Blackstone Group LP is up to something completely different — the health-care business.
Equity Healthcare is not a private equity investment or a real estate play. Indeed, the group is not exactly a money-earner. It's a not-for-profit set up by Blackstone's portfolio operations group to hold down the cost of health-care coverage at its portfolio companies by leveraging the scale of those companies. It's even offering health coverage for portfolio companies of its competitors, too.
It's all about scale.
Blackstone has 54 portfolio companies worldwide. In the U.S., Blackstone has 37 portfolio companies with 600,000 employees, said James Quella, senior managing director, senior operating partner and head of Blackstone's portfolio operations group.
“Scale matters. The more lives you can bring, the more insurance companies can customize,” Mr. Quella said.
Equity Healthcare was started in 2008 to offer a full-service health and wellness plan to Blackstone's own portfolio companies. Other private equity firms now take advantage of the service, and all companies can continue in the program even after a specific company no longer is held in Blackstone's portfolio.