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Focused on White Coats, Not Suits and Ties – Catalyst Seeks Doctor-Entrepreneurs



Healthcare investments can be broadly split into two overarching categories: (i) those that enhance the infrastructure of care through Healthcare Information Technology (HCIT), providing products/services such as practice management (PM), electronic health records (EHR) and revenue cycle management (RCM) and (ii) those that deliver the care, such as service providers and health systems.

Catalyst Investors has traditionally focused on the HCIT category, including investments in companies such as MINDBODY (business management software for health and wellness), Clinicient (PM and RCM for physical therapists) and PresenceLearning (speech and occupational therapy telemedicine for K-12 students). While we continue to actively seek out opportunities in this sector, Catalyst is also exploring healthcare services, particularly focusing on practice management companies that aggregate (or roll-up) specialty providers. From the perspective of the physician, working with a practice management company (versus traditional private practice) has a number of benefits:

  • Renew focus on patients by centralizing administrative functions and freeing up providers to focus on the actual delivery of care.
  • Improve patient experience through increased physician/staff attention and lower wait times due to centralizing scheduling.
  • Enhanced sales and marketing results in higher growth and improved patient flow, driven by a dedicated staff and unified brand.
  • Centralized billing enables significant improvement in collections.
  • Economies of scale enhance efficiency, cut down on overhead, optimize lab and equipment spend and enable better negotiating power with payers, suppliers and ancillary service providers.

More broadly, specialty providers have the ability to capitalize on changing consumer preferences and broader regulatory changes in healthcare delivery. A roll-up or build-up in a specialty provider area has the potential to benefit from economies of scale. From an investor perspective, we see the following industry tailwinds and opportunities:

  • Increased access to insurance – More than 20 million people have gained health coverage since the Affordable Care Act went into effect, increasing demand for services.
  • Limited consolidation – Most provider specialties remain highly fragmented. For example, 96%, 85% and 70% of dermatology, dentistry and physical therapy practices, respectively, are independent providers.
  • Multiple growth avenues – With consideration to specialty and geography, roll-up groups have three primary ways to grow: (i) M&A – acquiring and integrating other independent practices, (ii) De Novo builds – identifying attractive geographies and building new practices off the existing group infrastructure and (iii) same-store growth – utilizing pooled provider resources, including “Extenders” (physician assistants and nurse practitioners), to maximize utilization where previously capped.

Catalyst is very excited to pursue opportunities in the healthcare services. In particular, we’re focusing on specialties with diverse revenue streams and payer mix. As such, we’re digging even deeper in the following specialty areas:

  • Behavioral Health
  • Chiropractic
  • Dental
  • Dermatology
  • Ear, Nose and Throat (ENT)
  • Fertility
  • Physical Therapy and Rehabilitation
  • Post-Acute Care

If you are a growth-stage healthcare services company seeking investment in any of these areas, we would like to hear from you. Please send inquiries and business plans to [email protected].

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Catalyst Sees a Bright Future for Commercial & Industrial Solar

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Renewable energy is in the midst of a pivotal period of development – driven by the desire to combat climate change, a favorable policy and regulatory environment, advances in technology, and limited domestic penetration to date. Catalyst has researched the space and is attracted to the recurring revenue, contracted cash flow, and long customer life of distributed solar – and is interested in partnering with growing commercial and industriaI developers looking to scale their development efforts.

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