to us at healthcare@wcas.com.
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