Recent growth in Healthcare Investments has raised various eyebrows.

In recent years, Investment firms have increasingly invested in healthcare providers. Recent regulatory and economic challenges have spurred providers to partner with PE-backed platforms due to their ability to offer administrative, financial, and clinical support, allowing physicians to focus on care delivery. These investors also offer resources and expertise to help physician partners transition to value-based reimbursement models, which many providers struggle to achieve independently. Between 2019 and 2023 in Asia, there were approximately 600 PE deals representing investments of close to $11 billion for providers.

By some estimates, close to 100 hospitals are PE-owned, which represents approximately 9% of all private hospitals and 20% of all for-profit corporate hospitals in Asia, especially with the increase in controlling stake being invested for in India, Singapore & Indonesia. The growing concentration of PE-owned healthcare entities has prompted escalating levels of interest from government regulators of these developing economies. Specifically, these government regulatory bodies have begun questioning PE owners’ post-acquisition business practices—particularly the managing of their portfolio companies—and alleging that PE involvement in the management of their portfolio companies can lead to operating changes that prioritize profits over patient outcomes.

The Asian healthcare industry has a rich history of delivering high-quality, innovative patient care. Market forces such as young populations, shrinking physician bases, and rising costs are pressuring the industry like never before. Some healthcare providers navigating these headwinds would benefit from Investment firm partnerships. In these situations, PE firms and the target asset must have a clear path to value creation that benefits the consumer, clinical quality, and the healthcare ecosystem itself. This cannot be done without assessing and addressing compliance and reputational risks. PE firms considering mergers, acquisitions, and other material investments in healthcare entities must formulate a compliance and reputational risk appetite as part of their pre-deal due diligence process.

We at Fortune have been tracking the Asian Health care (especially Singapore & India) & Pharma Industry for more than a decade, witnessing immense growth and need for external investments.

" Fortune has been investing in selected companies which have been showcasing the potential to grow further at the same time also provide its intended essential services to its patients. By working closely with major Health-care providers we have formulated a perfect algorithm which helps our portfolio companies to integrate and work better. We could expect to see an increase in pace of growth in the upcoming decade. Focusing on ROI is not our only intention when we look into investing or divesting our funds, we are investing in companies which are creating a better future."

- Hirani Medha, Managing Partner.

Fortune's healthcare & pharma investment research measures include:

Compliance programs : Our healthcare portfolio company should have an effective compliance program to withstand any amount of regulator scrutiny. We source and invest in companies based on their risk appetite, expectations of their portfolio firms compliance programs and their past records of regulatory compliance. Our ROI motive on an effective compliance function is clear.

Antitrust analysis : To foresee possible concerns about market competition and antitrust that regulators may raise, develop analyses of market concentration and competitive dynamics. The investment research committee's decision-making processes are influenced by these quantitative and qualitative market theories in terms of possible regulatory friction, execution speed, and alignment of the investment thesis. Measure, track, and improve clinical quality, staffing ratios, operational effectiveness, and compliance with data analytics. These advanced technologies aid us in the early detection of possible risks and offer insights for risk mitigation and proactive management to our portfolio healthcare and pharmaceutical companies.

Quality & Safety first : We prioritize investments that enhance patient care quality and safety. This may involve hiring additional staff, investing in new technologies, and improving service offerings.

Pre & Post Clinical data analysis and benchmarking : Fortune works to identify past problems with care quality and forecast future ones, generate retrospective and predictive analytics. We generate a multitude of information on clinical outcomes, patient satisfaction, and patient safety trends can be found in data from clinical operations and incident-reporting systems. Additionally, the target entity's clinical performance and quality metrics are compared to peer groups and industry standards using industry benchmarking data to determine how well they align with industry's best practices. Value creation and the process for the organization and its patients should be directly informed by these analyses, which strengthens our portfolio's position against clinical quality risks.

Risk Management due diligence : Fortune assesses the health-care technology infrastructure of the potential investment company to find cybersecurity vulnerabilities; post-acquisition technology integration risk, concentrating on interoperability and data migration issues; and, in the event that AI has been implemented, the entity's governance, oversight, monitoring, and risk management controls.

Patient data breaches and the risk of financial fraud are becoming more likely, as shown by multiple high-profile cyberattacks. The regulatory bodies introducing new laws, rules, and regulations pertaining to AI governance, guardrails, and use as the healthcare sector implements new AI technology in operations, clinical decision-making, and the revenue cycle. We must validate their due diligence in order to determine whether investments are required to align the potential investment company with the increasing number of government regulations and expectations surrounding artificial intelligence.

Increasing growth & need for external investments have made this particular sector an investment haven. Fortune invests with a long-term goal of not only accelerating value creation but also looks into helping our portfolio companies to mitigate risks by operating within the regulatory bounds in place.

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