Paediatric hospital impact investing: Marketing Strategies for Pediatric Hospitals: Attracting Impact Investors

1. What is paediatric hospital impact investing and why is it important?

In recent years, there has been a growing interest in the field of impact investing, which refers to investments that aim to generate positive social and environmental outcomes along with financial returns. Impact investors seek to support organizations that address some of the most pressing challenges facing the world, such as poverty, climate change, health, education, and gender equality. One of the sectors that can benefit from impact investing is paediatric health care, which focuses on the prevention, diagnosis, and treatment of diseases and disorders affecting children and adolescents. Paediatric hospitals, as the main providers of paediatric health care, play a vital role in improving the health and well-being of millions of children around the world. However, many paediatric hospitals face significant challenges in delivering high-quality, accessible, and affordable care to their patients, especially in low- and middle-income countries. These challenges include:

1. Lack of adequate funding: Paediatric hospitals often rely on donations, grants, and government subsidies to cover their operational costs and capital expenditures. However, these sources of funding are often insufficient, unpredictable, and unsustainable, leaving many paediatric hospitals underfunded and unable to meet the growing demand for their services.

2. Lack of innovation and efficiency: Paediatric hospitals often operate with outdated equipment, facilities, and processes, which limit their ability to provide effective and efficient care to their patients. Moreover, paediatric hospitals often lack the resources and incentives to invest in innovation and research, which are essential for developing new and improved solutions for paediatric health care.

3. Lack of impact measurement and reporting: Paediatric hospitals often struggle to measure and report the impact of their activities on the health and well-being of their patients and communities. This makes it difficult for them to demonstrate their value and attract more support from donors, governments, and other stakeholders.

These challenges pose a serious threat to the sustainability and performance of paediatric hospitals, and ultimately, to the health and well-being of children and adolescents. Therefore, there is a need for new and alternative sources of financing that can help paediatric hospitals overcome these challenges and achieve their mission. This is where impact investing comes in. Impact investing can offer paediatric hospitals a number of benefits, such as:

- Access to capital: Impact investing can provide paediatric hospitals with access to capital that can help them finance their operations, expansion, and innovation. Unlike traditional donors and lenders, impact investors are willing to accept lower or longer-term financial returns in exchange for positive social and environmental impact. This can enable paediatric hospitals to access more flexible and patient capital that can support their long-term goals and needs.

- Incentive for improvement: Impact investing can provide paediatric hospitals with an incentive to improve their performance and efficiency, as they are expected to deliver both financial and social returns to their investors. This can motivate paediatric hospitals to adopt best practices, streamline their processes, optimize their resources, and enhance their quality of care.

- Accountability for impact: impact investing can provide paediatric hospitals with a framework and a tool for measuring and reporting their impact on the health and well-being of their patients and communities. This can help paediatric hospitals to track their progress, identify their strengths and weaknesses, and communicate their value and achievements to their investors and other stakeholders.

To illustrate how impact investing can work for paediatric hospitals, let us consider an example of a hypothetical impact investment fund that targets paediatric health care in Africa. The fund, called the African Paediatric Health Fund (APHF), is a private equity fund that invests in paediatric hospitals across the continent that have the potential to generate positive impact and financial returns. The fund has a total size of $100 million, and aims to invest in 10 to 15 paediatric hospitals over a period of 10 years. The fund has a dual objective of achieving a 10% internal rate of return (IRR) and improving the health and well-being of 1 million children and adolescents in Africa. The fund follows a rigorous process of selecting, supporting, and exiting its portfolio companies, which involves:

- Screening: The fund screens potential investees based on their alignment with the fund's mission, vision, and criteria. The fund looks for paediatric hospitals that have a clear social and environmental purpose, a strong management team, a proven track record, a scalable and sustainable business model, and a competitive advantage in their market.

- Due diligence: The fund conducts a thorough due diligence on the selected investees, covering their financial, operational, legal, and impact aspects. The fund evaluates the investees' performance, potential, risks, and opportunities, and determines their valuation and investment terms.

- Investment: The fund invests in the selected investees, providing them with equity capital ranging from $2 million to $10 million per deal. The fund also provides them with technical assistance, strategic guidance, and network access, to help them grow and improve their business and impact.

- Monitoring: The fund monitors the investees' progress and performance, using a set of financial and impact indicators. The fund also conducts regular site visits, audits, and reviews, to provide feedback and support to the investees, and to ensure their compliance with the fund's standards and expectations.

- Exiting: The fund exits the investees after a period of 5 to 7 years, either by selling its stake to another investor, or by facilitating an initial public offering (IPO), a merger, or an acquisition. The fund aims to generate a positive financial return and a positive social and environmental impact from its exit.

By following this process, the fund hopes to create a portfolio of successful and impactful paediatric hospitals that can serve as role models and catalysts for the development of the paediatric health care sector in Africa. The fund also hopes to demonstrate the viability and attractiveness of impact investing for paediatric health care, and to inspire more investors and stakeholders to join this movement.

2. Trends, opportunities, and challenges

One of the most promising and innovative ways for paediatric hospitals to improve their financial sustainability and social impact is to attract impact investors who are interested in both financial returns and positive outcomes for children's health. Impact investing is a form of investing that aims to generate measurable social and environmental benefits alongside financial returns. According to the global Impact investing Network (GIIN), the global impact investing market was worth $715 billion in 2020, and is expected to grow at a compound annual growth rate (CAGR) of 17.5% from 2021 to 2026.

However, the market for paediatric hospital impact investing is still nascent and faces several challenges and opportunities. Some of the key trends, opportunities, and challenges are:

- Trend 1: Increasing demand for quality and affordable health care for children in low- and middle-income countries (LMICs). According to the World Health Organization (WHO), more than 5 million children under the age of five die every year from preventable and treatable causes, and more than 90% of these deaths occur in LMICs. Moreover, the COVID-19 pandemic has exacerbated the existing health disparities and vulnerabilities of children in LMICs, as well as disrupted the delivery of essential health services. These factors create a huge unmet need and demand for quality and affordable health care for children in LMICs, which can be addressed by paediatric hospital impact investing. For example, the Africa Healthcare Network (AHN) is an impact investment fund that invests in building and operating a network of dialysis centers across Africa, providing affordable and quality care for children and adults with chronic kidney disease.

- Opportunity 1: Leveraging digital technologies and innovations to improve access, quality, and efficiency of paediatric health care. Digital technologies and innovations, such as telemedicine, mobile health, artificial intelligence, blockchain, and cloud computing, have the potential to transform the delivery and management of paediatric health care, especially in resource-limited settings. These technologies can enable paediatric hospitals to reach more patients, improve diagnosis and treatment, reduce costs and errors, and enhance patient satisfaction and outcomes. For example, the Aravind Eye Care System in India is an impact investment fund that invests in using telemedicine and mobile health to provide eye care services to rural and remote areas, where more than 70% of India's blind children live.

- Challenge 1: Measuring and reporting the impact of paediatric hospital investments. One of the main challenges for paediatric hospital impact investing is to measure and report the impact of the investments on the health and well-being of children and their families, as well as on the financial performance of the hospitals. Unlike other sectors, such as education or agriculture, where there are established metrics and indicators to measure impact, the health sector lacks a standardized and comprehensive framework to assess and compare the impact of different interventions and investments. Moreover, measuring the impact of paediatric hospital investments requires collecting and analyzing data on both short-term and long-term outcomes, as well as accounting for the complexity and diversity of the health systems and contexts in which the investments operate. For example, the Global Health Investment Fund (GHIF) is an impact investment fund that invests in developing and scaling up innovative health products and services for LMICs, such as vaccines, diagnostics, and drugs. The GHIF uses a rigorous and transparent methodology to measure and report the impact of its investments, based on the principles of the impact management Project (IMP), a global initiative that provides a common language and framework for impact measurement and management.

3. The benefits of paediatric hospital impact investing for children, families, and communities

Impact investing is a form of socially responsible investing that aims to generate positive social and environmental outcomes along with financial returns. Paediatric hospital impact investing is a specific type of impact investing that focuses on improving the health and well-being of children, families, and communities through investments in paediatric hospitals and related services. In this section, we will explore how paediatric hospital impact investing can benefit various stakeholders and society at large. Some of the benefits are:

- Improved quality of care and patient outcomes: Paediatric hospital impact investing can help paediatric hospitals improve their quality of care and patient outcomes by providing them with the capital and incentives to adopt innovative technologies, practices, and models of care that are tailored to the needs and preferences of children and their families. For example, an impact investor may fund a paediatric hospital to implement a telehealth program that allows children in remote areas to access specialist care and consultations without having to travel long distances. This can reduce the costs and risks of transportation, increase the accessibility and convenience of care, and improve the satisfaction and engagement of patients and families.

- Enhanced financial sustainability and resilience: Paediatric hospital impact investing can help paediatric hospitals enhance their financial sustainability and resilience by diversifying their sources of income and reducing their dependence on traditional funding mechanisms such as government subsidies, donations, and grants. By attracting impact investors who are willing to provide long-term and flexible financing, paediatric hospitals can increase their cash flow and liquidity, reduce their debt burden, and invest in their growth and development. For example, an impact investor may provide a paediatric hospital with a low-interest loan or a revenue-sharing agreement that enables the hospital to expand its facilities, services, and staff without compromising its mission and values.

- increased social impact and accountability: Paediatric hospital impact investing can help paediatric hospitals increase their social impact and accountability by aligning their goals and activities with the needs and expectations of their stakeholders and society. By engaging with impact investors who share their vision and values, paediatric hospitals can establish clear and measurable social and environmental objectives, indicators, and outcomes that reflect their contribution to the well-being of children, families, and communities. For example, an impact investor may require a paediatric hospital to report on its impact metrics such as the number of children served, the quality and safety of care, the patient and family satisfaction, and the environmental footprint. This can help the hospital to monitor and evaluate its performance, identify and address gaps and challenges, and communicate and demonstrate its impact to its stakeholders and society.

4. The key criteria for selecting and evaluating paediatric hospital impact investors

One of the most important decisions that paediatric hospitals face is how to attract and retain impact investors who share their vision and mission of improving child health outcomes. Impact investors are those who seek to generate both social and financial returns from their investments, and who are willing to support innovative and sustainable solutions to address the health challenges of children and adolescents. However, not all impact investors are alike, and paediatric hospitals need to carefully select and evaluate those who are best suited for their specific context and goals. In this section, we will discuss some of the key criteria that paediatric hospitals should consider when choosing and assessing potential impact investors, as well as some of the best practices and tools that can help them in this process.

Some of the key criteria that paediatric hospitals should consider when selecting and evaluating impact investors are:

- Alignment of values and objectives: Paediatric hospitals should look for impact investors who share their core values and objectives, such as improving child health outcomes, reducing health disparities, promoting equity and inclusion, and fostering innovation and collaboration. This can help to ensure a long-term and mutually beneficial partnership, as well as to avoid potential conflicts or misunderstandings. For example, a paediatric hospital that focuses on providing quality and affordable care to low-income and marginalized communities might seek impact investors who are committed to addressing the social determinants of health and reducing health inequities.

- Level of engagement and support: Paediatric hospitals should also consider the level of engagement and support that impact investors are willing and able to provide, beyond the financial capital. Some impact investors might offer additional resources and services, such as technical assistance, mentoring, networking, advocacy, or access to other partners and stakeholders. These can help to enhance the capacity and performance of paediatric hospitals, as well as to leverage their impact and scale. For example, a paediatric hospital that aims to implement a new digital health solution might benefit from impact investors who have expertise and experience in technology, data, and innovation.

- Risk appetite and return expectations: Another important criterion that paediatric hospitals should consider is the risk appetite and return expectations of impact investors. Some impact investors might be more willing to take higher risks and accept lower returns, while others might have more conservative or balanced preferences. Paediatric hospitals should be transparent and realistic about the risks and returns associated with their projects and activities, and match them with the appropriate impact investors. For example, a paediatric hospital that plans to launch a new research and development initiative might attract impact investors who are more interested in the social impact and the potential for breakthroughs, rather than the financial returns.

- Measurement and reporting standards: Finally, paediatric hospitals should also consider the measurement and reporting standards that impact investors require or prefer. Some impact investors might have more rigorous and specific requirements for measuring and reporting the social and financial impact of their investments, while others might be more flexible and adaptable. Paediatric hospitals should be clear and consistent about the indicators and methods that they use to track and communicate their impact, and align them with the expectations and preferences of impact investors. For example, a paediatric hospital that adopts a holistic and multidimensional approach to measuring child health outcomes might need to explain and justify its framework and metrics to impact investors who are more familiar with conventional and standardized measures.

5. The best practices for designing and implementing paediatric hospital impact investing projects

One of the most crucial aspects of paediatric hospital impact investing is to design and implement projects that can deliver both social and financial returns. These projects should align with the mission and vision of the hospital, as well as the needs and preferences of the impact investors. To achieve this, the following best practices are recommended:

- conduct a thorough market analysis and stakeholder engagement. Before launching any impact investing project, it is essential to understand the current and potential demand for paediatric health services, the gaps and opportunities in the existing system, and the expectations and motivations of the impact investors. This can be done by conducting surveys, interviews, focus groups, and workshops with various stakeholders, such as patients, families, staff, donors, partners, regulators, and competitors. The market analysis and stakeholder engagement can help identify the most pressing problems, the most viable solutions, and the most attractive value propositions for the impact investors.

- Define clear and measurable impact goals and indicators. Once the problem and solution are identified, the next step is to define the impact goals and indicators that will guide the project design and implementation. The impact goals should be specific, measurable, achievable, relevant, and time-bound (SMART), and aligned with the hospital's mission and vision. The impact indicators should be quantifiable, verifiable, and comparable, and reflect the intended outcomes and impacts of the project. The impact goals and indicators should also be communicated and agreed upon with the impact investors, and incorporated into the project contracts and reporting systems.

- Design and implement the project using a participatory and adaptive approach. The project design and implementation should involve the active participation and feedback of the stakeholders, especially the patients, families, staff, and impact investors. The project should also be flexible and adaptable to the changing needs and circumstances of the stakeholders and the market. This can be achieved by using a human-centered design approach, which involves empathizing with the users, defining the problem, ideating the solutions, prototyping the solutions, and testing and iterating the solutions. The project should also use a lean startup approach, which involves building a minimum viable product (MVP), measuring the results, and learning and pivoting based on the feedback.

- Monitor and evaluate the project performance and impact. The project performance and impact should be monitored and evaluated regularly and rigorously, using both quantitative and qualitative methods. The project should collect and analyze data on the impact indicators, as well as the inputs, outputs, activities, and processes of the project. The project should also solicit and incorporate feedback from the stakeholders, especially the patients, families, staff, and impact investors. The project should use the monitoring and evaluation results to report on the project progress and achievements, as well as to identify and address any challenges, risks, or opportunities for improvement.

An example of a paediatric hospital impact investing project that follows these best practices is the Healthy Kids Initiative (HKI), launched by the Children's Hospital of Philadelphia (CHOP) in 2019. The HKI is a $15 million project that aims to improve the health and well-being of children and families in West Philadelphia, a low-income and underserved community. The project is funded by a group of impact investors, who receive a fixed annual return of 3%, as well as a variable return based on the achievement of the impact goals. The impact goals are to reduce the rates of asthma, obesity, and dental caries among children in West Philadelphia, as well as to increase the access and utilization of preventive and primary care services. The impact indicators are the number and percentage of children who have improved health outcomes and behaviors, as well as the cost savings and revenue generation for the hospital and the community. The project design and implementation are based on a human-centered and lean startup approach, involving the co-creation and testing of various interventions, such as community health workers, mobile clinics, telehealth, and school-based programs. The project performance and impact are monitored and evaluated using a mixed-methods approach, involving surveys, interviews, focus groups, observations, and administrative data. The project reports and shares the results and learnings with the impact investors and other stakeholders on a quarterly and annual basis. The project has achieved positive results so far, such as increasing the number of children who have asthma action plans, reducing the number of emergency department visits and hospitalizations for asthma, and improving the oral health and nutrition of children in West Philadelphia. The project has also generated cost savings and revenue for the hospital and the community, as well as social and environmental benefits, such as enhancing the quality of life, social capital, and environmental sustainability of the community. The project has received positive feedback and recognition from the impact investors and other stakeholders, and has been considered as a model and inspiration for other paediatric hospital impact investing projects.

6. The success stories and lessons learned from paediatric hospital impact investing around the world

Paediatric hospital impact investing is a form of social finance that aims to improve the health and well-being of children and adolescents by supporting innovative and sustainable solutions in the healthcare sector. It is based on the premise that investing in paediatric hospitals can generate both positive social and financial returns, while addressing the unmet needs and gaps in the provision of quality and affordable care for young patients. Around the world, there are several examples of successful and inspiring initiatives that have leveraged the power of impact investing to transform the paediatric hospital landscape and create lasting value for all stakeholders. Some of the key lessons learned from these experiences are:

- aligning the mission and vision of the hospital with the impact goals of the investors. This is essential to ensure that the investment is aligned with the core values and purpose of the hospital, and that both parties share a common understanding of the expected outcomes and impact metrics. For instance, the Children's Hospital of Philadelphia (CHOP), one of the leading paediatric hospitals in the US, partnered with Social Finance, a non-profit organization that specializes in impact investing, to launch a $15 million Pay for Success (PFS) project that aims to reduce asthma-related hospitalizations and emergency visits among low-income children in West Philadelphia. The project is funded by a group of impact investors, who will receive a return based on the savings generated by the improved health outcomes of the children. The project aligns with CHOP's mission to provide high-quality care for children and families in the community, and with the investors' goal to support innovative and cost-effective interventions that improve public health.

- Leveraging the expertise and networks of the investors to enhance the capacity and performance of the hospital. Impact investors can offer more than just financial capital to the paediatric hospitals they invest in. They can also provide valuable technical assistance, strategic guidance, and access to relevant partners and resources that can help the hospital improve its operations, quality, and efficiency. For example, the SickKids Foundation, the fundraising arm of the Hospital for Sick Children in Toronto, Canada, launched a $25 million SickKids VS Limits Impact Fund in 2019, which invests in early-stage companies that offer innovative solutions for paediatric health. The fund not only provides capital to the companies, but also connects them with the hospital's clinical and research expertise, as well as its network of collaborators and mentors. This helps the companies accelerate their development and growth, while also creating opportunities for the hospital to adopt and implement new technologies and practices that can enhance its care delivery and patient outcomes.

- Engaging the community and stakeholders in the design and implementation of the impact investing strategy. Impact investing is not a one-way transaction, but a collaborative and participatory process that involves multiple actors and interests. It is important to engage the community and stakeholders that are affected by or involved in the impact investing initiative, such as the patients, families, staff, donors, regulators, and policymakers. This can help to ensure that the initiative is responsive to the needs and preferences of the beneficiaries, that it has the support and buy-in of the relevant parties, and that it can create positive and lasting social change. For instance, the Nemours Children's Health System, a non-profit organization that operates paediatric hospitals and clinics in the US, launched a $10 million Nemours Community Impact Fund in 2020, which invests in community-based organizations that address the social determinants of health for children and families. The fund was developed with the input and feedback of the community and stakeholders, who helped to identify the priority areas and criteria for the investments. The fund also involves the community and stakeholders in the governance and oversight of the fund, as well as in the evaluation and dissemination of the impact results.

7. Innovations, partnerships, and scaling up

As the global health landscape evolves, paediatric hospitals face new opportunities and challenges to deliver quality care and improve health outcomes for children. One of the emerging trends in this field is the use of impact investing, which is a form of financing that aims to generate both social and financial returns. Impact investors seek to support innovative solutions that address unmet needs and create positive change in the world. Paediatric hospitals can leverage impact investing to enhance their marketing strategies, attract new sources of funding, and scale up their impact. However, to do so, they need to consider the following aspects:

- Innovations: Paediatric hospitals need to showcase their innovations and demonstrate how they create value for their patients, communities, and investors. For example, a paediatric hospital in India developed a low-cost device that detects congenital heart defects in newborns and reduces the need for expensive echocardiograms. This innovation not only saves lives, but also lowers the cost of care and increases the accessibility of diagnosis. The hospital was able to attract impact investors who supported the scaling up of the device to other regions and countries.

- Partnerships: Paediatric hospitals need to forge strategic partnerships with other stakeholders in the health ecosystem, such as governments, NGOs, academia, and private sector. These partnerships can help them access new markets, share best practices, and leverage complementary resources and expertise. For example, a paediatric hospital in Brazil partnered with a local university and a social enterprise to develop a telemedicine platform that connects rural health workers with paediatric specialists. This partnership not only improved the quality and efficiency of care, but also created a revenue stream for the hospital and the social enterprise.

- Scaling up: Paediatric hospitals need to identify and pursue opportunities to scale up their impact and reach more beneficiaries. This can involve replicating or adapting their models to different contexts, expanding their services or products, or influencing policy or system change. For example, a paediatric hospital in Kenya scaled up its impact by launching a mobile clinic that provides primary care and immunization to children in remote areas. This initiative not only increased the coverage and utilization of health services, but also influenced the government to adopt a similar model for the national health system.

8. How to get started with paediatric hospital impact investing and join the movement?

As you have learned from this article, paediatric hospital impact investing is a promising and innovative way to support the health and well-being of children and their families, while also generating financial returns for investors. But how can you get started with this emerging field and join the movement of social impact? Here are some steps you can take to become a paediatric hospital impact investor:

- 1. Educate yourself. learn more about the challenges and opportunities facing paediatric hospitals, the types and models of impact investing, and the best practices and standards for measuring and reporting impact. You can find useful resources and information from organizations such as the Global Impact Investing Network (GIIN), the international Finance corporation (IFC), and the social Impact investment Taskforce (SIIT).

- 2. Identify your goals and preferences. Think about what kind of impact you want to achieve, what level of risk and return you are comfortable with, and what kind of investment vehicles and instruments you prefer. You can use tools such as the Impact Management Project (IMP) framework, the IRIS+ system, and the GIIRS ratings to help you define and align your impact objectives and expectations.

- 3. Find and evaluate opportunities. Look for potential paediatric hospital impact investing opportunities that match your goals and preferences. You can use platforms such as the ImpactBase, the ImpactAssets 50, and the GIIN Investor Directory to discover and connect with impact fund managers, intermediaries, and networks. You can also use criteria such as the principles for Responsible investment (PRI), the Operating Principles for Impact Management (OPIM), and the impact Investing Due diligence Guide to assess and compare the quality and suitability of different opportunities.

- 4. Make and monitor your investments. Once you have selected your paediatric hospital impact investing opportunity, you can proceed to make your investment and sign the relevant contracts and agreements. You can also monitor the performance and impact of your investment over time, using tools such as the Global Impact Investing Rating System (GIIRS), the Impact Reporting and Investment Standards (IRIS), and the social Return on investment (SROI) methodology. You can also engage with your investees and other stakeholders to provide feedback and support, and to share your learnings and insights.

- 5. Join the community. Finally, you can join the growing community of paediatric hospital impact investors and contribute to the advancement and development of this field. You can participate in events and forums such as the GIIN Investor Forum, the SOCAP Conference, and the Impact Investing World Forum. You can also join networks and initiatives such as the Global Health Investment Fund (GHIF), the Children's Investment Fund Foundation (CIFF), and the Pediatric Innovation Fund (PIF).

By following these steps, you can become a part of the paediatric hospital impact investing movement and make a positive difference in the lives of millions of children and their families around the world. You can also enjoy the benefits of a diversified and resilient portfolio that delivers both social and financial returns. Paediatric hospital impact investing is not only a smart and responsible way to invest, but also a rewarding and fulfilling way to live.