The Southeast Asian healthcare ecosystem is undergoing a metamorphosis: disruptive technologies, innovative financing arrangements, and new delivery models are playing a crucial role in meeting the region’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 exacerbated by the lack of affordability of healthcare and the deterioration of public service provision in many developing countries. COVID-19 has illuminated the inability of many governments to respond timely and effectively to health crises, demonstrating the need for private capital to advance universal health coverage (UHC).
The Growing Asian Healthcare Market
Private healthcare in Southeast Asia is well established, but the market is largely untapped by global investors. The Asian healthcare market is predicted to grow at 12% annually and reach US$4.2 trillion in the next five years, which is more than the U.S. and European markets combined. 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 capitalise on new opportunities to strengthen the capacity and resilience of national healthcare systems, while simultaneously generating profits and meeting ESG requirements.
Impact Investment after COVID-19: New Opportunities in Digital Healthcare
One of the largest emerging opportunities in impact investing is the growing market for telemedicine. Market Data Forecast predicts the telemedicine market in Asia-Pacific will have a compound annual growth rate of 21.4% over the next five years. Singapore’s MyDoc teleconsultation platform saw visits spike over 160% this year alone, with other mobile applications in the region seeing similar trends. Basic health screening for more people in developing countries can alleviate some of the future health burden on strained public budgets. Technologies such as telehealth 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 region.
Telemedicine
While telemedicine may be the new trend in healthcare, 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 telehealth in order to retain their client base even when the global pandemic begins to fully attenuate. From an investor perspective, the use of telemedicine and remote monitoring also looks promising in the long-term. Many investors are optimistic that telehealth is not just a reactionary phenomenon, but is reshaping the contours of the healthcare industry as a whole. Many governments have already made policy landscapes more conducive to telemedicine, as seen by the passing of the Healthcare Services Bill in the Singapore parliament, which essentially legitimised telemedicine and its regulation. These advancements 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 issues of the past.
Disease Prevention
Health systems need to build capacity to prevent health issues rather than respond to them, in order to maximize cost savings and reduce mortality rates. This creates important opportunities for impact investors. A report by Ecosperity estimates that an investment of US$11.4 billion towards cancer prevention in developing countries will yield savings of up to US$100 billion in future treatment expenditures. Successful impact investments in healthcare prevention use capital to address the causes of ill health at their source. For example, 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 housing.
Successful prevention strategies have demonstrated that the most impactful interventions in healthcare take place outside of the clinic. Effective and innovative investments that target the structural causes of healthcare inequity can propel Asian healthcare forward to meet new challenges, by using robust data to inform evidence-based and measurable interventions. Impact investments in Asian 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 NCDs.
Improving Healthcare Impact Metrics
There currently lacks a robust and standardized metric system that adequately displays how impact investment outcomes are changing overall healthcare systems. While commonly used metric systems such as GIIN offer a catalogue of metrics for investors to use, they are largely output based and do little to demonstrate long-term impacts. Many investors also have difficulty getting consistent feedback from their funds to aggregate their data, as the metrics are not used consistently across companies within the sector. This may facilitate a simplification of metrics in order to consolidate information across all of their funds, resulting in weaker impact data. In order for impact investing to play a bigger role in health systems, the necessity for well-established outcome-based metrics which both quantitatively monitor and qualitatively assess the depth, scale, and sustainability of interventions are crucial.
It is imperative that metrics are also expanded to capture who is left out of the ‘new normal’ of healthcare provision. How accessible are telehealth services for elderly citizens or the differently abled? How well does the health system as a whole address gender inequities in healthcare? For example, measurement systems might need to be expanded to integrate metrics that capture reproductive and sexual health services. The UNFPA estimates that 100,000 lives could be saved in Asia-Pacific if the 2030 targets for reducing maternal mortality as part of the Sustainable Development Goals (SDGs) are met. By looking at the peripheries of society, actors within the impact investing community can push for a more targeted and intersectional approach for better health outcomes.
Social Impact Bonds for Healthcare
While Social Impact Bonds (SIBs) or ‘pay for success’ models have been successful and well-established in Europe and North America, their potential in the Asian impact investing landscape is still unexplored. In contrast to the traditional grantmaking approach that is largely characteristic of Asian philanthropy, SIBs spur innovation because they begin with long-term outcomes and then offer opportunities to co-design services and programs. Impact investors then provide funds to service providers for reaching these objectives and receive a return upon success, resulting in an outcomes-based system that maximises benefits for recipients. In order for SIBs to gain momentum in Southeast Asia, they will need stringent evaluation frameworks and policies that facilitate collaborations among impact investors, intermediaries, and service delivery organizations to solve specific challenges.
Looking Forward: Healthier Citizens need Healthier Systems
Healthy people form the crux of vital, prosperous, and cohesive societies. However, it is evident that 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 intergenerational 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.
