The Story

Never in history has there been a better time to change and improve the $3 trillion healthcare system and lead the charge in its disruption. Seismic market drivers are shifting the industry to be completely digitized while we shift to new models of care.

Work with us and you’ll have partners who will help you navigate the never-ending complexities companies face while growing in the healthcare arena. We’ve been there and done it ourselves. We’ve gotten down in the trenches, raised financing, run companies, taken care of patients directly, disrupted industries and achieved highly successful exits. We’ve been in your shoes.

You’re not a “portfolio” company or a “deal” to us – you’re a partner. Just ask the CEO’s and founders we’ve partnered with.

Let’s build something great together.

Healthcare: A Changing Landscape & Massive Opportunity

$3.4 Trillion of Spend and Growing…

Healthcare expenditures are on a direct path to comprise nearly 20% of U.S. GDP. These expenditures have grown steadily, and are expected to continue to grow, both in absolute dollars and as a relative share of U.S. GDP.1 Healthcare spending growth is expected to continue for several reasons, including most importantly the significant aging of the U.S. population: currently, 10,000 new baby boomers reach Medicare age each month. 2 An aging population increases demand for the drugs, devices, procedures, and other services necessary to treat the many diseases – such as cancer, heart disease, diabetes and Alzheimer’s disease – whose incidence increases dramatically in older patients. Additionally, as the average life expectancy increases, patients need more care over a longer period of time, also driving up costs. And over 50% of the cost of care occur in the last two years of life.

Second, the percentage of the U.S. population that is covered by health insurance has increased materially, driven by key elements of the 2010 Patient Protection and Affordable Care Act (ObamaCare) including the individual healthcare insurance mandate, the expansion of Medicaid, and the introduction of state and federal exchanges for individual health insurance coverage purchase. While increased access to healthcare is an important goal of the Affordable Care Act, these newly insured patients add significant demand for healthcare services.

The continued growth in U.S. healthcare expenditures as a percentage of GDP appears unsustainable and the main constituents in the system – payors, providers, patients, biopharma, employers, and the government – will require technology-enabled solutions to address the increasing demands to control healthcare costs while ensuring high quality clinical care.

Inefficiencies Prime For Disruption

The U.S. healthcare system is characterized by waste and inefficiency, and it often fails to generate top quality outcomes. A 2000 report of the World Health Organization ranked the United States 37th among the world’s health systems. 3

A 2014 study conducted by the Commonwealth Fund compared 11 industrialized nations on a combined score for a range of healthcare-related factors, including quality, access, efficiency, and equity.

The United States ranked last in this study.4 A 2013 Institute of Medicine Report estimated that more than $750 billion – nearly one-fourth – of annual U.S. healthcare spending is wasted.5

Seismic Market Drivers

This enormous and inefficient industry is in the early innings of a remarkable period of transformation in how products and services are selected, delivered and paid for, which is being driven by two seismic market drivers:

In the years since the Health Information Technology for Economic and Clinical Health (HITECH) Act was enacted in February 2009, more than $30 billion in government funding was allocated to incentivize physicians and hospitals to implement electronic medical records (EMRs).  EMR adoption is now above 80% in both the inpatient and outpatient settings from well under 30% only a decade earlier.6 This change has created an explosion in the amount of digital data that can be leveraged by innovative companies to analyze, compare and drive marked improvement in the quality and cost effectiveness of clinical care.

U.S. healthcare reimbursement structures are shifting from a decades-old fee-for-service system of payments where doctors and hospitals are reimbursed for the volume of procedures they perform towards fee-for-value payment models where they are instead reimbursed for higher quality and more cost-effective care. The monitoring of care in these value-based structures requires new technologies and services to deliver improved outcomes. The transactional IT systems of the past in revenue cycle and the electronic medical record form the foundation of data from which these new systems driving value-based care are being built. These alternative payment mechanisms each have their own reimbursement rules, adding even more complexity to an already highly complex healthcare financial system and requiring new tools, systems and services to accurately record them and make sure each constituent is paid the correct amount.

The LTP Approach

LTP's 100% Focus

The U.S. healthcare system is uniquely complex: reimbursement mechanisms vary significantly by provider type and payor; the healthcare landscape has manifold stakeholders, often with misaligned incentives; and more than 40 regulatory bodies have some degree of industry oversight.

Domain expertise is crucial to fully understand the current state of the industry and to anticipate the ways in which its transformation will manifest itself into investment opportunities. We are well-suited to help you address this complexity. We’ve worked in healthcare our entire careers.

Tap into LTP’s Deep Operational, Clinical, and Investing Experience

Entrepreneurs building the companies shaping the future of the U.S. healthcare system are looking for more than just money from their investment partners: they are seeking investors with deep domain experience and company-building skills who can help them navigate the inherent complexities of the healthcare industry. The LTP team brings a powerful skillset from decades of healthcare investing, company building and operational and clinical experience to address the needs of entrepreneurs.

We have developed deep networks of relationships across the healthcare ecosystem as a result of our decades of focus on this sector. Our connectivity to decision makers and industry leaders has helped portfolio companies increase market access and accelerate sales.

Meet the Team

Leveraging a Strong Healthcare-Focused Partner

We launched our fund in partnership with LEERINK, which runs a pre-eminent healthcare investment bank with highly regarded equity research, M&A advisory and investment banking, including a team specifically focused on healthcare IT and services. We derive significant benefits from the industry knowledge, relationship network, and operational infrastructure of LEERINK.

As one powerful example, LEERINK also has developed and curated MEDACorp, a broad healthcare-focused Key Opinion Leader (KOL) network comprised of over 20,000 physicians, regulatory and reimbursement specialists, hospital/payor/pharma business managers and researchers. Our portfolio companies and investors are able to benefit from LTP’s proprietary access to this valuable and powerful network of leading healthcare authorities.

LTP: Helping Companies Grow

We bring a powerful combined skillset of healthcare investing, company building and operations and clinical experience that help us help you grow. We spend significant time helping our companies grow in a myriad of ways. We put our experience and extensive resources to work to drive growth by taking active roles in five key areas:

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    Mentoring and Coaching

    Having investors on the board who have been in founder, CEO shoes and have actually used healthcare IT products as clinicians has proven to be extremely helpful for the LTP partner companies. Regular 1:1 interactions, strategy sessions, on-call availability are all typical ways we work with founders, CEOs and executive leadership.

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    Team-Building

    We draw on our extensive collective network in the healthcare system to help you recruit senior executives and independent board members and other key leaders.

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    Business Development: Specialized Operational Assistance and Leveraging Extensive Network

    We have a well-developed understanding of how healthcare stakeholders interact, how their systems work and how they must evolve to accommodate the rapidly changing environment. Additionally, the extensive networks of our team and LEERINK provide a rich source of potential leads for customer prospects.

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    Acquisitions and Other Strategic Transactions

    We’ve developed significant expertise in assisting companies with strategic transactions, including incremental and transformational acquisitions, needed for company growth. We draw on this expertise, together with our extensive network within the healthcare ecosystem, to assist our CEO partners with these critical transactions.

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    Optimizing Exits

    We have experience with successful exits by acquisition (by both strategic and financial buyers) and IPOs as both operators and investors. We believe our networks, amplified by the reach of LEERINK, will broaden our ongoing access to the universe of potential strategic acquirers for companies we partner with.

The Fund

LTP has over $340 million in AUM dedicated to healthcare IT and services growth equity investing

Our Investing Criteria

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    Sector focus on healthcare information technology and novel healthcare services

    We partner with companies providing software and related business services to serve any key healthcare stakeholders, including providers, payors, biopharmaceutical companies, employers, consumers and other vendors. In healthcare services, we invest in companies providing technology-enabled services to the industry stakeholders as well as novel models of direct patient care.

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    $10-30 Million Investment Size

    We typically invest $10-30 million over the life our involvement with a company, though we can speak for much a larger capital amount in concert with many of our Limited Partners who want to make direct investments alongside us. We typically take on minority ownership positions though we will take control positions as well.

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    Commercial Stage

    We invest in revenue-stage businesses with multiple referenceable customers. We believe this is the optimal stage where our industry experience and relationships can help accelerate growth.

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    U.S. Geographic Focus

    We primarily invest in companies with headquarters and senior management teams based in the continental United States.

Massachusetts Innovation Catalyst Fund

LTP also manages the Massachusetts Innovation Catalyst Fund (MICF), which co-invests alongside LTF I in Massachusetts-based companies. The MICF is capitalized by leading Massachusetts companies and executives, including ones in the Massachusetts Competitive Partnership (MACP), a nonprofit public policy group comprised of CEOs of some of the largest businesses in Massachusetts. The MACP seeks to promote regional economic growth and competitiveness, including a focus area to enhance Massachusetts’ position as a leader in healthcare information technology.

Massachusetts is home to some of the top hospitals and biopharmaceutical companies in the world and has abundant software engineering talent, so it is a natural geography to excel in developing healthcare IT businesses, and LTP is proud to be working with local business leaders and contributing to the growth of the Massachusetts healthcare ecosystem.

More Info

Footnotes

  1. World Bank Group (2017). Health expenditure, total (% of GDP). World Health Organization Global Health Expenditure database. Washington, DC.
  2. Diamond, D. (2015). 10,000 People Are Now Enrolling In Medicare - Every Day. Forbes Pharma & Healthcare.
  3. Coutsoukis, P. (2007). The World Health Organization's ranking of the world's health systems. Champaign: Information Technology Associates.
  4. Davis, K., Stremikis, K., Squires, D. and Schoen, C. (2014). Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally. Washington, DC: The Commonwealth Fund.
  5. Yong, P. and Olsen, L. (2010). The Healthcare Imperative: Lowering Costs and Improving Outcomes: Workshop Series Summary. Washington, DC: The National Academies Press, p.2.
  6. Henry, J., Pylypchuk, Y., Searcy, T. and Patel, V. (2016). Adoption of Electronic Health Record Systems among U.S. Non-Federal Acute Care Hospitals: 2008-2015. ONC Data Brief, no.35. Washington, DC: Office of the National Coordinator for Health Information Technology.