Former America Online chairman Steve Case said yesterday he is launching a District-based venture called Revolution that owns controlling stakes in companies that provide health care services, manage resort properties or operate in related fields.
In an interview, Case said he has committed $500 million of his own money to the venture, which he hopes will succeed at refocusing the health care system so that it puts the interests of consumers first. He said the enormous inefficiencies in health care became glaringly clear to him through both personal experience -- as a patient, a parent and a sibling -- and through talks with Sen. Bill Frist (R-Tenn.) and other experts.
"It is the largest industry in the country, and almost everyone is unhappy with it," Case said of health care.
Case is likely to find that transforming the health care industry is much easier to talk about than it is to achieve. From the highest levels of government and industry, others with more clout than Case have tried and failed to turn a $230 billion industry into one that is more consumer focused.
Case declined to provide specifics about the health care ventures he intends to pursue. He said 90 percent of health care expenditures go to treat sick patients while only 10 percent are earmarked for keeping people well. His comments, and early investments, suggest that he will focus on the wellness business. He also said inefficiency, such as patients being asked the same questions repeatedly about their health histories before medical treatment, must be addressed.
Adding to the difficulties he will face is his legacy at America Online, where he grew wealthy but is blamed for creating an overly aggressive culture that led to AOL's overstatement of revenue on multiple occasions, prompting Securities and Exchange Commission probes and settlements. He also presided over AOL's merger with Time Warner, perhaps the most maligned in U.S. corporate history.
Case said he has realized he enjoys building businesses more than managing them. He is now investing in firms that he can help build by injecting money, passion and vision, rather than seeking to work as a top operating executive. In each of his investments thus far, founders and managers retain minority interest.
Yesterday, Case's firm announced the acquisition of a controlling stake in Wisdom Media Group, a radio and television network focusing on health and wellness. Case also has purchased controlling stakes in two other firms that now are part of Revolution: Exclusive Resorts, a luxury vacation club featuring about 175 mansions with concierge service for members who pay $375,000 to join; and Miraval, a wellness resort.
Exclusive Resorts has more than 300 properties worth more than $600 million. Members, who pay fees in addition to the one-time membership cost, can vacation at these luxury homes for up to 30 days a year. Case views Exclusive Resorts as a business platform that, in the future, could develop vacation options at a lower price-point.
Case said he hopes the Revolution name can add value to businesses, much like British entrepreneur Richard Branson's Virgin, which started as an airline and became several businesses. It recently entered the cell phone market.
Case, who has an estimated net worth of $850 million, still faces outstanding civil litigation stemming from his role as chief of AOL, the nation's biggest Internet service. He remains a member of the Time Warner board of directors but has spent less time on the company in recent years.
He has recruited some familiar colleagues to Revolution, including Donn Davis, a former senior AOL official, and attorney Ron Klain, who had been a partner in a major law firm representing Case. Revolution, Case said, "is a significant commitment and will be my principal focus."