Hartford Business Journal

www.HartfordBusiness.com March2,2015•Hartford Business Journal 3 Derby's Griffin Hospital dips toe into VC investing By Matt Pilon mpilon@HartfordBusiness.com N onprofit community hospitals are typically conservative investors, placing bets on stocks, bonds, real estate and other securities to supplement their income and strengthen their balance sheet. But a recent venture invest- ment by Derby's Griffin Hospital in a medical technology startup may have broken the mold for a hospital of its size. Griffin — the ninth smallest hospital in the state by net patient revenue — recently joined a $5 million early stage investment round in Philadelphia-based Velano Vascular, which has developed a device that draws blood samples through an exist- ing IV in a patient's hand or arm. Griffin's investment is modest — somewhere in the ballpark of $100,000, according to CEO Pat- rick Charmel — but it is unusual for a Connecticut hospital of its size, observers say. It also comes at a time of increasing financial difficulty for many hospitals, which have suffered declining government reimbursements and new taxes. VCs typically make invest- ments that offer big potential payoffs, and if Griffin's gam- ble strikes gold it will open an additional income stream. Venture investing, however, is a risky business; more bets fail than succeed. Charmel said he doesn't know of any similarly sized Connecticut hospitals jump- ing into the VC game, but he wouldn't be surprised to see it happen in the future. "Hospitals are going to be look- ing for alternative sources of rev- enue," he said. "How they go about that, I don't know. They have to be careful about what their core capa- bilities are." Following in larger footsteps While Griffin's venture invest- ment is rare given its size, larger health systems around the coun- try — like Partners Healthcare in Massachusetts — have formed their own VC funds to back medi- cal technology companies. Michigan-based Trinity Health, which is in the process of merging with St. Francis Hospi- tal and Medical Center, invested $10 million in a joint VC fund with four other hospitals in 2011. And both Yale and UConn's medi- cal schools, and their respective hospitals, are working to spin out medical technology companies. Nathaniel "Nat" Brinn, a Sims- bury-based principal of Vital Ven- ture Capital — which invests in bioscience, surgical, software and other companies — said many hospitals invest in startups with technology that was developed by their own researchers or doctors. One advantage hospitals have as investment partners, Brinn added, is that they can help develop and test technology. "Hospitals are kind of these giant incubators for technology development," said Brinn, whose fund has invested in Yale spinoff NovaTract Surgical. "They've got the inside track on the sense that something's going to be successful." Griffin didn't help develop Velano Vascular's technology, but it will be involved in the prod- uct's live testing and roll out. The state's quasi-public ven- ture capital arm, Connecticut Innovations, has invested heavily in medical technology as well as in research at both UConn and Yale. But CI hasn't partnered on an equity deal with a hospital, spokeswoman Kelsea Michaels said, although the investment fund would be open to the idea. "Most often we see medical SPRING IS RIGHT AROUND THE CORNER! Join us for a fun golf event on May 18th The FORE FACS Golf Classic at one of New England's premier courses SHELTER HARBOR GOLF CLUB, Charlestown, RI Save the Date! October 9th Archbishop's Columbus Day Breakfast New Haven, CT Archbishop Blair and The Foundation for the Advancement of Catholic Schls invite you to the ARCHBISHOP'S SAINT PATRICK'S DAY BREAKFAST Call 860.761.7499 or visit FacsHartford.org for sponsorship & ticket information. Please Join Us! Tuesday, March 17, 2015 7:30 a.m. Breakfast Connecticut Convention Center, Hartford, Connecticut Guest Speaker Cindi Bigelow, President and CEO of Bigelow Tea Individual tickets: $100 FACSHartford.org Proceeds benefit FACS to provide Scholarship Assistance Continued DiVersifiCation Play DiVersifiCation Play P H O T O | P a b l O R O b l e s In a rare move for community hospitals, Griffin Hospital CEO Patrick Charmel convinced his board of directors to invest in a tech startup developing a device that draws blood samples through an existing IV in a patients hand or arm.

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