CDC seeks sustainable investment in private health care

LONDON — The United Kingdom’s development finance institution, CDC Group, has launched a series of efforts to ensure its investments in private health care companies are having a positive impact on both patients and public health systems and is calling on other investors to do the same.

On the back of a major capital increase and a commitment to deliver impact beyond jobs and economic growth, CDC is looking to scale up its support for private health care providers in low- and middle-income countries. As part of this, the institution is taking steps to ensure its investments are responsibly managed, contributing to the Sustainable Development Agenda’s goal of universal health care.

Last year, the development finance institution commissioned researchers at the Imperial College London Institute of Global Health Innovation to develop a health care impact framework. It is designed to help policymakers, providers, and investors carry out qualitative assessments of the impact for-profit providers are having on patients and the broader health ecosystem.

CDC is also co-convening a newly established “investors for health community,” with the International Finance Corporation and The Rise Fund, which met for the first time in November. The community aims to bring together the spectrum of private health care investors to drive responsible practices.

More than half of all health care in Africa is delivered by private providers, according to IFC, and the role of the private sector in delivering and financing UHC is increasingly being recognized. However, many are concerned that private health care in lower-income countries can have negative impacts, including stripping the public sector of staff, over-treating and overcharging patients, and undermining the case for publicly-funded health systems.

“What we’ve seen is lots of investors invest in one facility, and then the government hospital next to it may crumble because they don’t have any doctors left … and actually, on a net [basis], you’ve made a negative impact,” Katharina Neureiter, executive in CDC’s impact management team, told Devex.

“We kicked off the health care impact framework to safeguard against that by looking at [the impact of our investments] at a patient level and an ecosystem level,” she added.

The framework is designed to highlight areas “where companies are doing well and where they aren’t doing so well,” and to enable CDC to have a “more nuanced conversation” with companies about their impact. It can also highlight “red flags,” such as a lack of workforce development, Neureiter explained.

CDC has started applying the framework to its current portfolio, starting with India. Neureiter highlighted the case of one investee: Rainbow Hospitals, a pediatrics and maternity hospital chain that CDC has been investing in since 2013. Applying the framework revealed a number of positives, she said, including that the company is a net contributor to India’s medical workforce, training approximately 5 percent of the country’s new pediatric consultants and 9 percent of its neonatology consultants — according to a CDC case study sent to Devex — more than any other hospital group in the country.

The framework also sparked the head of Rainbow’s human resources to make the companies’ hiring practices more inclusive. That includes a strategy to employ more female Muslim nurses, who may avoid working in adult hospitals, Neureiter said.

Building a community of like-minded investors

CDC now wants to get other investors on board through the investors for health community, according to associate Charlotte Davis.

“At CDC we’ve been on a journey, taking the framework and … starting to apply it in companies to make it more tangible and [also] spreading awareness about the framework to get other investors to think about the impact their health care investments are having,” Davis told Devex.

The community’s first meeting was held on the sidelines of last year’s World Innovation Summit for Health in November and included representatives from about 20 organizations. However, while the first cohort was mostly made up of other development finance institutions and impact investors, Davis said she hopes the community will soon attract more commercially-minded health care investors.

She described the kick-off meeting as a “scoping workshop” to explore how others are measuring and communicating the impact of their private health care investments. Attendees also discussed challenges, including how to improve last mile access and how to encourage the private sector to innovate around increasing health care coverage.

“There was a lot of positive momentum and enthusiasm to keep this conversation going,” Davis said. As a result, CDC, along with IFC and The Rise Fund, will officially launch the community in March, at the IFC Global Private Health Conference in Miami.

Neureiter emphasized that the community will not try to impose “standardized” impact measurement approaches but will instead function as a platform for collaboration. For example, the group could commission research into what has worked in some contexts in addressing challenges such as last mile delivery, and share best practices, she said.

Convening a wide range of investors, varying in their risk appetite and average deal-size, could also help new investors enter the private health space in emerging markets and improve deal-flow, Neureiter added.

CDC is increasing its focus on measuring development impact more broadly as it ramps up its investments following a large financial boost from the U.K. Department for International Development in February 2017. Its first-ever chief impact officer — Liz Lloyd — is due to start later this year.

Devex, with financial support from our partner MSD for Mothers, is exploring how the private sector is driving innovations in global health. Visit the Focus on: Future of Health Partnerships page for more.