The nation’s largest public pension fund, California Public Employees’ Retirement System announced a plan to invest $700 million more into healthcare companies, and to seek ways to make the healthcare system more efficient.

CalPERS will commit up to $500 million to a new “Healthcare Investment Initiative” for direct investments in healthcare companies, and up to $200 million for investments into private equity funds and strategic joint ventures that make investments into healthcare, the pension fund said in a statement yesterday morning.

Notably, it said it will set up a committee the oversees decisions to judge whether investment candidates “provide greater opportunities…to achieve greater quality and efficiency in the procurement of healthcare goods and services.”

The details are vague for us, but we’ll try to track this going forward.

CalPERS said it is teaming up with Health Evolution Partners, of San Francisco, to help manage the effort. The firm will help vet investment candidates, but CalPERS’ investment staff will have final say about where money is spent. Health Evolution a new private equity firm headed by Dr. David J. Brailer. Brailer founded the firm after serving as the Bush Administration’s National Coordinator for Health Information Technology. CalPERS said it selected Health Evolution Partners based on the firm’s knowledge and experience, finance and business development, and approach to private equity investment.

Here is a copy of the statement, with relevant details about the initiative.