As market pressures loom, healthcare giant Cigna launches a $250 million venture fund
If you don’t think the healthcare market is prepping for the radical transformations that remote care, persistent diagnostics, as well as and monitoring and improving targeted treatments are going to bring to the industry, think again.
Healthcare companies are steeling themselves for the shift in healthcare services in the most desperate way they can — by launching venture funds. The latest to make the move is Cigna, the multi-billion-dollar healthcare insurer which is now launching a $250 million venture fund called Cigna Ventures.
Starting a venture fund has often been the last, worst best hope of corporations that have been overtaken by dramatic changes in technological platforms. At the tail end of the last internet bubble, as everything was about to fall apart, big companies began to realize that technology was bringing hordes of new barbarians to the gate. And they swung into action to finance these companies, and get a window into them, even as the hordes were immolating themselves on pyres of wasted cash and incomprehensible business models.
This time, corporations in industries like health insurance may not have the luxury of startup ignorance to protect them from the slow march of progress.
The mighty combination of Amazon, Berkshire Hathaway and JP Morgan Chase loom large in the visions (or nightmares) of healthcare services providers — and the potential for a single-payor healthcare system in the U.S. can’t be far behind. And while one (ahem… single payor) is almost surely the stuff of nightmares, the announcement of a new chief operating officer is making the venture increasingly real.
Cigna says it will focus on investing in companies that will bring improved care quality, affordability, choice and greater simplicity to customers and clients in three strategic areas: insights and analytics; digital health and retail; and care delivery and management.
Companies in the portfolio include Omada Health, a digital therapeutics company treating chronic diseases; Prognos, a predictive analytics company for healthcare; Contessa Health, a home-patient care service; Mdlive, which provides remote health consultations; and Cricket Health, a special kidney care provider.
“Cigna’s commitment to improving the health, well-being and sense of security of the people we serve is at the front and center of everything we do,” said Tom Richards, senior vice president and global lead, strategy and business development at Cigna, in a statement. “The venture fund will enable us to drive innovation beyond our existing core business operations, and incubate new ideas, opportunities and relationships that have the potential for long-term business growth and to help our customers.”
Cigna has been spending like a drunken sailor to acquire businesses in an effort to build out an organization to withstand the assault of Amazonians, the government and upstart startups alike. Its stock fell off a cliff in March after it announced the $67 billion acquisition of ExpressScripts, months before Amazon acquired PillPack in a roughly $1 billion transaction.
Cigna had invested in startups before the creation of this new venture fund. According to Crunchbase, the company’s investment activity in startupland dates back to 2016.
“Our partnership with Cigna has been about so much more than capital,” said Sean Duffy, co-founder and CEO of Omada. “The ability to collaborate with, learn from, and integrate deeply with a health services company so dedicated to delivering a 21st-century care experience to its customers and clients has enabled us to accelerate innovation, advance our capabilities, and grow our customer base.”
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