Impact Investing; do good and do well

  • By Shainoor Khoja

We live in a world that has immense wealth juxtaposed with as many serious social, environmental and financial issues that need resolving. Impact investments provide for many an opportunity to “do good and do well,” which is appealing to the new generation of leaders, investors and consumers. With the rise in demand for such investments, an increasing number of companies are seeking to offer products and services through innovative business models that deliver financial, environmental and social returns, and create positive social impact at scale.

When you consider the regional geography in a four-hour flight radius from the UAE, the need is immense in terms of infrastructure, jobs and capacity building. Any dollar value invested here has a multiplier effect providing both an ROI for the business as well as the social return for the community.

At Foundation Holdings, we are primarily focused  on the central issue of social impact that brings us together. We are looking at how to design, fund and structure organizations that generate a financial return, while also generating a social return and at the same time addressing the many social challenges in a meaningful way. Our focus is on how to invest in middle-market companies across India and the GCC, where we can create impact and deliver competitive rates of return. We have chosen to invest in the healthcare, education and consumer sectors so that we can not only have an impact in these chosen sectors, but also benefit from the cumulative effect of multiple inputs that benefit and impact the populations that we target.

Value Healthcare Globally:Many of us in the healthcare industry recognize that we stand at an inflection point; old ways of doing business are becoming obsolete. Healthcare ought to be driven by a relentless focus on delivering outcomes that truly matter to patients and to society in a financially sustainable manner. But this is hard to do and hard to manage when the patient outcomes we should deliver are not clearly defined. To add to the problem, costs are increasing unsustainably with a significant fraction of healthcare spending wasted on low-value diagnostic procedures or treatments and on the consequences of poor clinical evaluations.

The World Bank estimates global population sizes of approximately 8.5 billion by 2030 and 9.2 billion by 2040. The United States and United Kingdom spent approximately 17.1% and 9.1% of Gross Domestic Product on healthcare related expenditures respectively. This is expected to grow in line with the increasing population at rates that will prove to be unsustainable in the medium to long term. Similar trends are being seen in the GCC and especially in Saudi Arabia and UAE. Despite these predictions, the approach to healthcare delivery in most markets remains focused on volume and process guidelines rather than true value for patients. A fundamental recalibration of focus – from volume to value – is needed to ensure a system where the outcomes that matter to patients are prioritized.

Why Value Healthcare and Why GCC: (Value-based-healthcare developments in the GCC)One of the most fundamental ways to build human capital is through health i.e. improving wellbeing and longevity. Over the last two decades, we have seen the UAE become a fast-paced metropolis, giving rise to a large and diverse expatriate population of more than 200 nationalities. The country’s visionary leadership has spearheaded the rapid growth of the UAE, resulting in the significant expansion of blue-collar workers. The provision of medicine in the region has also grown rapidly, but always with a strong focus on the high-income bracket, leaving a gap in the market and an opportunity to enhance the existing healthcare system within the value healthcare segment.

The introduction of universal health insurance means that the working population can now access quality healthcare. At Foundation Holdings, we build industry-defining companies through a deep understanding of the healthcare market in the region and through targeted timing of our investments. We are driven by positive change and impact and are therefore taking the bold decision to be the first in a movement to provide value healthcare to this segment.

The Importance:The concept of value encapsulates excellence, relevance, results, cost, care and compassion on every dimension from the facilities, to the processes, the healthcare professionals, administrators, support staff, patients, their employers and the insurers. Our commitment to this holistic view is what we believe underwrites our success in the delivery of our financial, environmental and social ROI’s.

The Value Based Healthcare sector is in need of transformation that will be driven by the focus we allude to and by leveraging economies of scale. Consolidation, collaboration, integration of the value chain and utilizing technology in the sector is what we expect to see in the coming 5 years. As the Founder of Al Noor Hospitals, Dr Kassem Alom, famously said, “The journey of a thousand miles begins with one step.” Now we all collectively have taken that first step towards value healthcare!

The Benefits:50% of all economic growth in the last 200 years can be traced either to medical research or health. As per a Milken Institute research, it is reported that it took 4 million years to extend life expectancy by 11 years and the last 14 years on this planet, we’ve extended life expectancy by 39 years, which is an amazing feat. We’ve overcome many life-threatening diseases, and we have solutions today for 500-600 life-threatening diseases out of, maybe, 7,000. We are now entering the Golden Age of healthcare.

The working population is the human engine that drives business and the economy. This is the population that works hard to provide all of us with the infrastructure; products and services that our communities need to lead a fulfilling life. A strong, healthy and happy workforce drives healthier businesses that in turn, drive stronger economies.

We aim to work with the UAE Vision 2021 National Agenda to achieve a world-class healthcare system.

The Impact to society:Currently the access to and cost of quality healthcare remains a key problem for the working population segment. This is a perpetual cycle that keeps people from investing in better care, better education, up -skilling and achieving a better quality of life.

We are determined to try and disrupt this cycle by investing time, money, expertise and advocacy to make the change and impact we all wish to see. For me personally this is the ultimate impact driver – to see the working population prosper alongside the rest of us.

“At Foundation Holdings – Value healthcare platform, our culture is one of care, compassion and understanding towards our patients and colleagues. We work as a holistic team with a patient centered approach underpinned by excellence and value. We are here to be the partner of choice for this segment and to create a platform for change and impact.”