FORTUNE — It’s been two decades since Wilfred Jaeger co-founded Three Arch Partners, to make venture capital investments in all segments of the healthcare market. Pharma, services, devices, etc. But he no longer thinks the model works, and is helping to form a new firm focused exclusively on healthcare services.
Jaeger is forming the new effort with three managing directors of CHL Medical Investors, a diversified healthcare VC firm that last raised a fund in 2007. He will operate out of Portola Valley, Calif., while the CHL team will continue to work from Connecticut.
“Last year was as good a year as we ever had at Three Arch, in terms of distributions, but it’s getting much harder to make those sorts of funds work,” Jaeger explains. “FDA approval has gotten even more difficult — even on devices, which used to be easier than drugs — so the whole thing has become much more hit and miss. Healthcare services is more predictable.”
The new firm does not yet have a name, nor would Jaeger discuss fundraising. Once they have capital in hand, expect the group to be stage-agnostic within the services space, which could mean everything from early-stage deals to growth equity roll-ups. His partners from CHL will be Myles Greenberg, Tim Howe and Greg Weinhoff, with a fourth (Jeff Collinson) serving as an advisor.
Three Arch raised and invested over $1 billion, and Jaeger is just the latest partner to move on from what is basically a zombie firm. Recently, fellow co-founder Mark Wan began raising a sports-focused fund with Boston Celtics owner Wyc Grousbeck.
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