CalPERS In New $700M Healthcare Program

Jun 6 2007 | 9:32am ET

The California Public Employees Retirement System has announced a $700 million commitment to healthcare direct investments, co-investments and private equity.

The latest initiative from the pension giant’s Alternative Investment Management program is a joint venture with newly-founded p.e. firm Health Evolution Partners, headed by former National Coordinator for Health Information Technology David Brailer. Of the system’s total healthcare investment initiative, some $500 million will go to co-investments and direct investments in healthcare companies, with the remaining $200 million dedicated to healthcare p.e. firms and strategic joint ventures.

“Billions of investment dollars are already in the healthcare market, but what’s missing is the focused investment of those dollars to specifically address the needs of purchasers,” CalPERS’ CEO Fred Buenrosto said. “Our new innovative approach will enable us to invest more efficiently by identifying needs based on our experience in spending nearly $5 billion a year to provide health benefits to 1.2 million enrollees.” In addition, the system notes, AIM already invests in some 800 healthcare companies through private equity funds, and has billions of dollars in pharmaceutical, hospital and other healthcare stocks.

“This investment represents a significant opportunity to leverage our twin role as a leading health benefits purchase and investor to bolster our market returns while addressing severe inefficiencies in the healthcare sector,” Rob Feckner, president of the CalPERS board, said. “The need is urgent since the fragmented, inefficient healthcare market has hit our Health Program members with double-digit premium increases the past five years.”

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