We are pleased to welcome our next PPPHealth4All Persona – Julien Beaujolin, the CEO and founder of ECMP, a healthcare operating firm providing solutions to bridge the healthcare delivery infrastructure gap in South East Asia. Since inception 5 years ago, he focused on partnership with public and private hospital to deliver cardiac Cath-labs, diagnostic imaging and soon oncology services across Indonesia. Julien has an exceptional drive and interest to improve healthcare delivery systems. He believes they should improve the well-being of the communities they serve by making services available, accessible, affordable, and of good quality. Before founding ECMP, Julien was managing director of a South-East Asian medical equipment distributor and started his career in asset management in Switzerland. Main lesson from healthcare PPPs in South-East AsiaIf there’s any lesson from this pandemic, it’s that we need much more robust and equitable health systems. Improving the quality of care by making it affordable and accessible is a paradox our world faces. However, the challenge of funding healthcare and bringing high-quality healthcare at affordable prices could not be more acute than in emerging economies, particularly in Asia, home to more than 50% of the global population. The Government will need to expand primary and secondary healthcare capacity and partner with private operators and investors for tertiary services. Private capital will contribute even more significantly to the expansion of care required to achieve universal healthcare coverage (UHC). It is essential to increase the efficiency of healthcare, meet the capital needs for new and upgraded infrastructure, and reduce the strain on public resources. By working with Governments, private capital will contribute to more significant health systems goals. More involvement through public-private partnerships will significantly augment public sector efforts and strengthen the Government’s service delivery. Key aspects from our experience of building a healthcare delivery platform in Indonesia:
- To ensure a levelled playing field, the Government must, i) have the capacity to manage and supervise long-term contracts, ii) ensure and enforce clinical quality and performance standards.
- Foreign clinician exchange must be facilitated to enable easier access to training capacity and best practice exchange.
- The low trust between the public and private sectors have to be accounted for and addressed.
- Compared to other SEA countries, patience is critical in Indonesia; things take time. Partly due to cultural reasons and also to a daunting regional and national bureaucracy.
- By offering turnkey managed care solutions to hospitals, we eliminate a potential source of red tape which can come with big-ticket medical equipment’s.
- Long term, 5-10-year tax incentives for all health PPP would drive more capital towards this asset class.
Access to permanent capitalTo improve healthcare delivery and access to care, numerous capital-intensive and fast- growing healthcare businesses need financing beyond the average fund life to reach scale and its full potential. This leads to a mismatch between fund and asset lifespan as most vehicles are closed-end funds. Given an average fund life of 6-8 years and an investment period of 3-4 years, the average holding period for investments is 3-5 years. However, certain assets, such as healthcare infrastructure, particularly where greenfield development is involved, require a long lead time (7+ years) before they reach a point in their lifecycle to be efficiently monetized. A permanent capital vehicle scales access to long-term capital by providing a structure attractive to a broad universe of investors. It unlocks private financing for businesses allowing them time to reach scale. Permanent capital strategies are not new. We can argue it’s one of the oldest strategies around. For decades, assets in families have often been concentrated in permanent vehicles such as family businesses, land holdings, trusts, etc. However, in today’s investment practice, which focuses on year-long performance periods as a benchmark, less attention is given to permanent capital strategies. For ECMP to access a broader and deeper pool of capital and ease regulatory, compliance and structure concerns, we are working towards a listing Q1 2022. SDGs and impact investorsAs a healthcare operator, we seek to make a meaningful impact on society by improving access to affordable quality healthcare for underserved populations. We believe that responsible investment and operations are critical to sustainable long-term value creation in Asia, and “doing well will only be possible by doing good” as they are not only compatible but mutually reinforcing. Over our recent history, we have, for example, diagnosed and treated 21’000 at our 18 centres in partnerships with the public and private hospitals across Indonesia. Moreover, 95% of the patient are lower / middle income under UHC.
However, our experience and interactions with SDG funds were disappointing from an impact perspective. In our view, a majority of them are greenwashing. As with any other investors, the only metric analysed and considered were financial returns.
Financial performance is critical for the sustainability of any investment in the healthcare delivery space. However, patient capital is vital, especially with greenfield projects, as the road to profit and value creation is longer. Value creation for hospital’s partnershipCollaboration and partnerships are essential in any business. In healthcare, they are critical as it’s impossible to succeed alone. Value creation first comes from our team members who are dedicating themselves to provide the best environment of care for our patients and ensure the success of each of our hospital partnerships. Secondly, value also comes from our third-party partners that support our center’s successful operation: consumables suppliers, equipment manufacturers, and technical services providers. This ecosystem enables us to operate and deliver a qualitative and safe environment of care to our patients. Usually, if you provide the above, profit takes care of itself. Healthcare delivery modelsAcross Asia, especially India, models that substantially lower the cost of healthcare without compromising clinical quality have emerged to satisfy significant unmet medical needs. The principle behind those care models is to employ economies of scale and specialization to slash healthcare costs. Several characteristics that drive access to care, improved quality, and efficiency have been identified: These characteristics can help healthcare systems meet the needs of their populations more effectively and deliver significant improvement in the quality and affordability of care. The phenomenal future for healthcare delivery systems is that many models have been proven to make a difference. The challenge is to implement these strategies with capital and talent. Executing investment in the healthcare delivery sectorIn Asia, opportunities are about building businesses and driving young companies who need capital and expertise. As such, investors must get involved in operations and focus on adding value to be successful. In-depth industry expertise and experience are critical to achieving higher efficiency, promoting governance, and creating new business opportunities. In Indonesia, ECMP has built a solid operational structure with healthcare expertise to support project management, technical maintenance, IT, sales & marketing, finance, human resources, and clinical services. Building our platform was a significant investment but key to creating value for our business. With such oversight on operations, it reduces the risk for the company and our shareholders. In return, this level of transparency encourages good governance. Addressing risks and making a positive societal impact is good management practice and will deliver higher returns. Ultimately, vision without execution is a hallucination. Interview by Natalia Domanska