News in brief - Nov. 7, 2011

Blues private equity fund invests in ACO technology company

A private equity fund backed by the Blue Cross Blue Shield Assn. has invested $9 million in Essence Group Holdings Corp., parent company of Lumeris, which makes technology designed for accountable care organizations.

Combined with a $61 million investment this year by prominent private equity firms Camden Partners Holdings and Kleiner Perkins Caufield & Byers, EGHC has $70 million to help fund Lumeris.

Lumeris' software, called Maestro, Maestro Plus and Tacklebox, was built over five years during which Lumeris tested it through its own Medicare Advantage plan, St. Louis-based Essence Healthcare.

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Coventry to buy Kansas City Medicaid plan

Coventry Health Care plans to expand its presence in the Midwest for the third time in two years by purchasing Children's Mercy's Family Health Partners, a Medicaid plan operated by Children's Mercy Hospital in Kansas City, Mo.

After the deal is completed, Coventry will have almost 900,000 Medicaid recipients in 10 states and more than 1.5 million members in seven states in the Midwest.

The Bethesda, Md.-based company recently was awarded Medicaid contracts in Kentucky and Pennsylvania.

The deal is similar to the last two large transactions Coventry made. It announced in August 2010 that it will buy Mercy Health Plans, a similarly named but unrelated St. Louis health insurer, from Sisters of Mercy Health System. It closed a deal to buy Preferred Health Systems from Via Christi Health System in January 2010.

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Philanthropic couple pump $100 million into health technology innovation

A $100 million investment fund has been created by an Omaha, Neb., couple to fund projects aimed at reducing health care costs through technology.

Gary and Mary West, co-founders of the nonprofit research firm West Wireless Health Initiative, created the West Health Investment Fund to provide capital to startup companies creating technologies and services aimed at controlling health care costs.

The fund's initial portfolio includes:

• A company that designed a diagnostic test to detect cancer from a single blood draw.
• A company that is building a Web tool to provide consumers with personalized pricing information for health care services.
• A home health monitoring device developer.
• An informatics company designing analytic tools for health care organizations.
• The developer of a continual vital sign monitoring device.

The Wests said the fund will target companies with products in the early stages of development, with a strong preference for pre-commercial and early-commercial companies. The couple will not profit from any of the fund's investments.

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