Menu
Burden of disease
Cardiovascular diseases (CVDs) are a leading cause of disability and premature death on a global scale, contributing substantially to the escalating costs of health care. The World Health Organization (WHO) estimates that CVDs are the leading cause of death globally, taking an estimated 17.9 million lives each year with over 75% of CVD deaths taking place in low- and middle-income countries [1]. In Africa, CVDs are the largest contributor to the total NCD burden, accounting for 38% of NCD deaths and 23 million DALYs [2]. While several high-income countries have witnessed a decline in cardiovascular deaths, Africa has experienced a significant rise of nearly 50% in the burden of CVDs burden within the last three decades [3] This increase can be linked not only to the rise in major risk factors but also to population growth and aging.
More than 50% of CVD deaths in Africa are categorized as premature mortalities, occurring between the ages of 30 and 70 years [4]. The substantial impact of resulting DALYs on the most productive age group leads to significant social and economic repercussions for households, communities, and the entire nation [4]. Currently African countries spend USD 8 to USD 129 per capita on health, compared to high income countries that spend above USD 4,000 [5]. This, combined with the lack of universal health coverage in most countries, necessitates high out-of-pocket costs for individuals, with resultant impoverishment and inequity in health care access.
State of cardiovascular diagnostics in Africa
Inadequate diagnosis is a major driver of cardiovascular morbidity and mortality in Africa [1]. People in African countries who suffer from CVDs have less access to effective and equitable health care services which respond to their needs. As a result, many people in African countries are detected late in the course of the disease and die younger from CVDs, often in their most productive years. The poorest people in African countries are affected most. At the household level, sufficient evidence is emerging to prove that CVDs contribute to poverty due to catastrophic health spending and high out-of-pocket expenditure [1].
The role of the private sector in the diagnosis of CVDs
Given the limited public resources in Africa, the private sector plays a vital role in the healthcare system. Approximately 60% of healthcare financing in Africa originates from private sources, and private providers receive around 50% of the total health expenditure [6]. The emergence of Africa’s urban middle class, who are increasingly demanding better services and have more disposable income than ever before, means that the economics of private healthcare businesses on the continent are strong [7]. There is more acceptance of the private sector as a provider of services, since the private sector has a large and expanding role in health systems in low- and middle-income countries, often filling the gaps in the public [8].
Non-invasive diagnostic imaging methods like echocardiography, cardiac computed tomography (CT), nuclear imaging, and cardiac magnetic resonance imaging (MRI) play a crucial role in diagnosing CVDs, assessing risks, making therapeutic decisions, and influencing patient outcomes. Recent data from WHO reveals that South Africa, Egypt, and Morocco, possess a relatively high number of imaging devices per capita, such as echocardiography, cardiac magnetic resonance (CMR), CT, and single-photon emission computed tomography (SPECT)-myocardial perfusion imaging compared to other African countries [9]. Access to these advanced technologies remains limited in many countries, especially in Sub-Saharan Africa (SSA), where some nations like Mali, Niger, and Chad have less than one imaging device per million individuals. For instance, the average number of MRI units per million people in SSA is 0.3, with 11 countries, varying in population from 0.7 million to 67.5 million, lacking any scanners altogether. CMR services are only available in eight countries across the African continent, with most scanners concentrated in South Africa and mainly accessible through the private sector and academic centers [9].
Private equity's entrance into African healthcare
Private equity and venture capital investments in Africa soared 66% year over year in 2022 to USD 7.70 billion, the highest aggregate value for the region in the last five years [10]. Healthcare was a prominent industry sector in the private equity and venture capital universe, accounting for 72% of the total number of private equity backed buyout deals in 2022. The huge contribution of the healthcare sector was mainly due to the acquisition of hospital operator Mediclinic International PLC, which is valued at more than USD 5 billion [10]. In terms of funding, the bulk of funding activity continues to take place in the big four markets of Nigeria, Kenya, South Africa and Egypt, contributing 81% of the annual total, down from a bumper 92% in 2021 [11]. Encompassing several sub-industries including pharmaceuticals, medical devices, hospitals, biotechnology and more, the healthcare industry has grown in line with the social and technological advancements of the 21st century. The world’s constant demand for healthcare services means that the sector accounts for a significant proportion of global deal activity year-on-year.
In Africa, approximately 10-20% of investments in health service delivery infrastructure are currently sourced from the private sector. This is primarily due to the significant investment risk involved [12]. The limited availability of health insurance coverage and the prevalence of out-of-pocket spending in health financing further complicates matters for investors seeking a financial return. Consequently, private sector investments in health infrastructure have mostly focused on brownfield investments, which involve expanding existing hospitals. Additionally, development partners, including private foundations, also play a role in financing health infrastructure projects. However, it is worth noting that grant aid for health-related capital investment from OECD countries has experienced an annual decline of 6% since 2014 [12].
Private equity investors are displaying growing interest in the field of cardiology. Notable instances of key private equity investments in cardiology include Pioneer Diagnostic Center, a diagnostic services company in Ethiopia that offers MRI, CT scan, X-ray, and ultrasound services [13]. Another example is Novamed Ltd, which received a capital increase from EuroMena in 2019. The Novamed group is currently undergoing a rejuvenation process for its network of hospitals and has embarked on a substantial investment program that includes establishing a state-of-the-art cardiology center, the first in Francophone West Africa to perform open-heart surgeries, and an oncology center, the first in the region to provide radio therapies [14]. Furthermore, there was a significant financing round of 16.6 million from Vital Capital Investments into Luanda Medical Centre (LMC) to enhance diagnostic services [15].
Addressing ethical consideration in private equity investment for health
The private sector plays a role in CVD investment and financing that is both positive and negative, contributing to high costs and lack of affordability, while subsidizing some costs and providing capital to fund initiatives. One adverse outcome of private equity involvement is illustrated by the fact that their goal is to consolidate healthcare providers and companies, not with a primary focus on improving healthcare quality and efficiency, but rather to exploit financial opportunities and leverage their position to negotiate with suppliers, payors, and patients. As a result, this approach undermines stability and leads to healthcare markets that are more concentrated and less competitive [16].
The positive roles of the private sector appear to outnumber the negatives, and with adequate regulatory measures the private sector will be a constructive influence on CVD prevention and management in African countries [17]. Private equity can contribute to achieving public healthcare goals under specific circumstances. Policymakers should consider the evolving economic landscape in the healthcare sector and propose measures that encourage private equity firms to align their objectives with public healthcare goals alongside their pursuit of financial incentives.
Future outlook
As financial institutions increasingly emphasize impact and considerations around environmental and social factors, there is an optimistic outlook that these trends will lead to increased investment in African countries. Considering that healthcare deal internal rates of return have consistently surpassed the broader private equity market by a median of 6% over the last ten years, attractive high returns have caught the attention of new sources of capital and intensified competition for healthcare investment opportunities [18]. The sector’s resilience during economic downturns and the growing demographic factors, such as aging populations and the prevalence of chronic diseases, further add to its appeal. Sovereign wealth funds, infrastructure funds, hedge funds, and non-healthcare buyout funds are all actively exploring private healthcare deals. If healthcare continues to deliver superior returns compared to other industries, more capital is expected to flow into the sector, potentially driving up valuation multiples even further.
The healthcare sector development agenda in Africa will continue to prioritize expanding access to quality healthcare services and boosting domestic pharmaceutical manufacturing capacity. Investment is expected to support these objectives. Traditional brick and mortar investments will be required in both areas, but there is also a rising trend in innovative, tech-enabled services, particularly in diagnostic services, which will play an increasingly vital role in healthcare provision and attract a significant share of investment. While the government’s role as a regulator and coordinator in the healthcare sector is crucial, private actors will also be essential for achieving wider coverage. The private sector will play a significant role in enhancing last-mile delivery of health services through digital infrastructure, including mobile telephone facilities and telemedicine. Additionally, private investment will be instrumental in financing long-term efforts to ensure universal health access for all [12].
References
[1]World Health Organization, “Cardiovascular Diseases Factsheet,” 11 June 2021. [Online]. Available: https://www.who.int/news-room/fact-sheets/detail/cardiovascular-diseases-(cvds).
[2]”Gouda, H.N., Charlson, F., Sorsdahl, K., Ahmadzada, S., Ferrari, A.J., Erskine, H., Leung, J., Santamauro, D., Lund, C., Aminde, L.N. and Mayosi, B.M., 2019. Burden of non-communicable diseases in sub-Saharan Africa, 1990–2017: results from the Global Bur”.
[3]”Institute for Health Metrics and Evaluation [IHME]. GBD Compare Data Visualization. (2020). Available online at: http://vizhub.healthdata.org/gbd-compare (accessed August 04, 2023). [Google Scholar] [Ref list]”.
[4]”Minja NW, Nakagaayi D, Aliku T, Zhang W, Ssinabulya I, Nabaale J, Amutuhaire W, de Loizaga SR, Ndagire E, Rwebembera J, Okello E, Kayima J. Cardiovascular diseases in Africa in the twenty-first century: Gaps and priorities going forward. Front Cardiovasc”.
[5]United Nations, “Public financing for health in Africa: 15% of an elephant is not 15% of a chicken,” 13 October 2020. [Online]. Available: https://www.un.org/africarenewal/magazine/october-2020/public-financing-health-africa-when-15-elephant-not-15-chicken. [Accessed 04 August 2023]
[6]International Finance Corporation, “The Business of Health in Africa – Partnering with the Private Sector to Improve People’s Lives,” UNIDO, 2016.
[7]Africa Development Bank Group, “Private Equity Investment in Africa In Support of Inclusive and Green Growth”.
[8]”Collins T, Mikkelsen B, Axelrod S. Interact, engage or partner? Working with the private sector for the prevention and control of noncommunicable diseases. Cardiovasc Diagn Ther. 2019 Apr;9(2):158-164. doi: 10.21037/cdt.2018.08.04. PMID: 31143637; PMCID:”.
[9]I. M. Savasini Laksmanan, “A comparison of cardiovascular imaging,” European Society of Cardiology, 2023.
[10]B. Mckenzie, “Lexology,” 16 May 2023. [Online]. Available: https://www.lexology.com/library/detail.aspx?g=56b39118-6b11-4e22-b72a-9e41fe332963#:~:text=This%20is%20confirmed%20in%20a,in%20the%20last%20five%20years.. [Accessed 04 August 2023].
[11]DISRUPT Africa, “The African Tech Startups Funding Report,” 2023.
[12]Africa Development Bank Group, “Strategy for Quality Health Infrastructure in Africa 2022-2030,” 2022.
[13]Z. Partners, “Zoscales Partners Follow-on Investment Into Pioneer Diagnostics Center,” 2021.
[14]The EUROMENA FUNDS, “The EuroMena Funds Invests in Nomaved, a leading Healthcare Provider in Côte d’Ivoire,” 2019.
[15]Global Private Capital Association, “Vital Capital and OPIC Provide Financing to Luanda Medical Center,” 2014.
[16]America Antitrust Institute, “Soaring Private Equity Investment In The Healthcare Sector: Consolidation Accelerated, Competition Undermined,and Patients At Risk,” 2021.
[17]”Marshall K, Beaden P, Durrani H, Tang K, Mogilevskii R, Bhutta Z. The role of the private sector in noncommunicable disease prevention and management in low- and middle-income countries: a series of systematic reviews and thematic syntheses. Int J Qual St”.
[18]B. &. Company, “Global Healthcare Private Equity and M&A Report 2022,” 2022.