IMPACT INVESTING IN HEALTHCARE: Trends, Opportunities and Challenges

The global healthcare ecosystem is undergoing a metamorphosis – disruptive new technologies, innovative financing arrangements, and new delivery models are playing a crucial role in meeting the world’s evolving healthcare needs and growing demand. Public health trends such as population ageing and rising deaths tolls from non-communicable diseases (NCDs) are being aggravated by the lack of affordability of healthcare and the deterioration of public service provision in many developing countries, Nigeria inclusive. Covid-19 has shown clearly the inability of many governments to respond timely and effectively to health crises. This, in turn, has demonstrated the need for private capital to step up and help advance universal health coverage.


The Growing Healthcare Market


Private healthcare in developing economies such as Nigeria is well established, but the market is largely untapped by global investors. Healthcare has attracted more interest in recent years. According to a survey done by the Global Impact Investment Network (GIIN), healthcare asset allocations grew 23% from 2015 to 2019, with 51% of respondents planning to increase their capital allocations to healthcare. Those seeking a positive return on social investments are now in a prime position to capitalize on new opportunities to strengthen the capacity and resilience of national healthcare systems, while simultaneously generating profits and meeting ESG requirements.


After COVID-19: New Opportunities in Digital Healthcare


One of the largest emerging opportunities in impact investing is the growing market for telemedicine. A study by Market Data Forecast predicts that the telemedicine market in the Asia-Pacific region, for example, will have a compound annual growth rate of 21.4% over the next five years. Basic health screening for more people in developing countries can alleviate some of the future health burdens currently being borne by strained public budgets. Technologies such as tele-health apps for smartphones, remote monitoring devices for illnesses such as diabetes, and AI-enabled detection systems for communicable diseases such as TB, will help in making more people healthy, while also reducing the burden of rising healthcare costs in the developing world.




While telemedicine may be the new trend in healthcare, the question being asked by many stakeholders is:  “But will it last?”  From the perspective of a healthcare provider, the investment can be justified on the grounds of patient satisfaction; customers want convenience, and healthcare providers need to offer tele-health to retain their client base even when the global pandemic begins to fully decrease. From an investor perspective, the use of telemedicine and remote monitoring also looks promising in the long term. Many investors are optimistic that tele-health is reshaping the contours of the global healthcare industry as a whole. Many governments have already made policy landscapes more conducive to telemedicine, as seen in the recent passing of the Healthcare Services Bill in the Singaporean parliament, which essentially legitimized telemedicine and its regulation. Developments like that have made it evident that virtual healthcare is here to stay. Impact investing has the potential to take digital healthcare to new heights and make inconvenience and inaccessibility a thing of the past.


Disease Prevention


Health systems need to build capacity to prevent health issues rather than just respond to them, to minimize costs and reduce mortality rates. This creates important opportunities for impact investors. Successful impact investments in healthcare prevention use capital to address the causes of ill health at their very source; for example, the US-based non-profit Kaiser Permanente invested $200 million towards affordable housing in the markets where it operates. This investment was informed by data linking negative healthcare effects to unaffordable or unsuitable housing.


Successful prevention strategies have demonstrated that the most impactful interventions in healthcare are those that take place outside the clinic. Effective and innovative investments that target the root causes of healthcare inequity can propel healthcare forward to meet new challenges, by using robust data to inform evidence-based and measurable interventions. Impact investments in healthcare can be more targeted towards addressing deeply-rooted issues that make systems vulnerable and unable to cope with shocks. This might include focusing on improving unhealthy diets and food insecurity to reduce high diabetes rates or improving education to lower the spread of non-communicable diseases.


Looking Forward: Healthier Citizens need Healthier Systems


Healthy people form the crux of vital, prosperous, and cohesive societies. However, a future of accessible and affordable healthcare can no longer be accomplished solely with government action. Impact investments in healthcare can bring us closer to improving inter-generational health by preventing diseases based on genetic factors, developing and deploying new vaccines quicker, and using artificial intelligence (AI) to reduce human error in medical consultations.  With more pilots for innovative financing mechanisms such as SIBs, better precision of impact metrics, and more robust data collection systems to measure outcomes, the opportunities for generating sustainable impact in healthcare will be boundless.

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