Minority-owned Firm Reduces Costs and Provides Greater Access to Health Care System
Pharos Capital Group is a minority-owned, physician-founded private equity firm that invests in growing healthcare companies that improve patient outcomes, increase access to care and lower the cost of healthcare. The group is based in Dallas, Texas, and Nashville, Tennessee, two U.S. healthcare capitals, offering them significant networking opportunities and access to healthcare entrepreneurs. The group focuses on investments in underserved areas with small and complex populations. While rural communities were not an initial focus, Pharos now has a significant portfolio of rural-based businesses.
“Pharos takes a ‘somewhat contrarian stance’ against the legacy healthcare system which has rewarded volume as opposed to quality, access or outcomes,” said Joel Goldberg, a partner at Pharos Capital Group. “We didn’t want to do what everyone else was doing. We really wanted to work on taking some of the costs out of the system and bringing greater access to care in a decentralized way. While that approach has grown more popular among healthcare investors, we believe we were really at the forefront of that thinking.”
In 2018, Pharos began pursuing a Rural Business Investment Company license with the USDA. At the same time, the organization proactively identified CoBank as a potential investment partner.
“We had a strong network of community banks, but we really wanted to develop a relationship with Farm Credit,” said Goldberg. “CoBank immediately understood what we were trying to accomplish, how it benefitted rural communities and aligned with their own goals. They helped us to build a coalition of committed Farm Credit partners. CoBank’s advocacy and early adoption enabled us to build traction and we’re now the largest licensed RBIC, so that’s a great success story. Without CoBank’s partnership, I don’t know if this fund would exist.”
One of Pharos’ recent investments is in Renal Care 360°, a comprehensive nephrology and chronic care management company that has developed a unique model centered on early detection of unidentified chronic conditions using proprietary data analytics.
“Utilizing technology and high engagement with care advocates, Renal Care 360° partners with providers and healthcare systems to detect disease early, empower patients, delay disease progression and reduce cost of care,” said Shannon Perry, chief operating officer. “By analyzing electronic health data, we can identify people with kidney disease before they even know they have it. Early identification helps get patients involved in proactive care through education, comprehensive customized care plans and medication adherence. If the disease has already progressed, we get them treatment that can help keep the disease from advancing further. Ultimately, we hope to prevent the majority of patients from ever going on dialysis.”
Jim Kerrigan is a vice president at Pharos and serves on the board of directors for Renal Care 360°.
“Our introduction to RC 360° exemplifies the importance of having a good reputation in the investment space,” said Kerrigan. “They were looking for a partner to help expand their business and Pharos was one of the first names they heard. For us, they really ticked all the boxes. By helping to identify chronic disease earlier in the process, they are lowering costs, increasing access to care and improving outcomes.”
“The Pharos RBIC is a great example of how the program can diversify into sectors outside agriculture for the benefit of rural America,” said Dave Dornbirer, vice president, Public/ Private Partnerships at CoBank. “Bringing capital and jobs to these communities, as well as vital services like those supplied by Renal Care 360°, offers exactly the kind of outcomes you want from a collaboration like this. We’re proud of the role that CoBank and Farm Credit are playing in these important efforts.”