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Transformation Capital Launches $800M Fund III to Fuel the Future of Health

Industry transformations don’t happen overnight.  It takes a series of tectonic shifts to spur change.  For the healthcare industry, that change was slow to arrive, but it is finally here.  Healthcare was primarily a paper-based industry until recent years when the proliferation of electronic medical records spurred by the HITECH Act of 2009 laid the data foundation layer of the U.S. healthcare system.  Innovations fostered by the Affordable Care Act and the increasing consumer demand for Medicare Advantage plans started to increase the economic incentives for providers to provide high quality and cost-efficient care – this was the advent of value-based care.  The pandemic accelerated adoption of virtual care and other lower cost-of-care settings outside the four walls of a hospital, and providers and patients alike seem to love the new experience and don’t want to go backwards.  The digital health boom was born, and we’ve observed adoption of these technologies abound across providers, payers, pharma, employers, and healthcare consumers – adoption, which before was anticipated to take decades, has happened in just a few years.

We at Transformation Capital were among the first to deploy a dedicated digital health fund to this historic shift with our first fund in 2016.  We launched our second fund ($500M) during the pandemic as thousands of new companies were formed to meet the growing appetite for digital health solutions.  Now we’re proud to announce the launch our third fund ($800M) backed by many limited partners that want to see a more equitable and efficient healthcare system.

We have partnered with more than 30 innovators in this first part of our journey.  The stories behind these partnerships are inspiring – here are just a few:

We believe a new digital healthcare age is upon us.  We want simpler, more affordable care that is easier to navigate.  We want to get away from the swamp of complexity encumbering quality care. We’re tired of the alphabet soup of CPTs and DRGs and the misaligned incentives inherent to fee-for-service medicine.  Hospitals are realizing their customer is not the payer, the pharma company or government agencies – it’s all of us – the healthcare consumer.  Biopharma companies want more live, streaming data to understand the efficacy of their offerings and bring products to market more quickly and more safely.  Employers are tired of their third-party administrators and brokers who focus on arbitrage with little value-add – they want direct care solutions for their team members.  The flywheel has started – key decision-makers in these organizations know they need to get digital now if they want to remain competitive.

We built Transformation Capital to help make healthcare faster, simpler, higher quality, and more affordable for all of us but especially for the vulnerable populations most in need of care.  Our team is composed of former operators, digital health founders/CEOs, clinicians, and healthcare investors with decades of collective experience.  And through all the years we’ve spent in this industry, we’ve built a network of healthcare leaders driving these changes which enables our partner companies to connect with the right leaders to accelerate their success.  We are fortunate that great founders partner with us because they know we seek to help them grow and thrive through industry connections and insights, operational support, fundraising and M&A and exit guidance.  With our sole focus in health innovation, we are purpose-built and aspire to be the best possible partner to founders in this fast-growing sector.

We are honored to support bold founders with bold visions who want to make decisive and lasting change to the old world of healthcare which we believe is, quite simply, horribly broken.  We can’t wait to see where these talented entrepreneurs will take all of us and welcome a conversation about how your company will transform healthcare.

  1. Source: Leavitt Partners, McKesson / ORC VBC Studies (2014, 2016, 2018), KFF.org. CMS: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsHistorical