Over the last decade TVM Capital Healthcare has been focused on investing private equity in healthcare companies setting them for growth and success. While we always were aware of the special responsibility that arises from being active in the healthcare sector, we have been instilling a dedicated culture of ethics and integrity in our companies as part of our investment approach that seeks to do good and do well, from the very beginning of our investment activity. An early definition of responsible investing if you will. In this spirit, we set our companies for growth and success. However, the times when investors looked exclusively on financial metrics to determine and define success, are long over. Do not misunderstand me, financial metrics have not lost their importance as fundamental measure of success. The definition of ‘success’ has changed and become multi-faceted. Over time, a lot of less tangible but not less essential values have emerged that also constitute the success of a company in various dimensions – the ESG and impact discussion in private equity and other industries has clearly gained tremendous momentum and there is a reason for that. There is of course inter-dependency between Corporate Governance, including a culture of ethics and compliance, Responsible Investing emphasizing Social aspects such as Human Rights and Environmental Protection.
In other words: responsible investing has evolved to be sustainable investing. We are convinced that sustainable investing makes businesses more resilient towards external shocks and internal organizational dysfunction, which could jeopardize a long-term culture of responsibility and ethics.
In line with these core considerations, we have long been a signatory of the United Nation supported Principles for Responsible Investment (PRI). We adhere to the PRI blueprint and contribute to various UN SDGs, to build companies that are successful across these dimensions.
We consider responsible, ethical, and sustainable investing as powerful growth drivers as they grow trust and ethical principles very critical factors of success in our industry.
Demand for Healthcare Excellence in Asia and MENA
Private & Public sector investments in our industry in these regions are skyrocketing with the rising demand for value-based healthcare (VBHC). By Q3 2021, healthcare funding in Asia hit a record US$ 22.6 billion and already surpassed last year’s total of US$ 20.1 billion. Asia-based healthcare startups comprised 38% of total deals – an all-time high (CB Insights, Q3 2021). The Middle East has also seen an increase in healthcare spending, mainly due to the private sector. While currently, the average healthcare expenditure per capita is still relatively low, about US$ 1,400, this number is growing (Mashreq White Paper, July 2021).
This high demand for healthcare is primarily led by:
- a growing life expectancy,
- an aging population, and
- the rise in chronic diseases due to greater industrialization and changing diets and lifestyle.
Increasingly, the expanding middle class in these countries are more aware of and expect accessible high-quality healthcare. Affluence and health insurance coverage are on the rise, which means more people can afford and access quality healthcare services. Additionally, the COVID-19 pandemic highlighted and accelerated the need for digital health services and de-risked medical supply chains in Southeast Asia and the MENA regions as well as globally.
As investments pour into the industry and healthcare companies begin to scale rapidly, it is critical, now more than ever, to ensure they do so with quality, access and cost in mind. VBHC models focus on improving patient outcomes through affordable and responsible care.
Trust as a main driver of success in Healthcare
Additionally, to our already ongoing advocacy and stewardship for ESG-driven value creation and responsible investing, we are convinced that there is one more powerful driver of success in healthcare and healthcare investing, which should not be taken for granted: Trust.
We believe in building trust by design.
In addition to our longstanding proven commitment to quality, responsible investment and ESG, this belief has now led us to become a signatory of EPiHC, a set of ten fundamental principles to be shared across the health care ecosystem—from front line providers to top leadership—adding welcome clarity to the decisions, transactions, practices, and encounters that affect every aspect of health care services. In early 2019, the IFC unveiled EPiHC to promote ethical conduct and support daily decision making in the health sector. Today, thanks to IFC’s leadership, EPiHC is a global initiative whose signatories together own or manage over 4,000 healthcare facilities in more than 70 countries. We are very proud to join this initiative and advocate for ethical and responsible conduct to achieve global health goals in line with U.N SDG 3 and we believe it is also an important element of performance and risk management.
We invest in benchmarking all our portfolio companies against international quality standards such as JCI, CARF, ISO, we apply a comprehensive ESG system and now follow the EPiHC principles. This holistic approach has served us well as we continue to optimize tangible and intangible value creation for all our stakeholders.
Over the last 18 years, I have been humbled to contribute to the advancement of quality and accessible healthcare mostly in Emerging Markets. I have also been honored to serve in companies and organizations that have set ethics, compliance, and integrity as core basics of their corporate culture. Every step we take towards building an environment of trust where concerns can be voiced securely by anyone and will be addressed will contribute to and guarantee positive impact. This is the culture we drive at TVM Capital Healthcare, we welcome the stewardship of the IFC, as the initiator of EPiHC, and will actively advocate the principles together with our fellow signatories.