Is the timing right for venture capital?

The sour economy isn’t curbing interest in the healthcare IT sector, where a new private equity firm has sprung up to provide funding and management support for healthcare start-ups.

Blood, Sweat Capital LLC was launched on June 22 in Philadelphia by four healthcare industry veterans, amid news that the healthcare venture capital market saw $1.83 billion in transactions during the first quarter of 2009. The firm is led by CEO David Bach, MD, along with partners Pat Aberle, Mike Duffy and Dan Lyons, MD.

Bach, a graduate of Harvard Medical School, was the founder and CEO of the Touchstone Health Partnership, a New York-based Medicare HMO, Empyrean Benefit Solutions, a Texas-based human resources outsourcing firm, and Leprechaun, a Texas-based HCC management outsourcing company. Along with co-founders Aberle and Duffy, he sold Leprechaun last year after generating an annualized return-on-investment of more than 100 percent for its founding investors.

“Blood Sweat and Capital was launched to transform great healthcare ideas into successful businesses,” said Bach, “We’ve spoken with dozens of hospital and health plan executives, physicians, pharmacists, consultants and other stakeholders in the past two months. Today’s massive federal funding and policy shifts in Washington are already stimulating a wave of entrepreneurial activity. We want to talk to anyone with a great idea on how to improve healthcare service delivery during this sea change, and believe we offer unique value to those entrepreneurs.”

David Jenkins, director of technology, telecommunications and digital media for Harris Williams, a middle market merger and acquisition firm, said the healthcare IT market has been active over the past three years as providers deal with an aging population and a lack of interoperability among legacy systems. As the nation moves toward healthcare transparency and interoperability, he said, “there’s definitely a prevailing view that healthcare IT is a great place to invest.”

“It’s all about efficiency and optimizing healthcare,” he said.