Exclusive: Cypress Ridge debuts with cardiac care deal

Cypress Ridge Capital has made a controlling investment in atria health, a newly launched value-based cardiovascular care organization, the firm tells Axios exclusively.

Why it matters: The investment is the first for CRC, the health care-dedicated growth equity firm that managing partners Andrew Pardo and Chris Petrini launched in January.

Zoom in: Cardiology is the largest pocket of health care spend and the field is in desperate need of innovation. Through atria, CRC aims to reinvent specialists' role in care delivery through a JV partnership playbook.

• In contrast to the traditional physician practice management (PPM) model, wherein physicians are primarily cashing out, atria is hyper-focused on giving its partner physicians more autonomy — clinically and economically speaking.
• The first group atria is partnering with will roll more than 50% of their proceeds into the deal, Pardo says.
• Likeminded value-based care approaches in other specialities include General Atlantic-backed cancer care platform OneOncology and Bill Frist's nephrology platform Monogram Health.

Between the lines: Cardiologists are uniquely positioned to further value-based care, as they assume a primary care role for a very defined chronic patient cohort with many downstream costs.

• "You can actually move the needle" by managing all of those conditions better, Pardo says.
• Hence, atria enables providers to work with payors and take more risk. "We're effectively putting physicians in the driver's seat," Petrini adds.

Yes, and: The new venture is thinking through how to weave in health tech to avoid unnecessary hospitalizations and deliver coordinated care.

• Heart care startups may have intriguing technology around this problem but are "fundamentally missing how do you loop that back into the delivery of care," Petrini says.

Behind the scenes: CRC since last year has met with 200 to 300 cardiologists, seeking out those that share a similar mindset around value.

• Pardo and Petrini, former investors of CD&R and WindRose Health Investors, respectively, are members of atria's board of directors, joined by a group of executives and doctors they are assembling.
• The duo are old friends, having previously co-led investments at CI Capital.

State of play: Sponsors are increasingly flocking to cardiac care, but mostly through a typical PPM lens:

• That includes Webster Equity's Cardiovascular Associates of America; Ares' Pima Heart and Vascular; Assured Healthcare's Cardiovascular Health Partners; and Varsity Healthcare's Partners First Cardiology.
• Deerfield Management-backed Novocardia also boasts a value-based care strategy.
• Meanwhile, Pivotal Healthcare Partners is prepping for a sale via Triple Tree.

Context: CRC aims to write checks in the $25-$50 million zip-code in companies with $5-$100 million of revenue. It targets four sub-segments: provider services and care delivery, payor services, pharma services and healthcare IT.

• Supported by a network of industry operators, CRC pursues both control and non-control investments via two strategies: partnership platform builds and founder growth equity transactions.
• "We have a big firm approach but are applying that to the lower middle market," Petrini says.
• CRC has significant LP capital committed to fund atria's future growth, and over the next 12 to 18 months will begin fundraising for a traditional fund.

❤️ One fun thing: Atria is the plural for atrium — one of two upper chambers in the heart.