Healthcare systems appear to have navigated the most severe financial impact of the pandemic. We believe the present time provides an opportunity to reset investment strategy and recalibrate portfolios as necessary.
In a changing healthcare landscape, we understand the unique challenges and complexities facing healthcare systems today.
For more than 35 years, we have worked with healthcare-related institutions to build and manage investment portfolios customized to their needs.
We recognize that healthcare systems have unique objectives, constraints, and operating considerations that require them to invest their asset pools in a way that is significantly different from other institutional investors. To build a successful investment program, it is critical to fully understand the enterprise and how its varied pools—including endowments, pensions, insurance pools, working capital, and board-designated funds—work together to support it.
We start every relationship with a complete enterprise review to assess what drives the institution and understand the system’s ability to assume equity and illiquidity risk. We then build and manage a customized portfolio that is designed to best meet each client’s objectives.
With deep expertise in alternative assets, impact investing, and governance, we bring the needed resources to bear and deliver the portfolio that’s right for each client. Combined with our knowledge of enterprise issues specific to healthcare organizations, we help create customized investment programs to meet the specific values and objectives of the healthcare organizations we serve.
Our Latest Insights
Before COVID-19 most hospitals generated liquidity from their operating model. In our May 2020 survey of 27 hospital systems, we learned that COVID-19 has driven hospitals to search for liquidity from multiple sources, including, for some, the investment portfolio.
As 2020 comes to a close, we expect some key investment drivers to persist into next year. While our views speak to many different challenges confronting investors, including the poor bond yields on offer, the fate of US-China relations, and where to find growth, they are rooted in the belief that 2021 will be a year of healing for the global economy.
April 8, 2020—The COVID-19 pandemic has inflicted significant duress upon the operational and financial situations of nonprofit healthcare systems. An immediate response was necessary to escalate staffing, spending, and resources to provide emergency treatment to those affected by this highly contagious outbreak.
Healthcare systems can benefit greatly by maximizing equity orientation and illiquidity while prudently managing risk. But a typical healthcare system may have investment assets in multiple accounts, due to mergers & acquisitions (M&A), capital projects, and fundraising, as well as operational and pension benefit growth. Investments can be curated—identified, categorized, and clustered—for optimal efficiency and cost savings. Similarly, defined benefit pension plans can be restructured to better manage pension risk and administration. This paper discusses strategies to simplify and streamline investment structures to make complexity more manageable for investment and financial executives.
Investors are facing a challenging period for earning what they spend and achieving adequate portfolio diversification. With most DM sovereign bond yields near or below zero, expected returns for bonds are at all-time lows and diversification qualities are constrained. In this edition of VantagePoint, we evaluate defense and diversification options to identify a modern approach to diversification in this low-yield era.
Yes, because rising concentration reflects rising valuations for the largest stocks, which are likely to serve as a headwind to index returns. Further, the growing market share of these companies increases the potential for rising regulatory oversight.