The Growing Role of Private Investment in Emerging-Market Health Care

by JHI Staff on May 21, 2013

Most people who are at least vaguely aware of trends in the global economy have heard of the BRICs—Brazil, Russia, India and China—the four large countries whose economies have, on average, been growing over the past few decades at impressive paces. The result has been the generation of enormous middle classes with significant new purchasing power and access to the sort of information that leads them to be choosy in how they spend it.

But have you heard of the Next-11? Here’s how Goldman Sachs, which came up with the category, describes the group:

In 2005, Goldman Sachs identified the Next 11 (N-11) largest populations after BRIC, which—combined with economic and political conditions—could greatly impact the global economy. The N-11 countries include Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.

One might quibble about exactly which countries do or don’t belong on that list, but the concept is pretty solid. Most of these countries, too, are producing new and influential middle classes.

One of the things these emerging middle classes want is better access to good health care. And by and large their respective governments are responding. In many cases, governments, sometimes joined by strong private insurance markets, are providing the health care coverage to support improved access to care. But it’s not just a strong payor system that many of these countries have been lacking—it’s also the health care infrastructure itself. In many ways, upgrading that infrastructure to provide needed treatment can be a more daunting job than covering the costs of getting the care.

Governments often take on the job of building new hospitals and health care systems, or of significantly improving them. Johns Hopkins Medicine International collaborates with many governments around the world to do exactly that, as do others in the relatively small field of global collaborative health care.

We also work with private organizations, and have found that private investment in health care infrastructure projects can go just as far as, and perhaps sometimes even further than, government-financed infrastructure to improve health care for a population.

What’s more, the global financial community’s interest in health care investment in emerging markets was made clear at a recent international conference in Istanbul that Johns Hopkins Medicine International co-sponsored with the International Finance Corporation. The IFC, in its own words, is

....a member of the World Bank Group [and] the largest global development institution focused exclusively on the private sector. We help developing countries achieve sustainable growth by financing investment, mobilizing capital in international financial markets, and providing advisory services to businesses and governments. In FY12, our investments reached an all-time high of more than $20 billion....

So are billions in investment pouring into global collaborative health care? Not quite, or at least not yet. The problem isn’t that the finance community isn’t willing to invest in it. In fact, it could be argued that there’s more money out there than quality opportunities. One of the points that came out of the conference is that right now, top investors aren’t finding enough health care projects in emerging markets that they feel confident are likely to perform well in meeting both health and financial targets.

Today there are really only a handful of global collaborative infrastructure-builders capable of working to produce the kind of high-quality, high-performing projects that financial markets are looking for. We’re proud to be a leader in this small field, but we will need many more involved to support the emergence of good health care infrastructure in the many, many countries that today don’t have them. There just aren’t yet enough players to put up even a large fraction of those needed projects.

That’s the bottleneck right now—not investment. To be sure, it’s a tricky business, but it’s not a completely new one anymore, so I can only assume more organizations will come into the field and gain the right experience. That would bring new, better-designed and better-executed projects to deliver quality and value, and the money should be there to back them.

There aren’t all that many propositions in the global economy that are truly wins for everyone involved, but solid, high-performing hospitals that profitably deliver high-quality care to populations that never had it is surely one of them.

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