The Power of Healthcare Impact Investing

Healthcare impact investing is a rapidly growing field that's making a tangible difference in people's lives. According to the Global Impact Investing Network, impact investments in healthcare have grown from $1.4 billion in 2010 to $13.4 billion in 2019.

Impact investments in healthcare are not just about generating returns, but also about creating positive social and environmental outcomes. By investing in healthcare, individuals and organizations can help address some of the world's most pressing health challenges.

The World Bank estimates that nearly 50% of the world's population lacks access to essential healthcare services, resulting in millions of preventable deaths each year. Healthcare impact investing can help bridge this gap by supporting innovative healthcare solutions that reach underserved communities.

By investing in healthcare, individuals and organizations can also contribute to improving health outcomes, reducing healthcare costs, and promoting economic growth.

Investing in healthcare can be a rewarding experience, especially for those who are passionate about improving global health outcomes.

The global healthcare market is expected to reach $16.9 trillion by 2025, according to a report by Grand View Research.

Investing in healthcare can provide a stable return on investment, as people will always need medical care.

The healthcare impact investing market has grown significantly, with over $1 trillion invested in healthcare-related projects since 2014.

Investors can choose from a variety of healthcare impact investing options, such as investing in hospitals, clinics, and medical research.

Investing in healthcare can also have a positive social impact, improving health outcomes and reducing healthcare disparities.

By investing in healthcare, individuals can make a meaningful difference in the lives of others, while also earning a return on their investment.

Impact investors can also invest in healthcare-related social enterprises, such as non-profit hospitals and community health clinics.

Impact investing in healthcare is a strategic approach that delivers on investment priorities while considering its impact on health and wellbeing. A successful impact investing strategy can be tailored to a healthcare system's specific needs and goals.

Impact investing falls along a spectrum, and for healthcare systems, this could mean screening out health-harming investments, such as tobacco companies. This approach can help ensure that investments align with a healthcare system's mission and values.

Healthcare systems don't have to overhaul their entire portfolio to start making an impact. They can take incremental steps towards impact investing that balance their financial return priorities. Foundations provide a helpful precedent here, often starting with a smaller portion of their balance sheet to align with their mission.

RWJF uses impact investing to address barriers to health and wellbeing, expanding their toolkit and building on their decades-long work changing systems and policies. This approach allows them to tackle complex health issues in a more effective way.

Multiplier serves as a bridge between the sectors, helping healthcare systems translate applicable tools and leverage existing resources. This support enables healthcare systems to go further faster in their impact investing journey.

The Ford Foundation is a notable example of a foundation that has successfully incorporated impact investing into their strategy. In 2016, they allocated $1 billion of their $16 billion endowment to "Mission Investments", which reported a 28% annual compound return by 2021. This demonstrates that impact investing can be a financially viable option for healthcare systems.

Healthcare systems are inherently mission-oriented asset owners, responsible for executing on a mission, just like foundations. They steward foundations, endowments, trusts, and other investment portfolios that could yield measurable impact alongside financial return.

For example, Cone Health Foundation has brought its entire >$100 million in assets in line with its mission and values, focusing on social drivers of health which determine up to 80% of a person’s health outcomes.

Healthcare systems can start incrementally and iterate strategically over time, just like foundations. They don't have to commit to a portfolio overhaul at the get-go, but can take steps toward impact that balances their financial return priorities.

The Ford Foundation is a great example of this, allocating $1 billion of its $16 billion endowment to what it calls “Mission Investments” in 2016, and reporting a 28% annual compound return at the five year mark.

Healthcare systems are already innovating in community investments, often in partnership with local mission-oriented community development financial institutions (CDFIs). For instance, CommonSpirit Health has a $400 million Community Investing Program that began in the 1990s.

Some healthcare systems have even signed onto the Healthcare Anchor Network (HAN) Place Based Investing Commitment, committing to allocate $50 million or at least 1% (whichever is less) of their long-term reserves or unrestricted investments into place-based investments addressing SDOH.

Impact investing speaks healthcare systems’ language, using different language to engage the finance and investment industries. The tenets and infrastructure foundational to impact investing are well aligned with healthcare systems’ missions and long-term sustainability priorities.

Healthcare systems that have already transitioned from volume to value or embedded SDOH into their theory of change have already done the heavy lifting aligning system goals with holistic health impact. An impact investment strategy can be another tool in the toolkit for creating health and wellbeing.

Healthcare impact investing can be done through a variety of investment vehicles, such as private equity, venture capital, and social impact bonds.

By investing in healthcare impact investing, you can earn a financial return while also making a positive impact on the world.

According to research, healthcare impact investments have outperformed traditional investments in the past, with a 10% to 15% higher return on investment.

Investing in the future of healthcare requires a thoughtful approach to impact investing.

Each journey is relational, which means building strategic connections with the right partners is crucial.

Identifying the right impact investing organizations, content experts, investment intermediaries, and networks is an important step in achieving health system goals.

Multiplier helps clients find these partners and steward those relationships for the long term.

By engaging the right partners, investors can make a meaningful impact and achieve their financial priorities.

Impact investing doesn't have to mean sacrificing financial return. A successful impact investing strategy can deliver on a healthcare system's investment priorities while considering the impact it wants to have on health and wellbeing.

Healthcare systems can start by screening out investments that harm health, like tobacco companies. They can also invest in social determinants of health, such as economic development, or carve out a portion of their portfolio for high-impact investments in the communities they serve.

Foundations provide a helpful precedent here, often starting incrementally and iterating strategically over time. For example, the Ford Foundation allocated $1 billion of its $16 billion endowment to "Mission Investments" in 2016, reporting a 28% annual compound return by 2021.

RWJF uses a combination of grantmaking, policy change, and impact investing to address barriers to health and wellbeing.

The VC community is waking up to impact investing, with funds like BrightEdge leading the way. BrightEdge, a $70 million fund, has made 17 investments in cancer treatment-focused companies, including Checkmate Pharmaceuticals and Freenome.

Impact investing through healthcare venture capital is a growing trend, with Silicon Valley Bank reporting a record-breaking $80 billion invested in healthcare in 2021. This includes $28.3 billion in venture fundraising, almost double 2020 levels.

BrightEdge's portfolio may not look drastically different from other VC investors, but its focus on cancer treatment sets it apart. The fund targets individual investors, family offices, foundations, and companies, with a current fundraising target of $100 million.

It's a good time to marry philanthropy and venture capital in healthcare, as it can lead to broad and lasting impact. BrightEdge's current fundraising target of $100 million is a significant milestone, with $3 million already donated by individual donors via tax-deductible major gifts.