Health-care foundations in the Bay Area and elsewhere are increasingly turning to \u201cimpact investing\u201d \u2014 plowing money into for-profit companies, seeking a financial as well as a social return.<\/p>\n
Oakland\u2019s California HealthCare Foundation<\/a> started with a $10 million fund in late 2010. It\u2019s invested about 75 percent of that money in eight entities \u2014 including seven for-profit companies. The rest of the initial funding will likely go to augment those early investments, which so far have taken the form of low-interest loans or convertible debt, as opposed to traditional grants.<\/p>\n \u201cWe\u2019re looking for entrepreneurs serving a market of underserved people,\u201d explained Margaret Laws<\/a>, director of CHCF\u2019s Innovations for the Underserved program.<\/p>\n A key area of interest is entrepreneurs working to make community health clinics more efficient and effective.<\/p>\n As the Affordable Care Act expands access to Medicaid (Medi-Cal in California), it puts more pressure on those clinics to meet the needs of more patients. \u201cCommunity health centers will bear the brunt,\u201d Laws said.<\/p>\n Locally, CHCF has invested in three South Bay companies, Palo Alto\u2019s Direct Dermatology, Santa Clara\u2019s CareInSync and LifeWave Biomedical in Los Altos, and three San Francisco for-profits, PipelineRx, iRhythm Technologies and Propeller Health.<\/p>\n PipelineRx, a virtual pharmacy oversight company, helps small hospitals, many of them rural, ensure they\u2019re prescribing the right dose for the right patient at the right time, Laws said.<\/p>\n \u201cWe invested in that company pretty early,\u201d she said, when it had 14 customers. Now it has more than 70, and \u201cjust raised a big growth round of capital.\u201d<\/p>\n Similarly, Direct Dermatology is using $740,000 from CHCF and another $500,000 from Kresge Foundation<\/a> to bolster its management team and \u201cdeploy our services to rural and underserved areas in California and now Hawaii,\u201d said co-founder and CEO David Wong<\/a>, M.D.<\/p>\n It links about 250 primary care clinics statewide with dermatology specialists, most of them in urban areas like San Francisco, Los Angeles and San Diego, who can diagnose conditions remotely using electronic images.<\/p>\n More in the works<\/strong><\/p>\n Early this month, CHCF said it will work with the much-larger Kresge Foundation<\/a> to invest at least $5 million in companies that have technologies to help community clinics improve access and efficiency.<\/p>\n A big investment along these lines in a company \u201cwith Bay Area roots\u201d is expected shortly, according to foundation officials, but they\u2019re mum on the details.<\/p>\n \u201cIt\u2019s definitely a trend in the field,\u201d said Peter Long<\/a>, CEO of the San Francisco-based Blue Shield of California<\/a> Foundation, the philanthropic arm of Blue Shield of California. His foundation hasn\u2019t made for-profit investments itself, Long said, but it works closely with CHCF and others who have taken that step.<\/p>\n The Blue Shield foundation typically works with organizations doing good work that isn\u2019t necessarily \u201cfinancially viable\u201d without outside assistance, while the new CHCF innovation fund is meant to help companies with potentially scalable models that could ultimately make a big dent in seemingly intractable social problems.<\/p>\n Sometimes CHCF identifies organizations that can use Blue Shield\u2019s approach, Long said. Sometimes Blue Shield sends potential investment opportunities to Laws\u2019 group.<\/p>\n \u201cWe definitely are participating, but we don\u2019t see it as a space where we\u2019re going to be a big player,\u201d Long said.<\/p>\n More broadly, philanthropic foundations such as the California Endowment, Robert Wood Johnson Foundation<\/a>, and Kresge are making impact-investing moves, sometimes in for-profit companies and sometimes in nonprofit organizations, according to a CHCF report in December.<\/p>\n In 2012, for example, 13 foundations and three other organizations made such \u201cimpact investments,\u201d the study reported, investing $81.2 million.<\/p>\n![\"Margaret](\"http:\/\/media.bizj.us\/view\/img\/2351011\/lawsmargaret-3441-sb14*750xx1680-2240-0-143.jpg\")
Margaret Laws is looking for entrepreneurs who serve underserved people for California\u2026 more<\/a><\/p>\n