Global Healthcare Trends Report 2023

GLOBAL HEALTHCARE TRENDS A timely examination of the interaction between the U/HNW ecosystem and healthcare

CONTENTS Foreword ......................................................................

5

Introduction ..................................................................

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Key Findings ................................................................

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CHAPTER 1

The healthcare needs of today’s global UHNW families and individuals ................................

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CHAPTER 2

Solutions provided by healthcare players ............. 21 CHAPTER 3

Key sectors, technologies and business models in healthcare that are attracting investment and capital .............................................. 32 CHAPTER 4

How the wealthy plan their healthcare investing and incorporate their pursuit of ESG goals ................................................................ 34 Contributors ................................................................. 42

Best CEO in Greater China Wealth Management Madame Wang Dian

CEO, Hywin Holdings Ltd. (NASDAQ: HYW)

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

FOREWORD Does health have monetary value? One can look at the maintenance of health in this way, likening it to an asset – the greatest asset that anyone can have. UHNW entrepreneurs are always thinking about improving their businesses, checking performance figures and making adjustments with the help of expert advice. They are not, on average, so meticulous in the way they treat their health, although a growing number of health professionals are now urging them to be so, especially since the recent pandemic reached its grisly climax. HNWIs are now much more interested in healthspan, the number of disease-free years that someone lives, as opposed to lifespan, the total number of years that somebody lives.

Many wealthy families and HNWIs believe that good financial performance can go hand-in-hand with benefits for society through innovation. One area in which they invest heavily – and never more so than after the shock of COVID-19 – is that of healthcare in all its guises.

Pharma services, biotech, therapeutics, home health and value-based care are all the subject of a massive upsurge in HNW investment, taking in health-oriented funds and both public and private capital. The surge of HNW investment that occurred at the height of the recent pandemic has ebbed in many countries, as has philanthropy in healthcare, but the unmistakeable long-term trend is upwards. COVID-19 also caused an eruption in the fields of telemedicine and remote care advice. Many families are deciding to take on concierge services and improve their health insurance. Healthcare, moreover, is a mega-trend propelled by the global forces of supply and demand as the global population grows, ages and becomes more health-conscious.

This survey, sponsored by Hywin Holdings, of healthcare operators, healthcare professionals and healthcare investment firms, looks at all aspects of the healthcare universe. How have high-net-worth families re-discovered and re-assessed their health needs in this post-pandemic world? Have wealthy clients received the best services and solutions that their wealth should be able to procure? What providers of healthcare and medical solutions are competing for the attention and trust of these demanding clients, and how successful are they? Why do wealthy clients sometimes have to part with their entrepreneurial habits to really get what they need in the healthcare space? Where do investors find the emerging and investable trends in healthcare, and how do they place their bets and also incorporate their ESG commitments?

To answer these questions, this report has consolidated the opinions of experts at the top of their trade. It ought to be of interest to the casual reader, to the prospective investor in healthcare services and, of course, to high-net-worth families that are on an eternal search for healthcare providers who can truly listen and understand.

We hope you will enjoy the read!

Shuming Zhu Director Hywin Holdings Ltd. (NASDAQ: HYW) Andrew Deane Publisher WealthBriefingAsia

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

INTRODUCTION In this report, we survey every aspect of the modern high-net-worth individual’s interaction with healthcare, whether as a patient or as an investor. In doing so, we have interviewed experts on the subject from all over the world. The results of our survey are to be found below.

It is certain that wealth not only affords material comfort but also supports the foundation of good health, paving the way for a prosperous and fulfilling life. The relationship between wealth and health, however, is complex. Some HNWIs’ habits are very bad for their health. The phenomenon of founding patriarchs neglecting their health is reflected in the haphazard manner in which they often acquire health advisory services. Respondents to the survey also agreed that the second generation, freed by the family wealth from having to work, can suffer from anxiety, depression or loneliness because their lives lack purpose. The correlation between cost and quality in healthcare, moreover, is not a direct one; the choice of doctor, concierge or healthcare consultant is crucial.

Over-treatment and under-treatment abound. Fraud and inadequate insurance coverage are other problems that the report discusses.

The complexity of the average HNWI’s life – a life that often includes homes, assets and relatives on more than one continent – can cause healthcare problems in a number of ways, which this report enumerates. Family offices appear not to be as good at making healthcare arrangements for their members as they could be.

According to respondents, however, the situation is improving, as some wealth managers and family offices are extending their operations into the healthcare space with finesse.

In this report we look at various kinds of healthcare consultants, medical consiglieres, concierge firms and health management providers. All are becoming more popular among the world’s increasingly-healthconscious HNWIs. Wealthy families can, of course, be very demanding, ordering the removal of doctors who rub them up the wrong way and insisting – to the consternation of their doctors – on recovering from procedures in countries where their health might be in danger. The only way to deal with this, in the words of one respondent, was to do everything to minimise the problems caused by their decisions, while never losing sight of the doctrine that “the customer is always right.”

Respondents to the survey all spoke in glowing terms of the role that foreplanning can play in prolonging the life of a HNWI. Blood tests are now very sophisticated and genome tests are so cheap and easy that they have ceased to be the preserve of the wealthy. There is now no excuse for any HNWI who fails to have these things checked more regularly than governments prescribe for public health.

The recent pandemic has caused many problems for HNWIs in healthcare, which the report enumerates. It has also, however, inspired HNWIs to spend more on their health and has caused a surge in telemedicine and remote-care advice. More young HNWIs are seeking healthcare and HNWIs are now far more interested in their healthspans – the quality of their lives – as opposed to their lifespans – the lengths of their lives.

Governmental bodies, meanwhile, help with HNW healthcare as well; private and public doctors and researchers tend to help each other in any case.

In this report we look at the various vehicles into which HNWIs pour their money when investing in healthcare, which they do to an enormous degree, and the key sectors, technologies and business models that attract them. Their enthusiasm is a function of the pandemic as well as other things such as personal healthcare experience. HNWIs are far less likely to diversify their holdings than corporate investment houses, and healthcare is one of their main targets.

There are now some official guidelines in existence to help HNWs in their efforts to invest ethically – and promote their own personal environmental, social and governance-related (ESG) principles – healthcare being part of the social component. The United Nations’ sustainable development goals and the European Union’s Sustainable Finance Disclosure Regulation are cases in point, but many nations are now evolving rules along similar lines. More informally, investors have been using the measurements of disability-adjusted life years and quality-adjusted life years to make investment appraisals in the healthcare arena.

The information contained in this report is based on interviews and additional types of research.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

KEY FINDINGS

1

3

5

8

Post-pandemic, high-net-worth individuals globally are devoting more time and resources to their health and wellbeing. This can be done with sub-optimal results, because many facilities – and the report mentions no names but plenty of details – over-treat them in order to prove their worth again and again, or else under-treat them out of meekness and a desire not to irritate them.

Chapter 1.3 is of interest here.

High-net-worth individuals have always been interested in lifespan – longevity – but are only just starting to be interested in healthspan – the number of disease-free years that someone lives. See Chapter 2.7. When HNWIs pursue La Bonne Vie, however, they are often prey to unsubstantiated claims of efficacy and dubious longevity products. Nobody has proved conclusively that any therapy or medicine can prolong life into old age, because such proof can only happen after two generations have passed, as Dr Jordan Shlain explains most scathingly in Chapter 4.3.

HNWIs’ inclination to be in control sometimes works against them in their healthcare situations. They can overwhelm their medical teams with interference and exam-style questioning – perhaps to their eventual detriment – as described in Chapter 1.3.

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4

6

New tests, innovative diagnostics, regenerative medicine, gene therapy and new delivery models are gaining popularity. The report discusses how genetics can predict the future course of a HNWI’s medical life as well as a detailed anecdotal knowledge of his family history, as section 2.5 of the report attests. Whereas once it took years to chart a human genome, the swiftest clinic in the world can now do it in four hours...for a price. With this in mind, spas and wellness centres have been popping up all over the Western world in the wake of the pandemic. They have just begun to do so in East Asia as well, thanks mainly to leading healthcare providers like Hywin in the region.

The possession of wealth ought to lead to greater and longer health, but it very often does not. Many of the casualties of the deterioration in the mental health of US citizens in recent years – and especially since the pandemic began – are the members of HNW families. Mental health diagnoses and strategies for recovery are discussed in Chapter 2.2.

First-generation entrepreneurs and their second-and-third-generation descendants tend to differ in their assumptions and ideas about health.

When someone of the first generation – the generation that produces the wealth in the first place – comes into contact with a medical team, it is often in passing, during an attempt to provide healthcare for a member of his family. Other so-called patriarchs run into medical difficulties because they are workaholics. When a member of the second generation needs healthcare, it is often because of substance abuse. Chapter 1 is festooned with such stories.

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

KEY FINDINGS

7

9

11

Family offices invest heavily in health propositions, but many are constrained by insufficient resources or weak operational knowledge. It is wellknown – and documented in a diagram in Chapter 3 – that family offices are ‘overweight healthcare,’ in the parlance.

Their interest in investing in medtech – and especially biotech – often comes from their own medical histories.

Biotech, pharma services, home health and life sciences are among the top investment choices for wealthy individuals and family offices. There are many mentions of this throughout the report, ranging from a table showing a spike in the global setting-up of initial public offerings (IPOs), many of them in healthcare, during the peak years of the pandemic in 2020-1, to the example of the Strüngmann family office’s adventures in biotech, as seen in Chapter 3.

Healthcare funds and high-net-worth investors try to align themselves with the European Union’s Sustainable Finance Disclosures Regulation (SFDR) and the United Nations’ Sustainable Development Goals (SDGs)...but it’s a work in progress. ESG regulations are still in their infancy around the world, with the European Union and the United Kingdom in the forefront (see Chapter 4.3).

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Wealth managers who operate health assets and provide holistic diagnostics/ advisory/delivery can have a strategic edge. Healthcare consultants are sometimes approached by large private banks that perform family-office and wealth-management services and want to differentiate themselves from other private banks.

Some forward-thinking wealth managers at the big financial institutions want to organise proactive healthcare for their clients, as seen in Chapter 2.1.

Some investors are keen to capture the next healthcare unicorn, whilst others are happy to participate in all sub-sectors of healthcare with a portfolio approach. The HNWI in question often does not feel the need to make fast profits from his investments in healthcare and, in such a case, his contribution is known as patient capital (see Chapter 4.2).

The future of HNW healthcare is a flourishing one for clients, advisors and providers alike. All chapters in the report attest to this. Matters are likely to improve even further when family offices – which have long abounded in the West but have also sprung up in East Asia in large numbers lately – redouble their efforts to organise their healthcare strategies, or else appoint reputable healthcare companies to manage these strategies for them.

Their story is told in Chapter 1.5.

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NEWS

AWARDS

EVENTS

RESEARCH

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North American Family Office Intelligence

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

CHAPTER 1

THE HEALTHCARE NEEDS OF TODAY’S GLOBAL UHNW FAMILIES AND INDIVIDUALS All the medical service firms in the survey agreed on one thing – that HNWIs were becoming more and more obsessed with their health, but that too many of them, especially of the founding generation but also of the second, treated their health in a cavalier manner. All agreed that a growing number of HNWIs were interested in longevity.

Most people take their health for granted and hope for the best. All respondents at medical companies thought that every HNWI ought to understand his medical ‘portfolio’ of risk – ascertainable through genome testing and an analysis of family history – and let his doctors develop a comprehensive strategy for prevention, detection, monitoring and smart intervention.

Dr Jordan Shlain, the founder and managing partner of Private Medical, a referral-only private-practice office in San Francisco, Silicon Valley and Los Angeles, was adamant on the subject.

“From my perspective, I can see from a mile away when a problem’s going to happen... if I’m looking hard enough and we’re doing our due diligence. Often, we can use the ‘Markov Chain’ concept, which states that if we get enough detailed information about the current, present state, we can predict the future as accurately as if we had historical information. That said, we do collect all historical information and current information and build a trajectory. When you actually have a strategy and you score your risk and then you dive deep into looking for things, you can catch things early.

“There’s a guy I saw some years ago. He’s about 65 now but when he was in his 50s, we did a calcium score.

I said look, we want to look at your heart in great detail.

He said I exercise every day, I’m great. We looked at his heart and all his blood vessels in his heart were stenosed.

[Stenosis = abnormal narrowing.] I said ‘we need to put you on hyper-aggressive anti-heart-attack therapy,’ which we did. Ten years later, he’s never had a heart attack, he’s doing fine, but had we not done that ten years ago, he’d be having a heart attack right now.”

“From my perspective, I can see from a mile away when a problem’s going to happen... if I’m looking hard enough and we’re doing our due diligence. Often, we can use the ‘Markov Chain’ concept, which states that if we get enough detailed information about the current, present state, we can predict the future as accurately as if we had historical information.”

MARKOV CHAIN

A Markov chain or Markov process is a stochastic model describing a sequence of possible events in which the probability of each event depends only on the state attained in the previous event. Informally, this may be thought of as, "What happens next depends only on the state of affairs now."

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

CASE STUDY: THE ROLE OF IT UHNWIs have complex lives. Their travelling lifestyles might make healthcare very complex for them – unless their healthcare provider has good information technology (IT). One US respondent who runs a health advisory firm illustrated this point.

“If one of our clients is travelling between London and New York and he sees an endochrinologist in London who does XYZ and then he comes back to New York and the doctors in New York don’t have the records from the doctor in London, our work is to make things seamless so that when the client walks into the doctor’s office in New York, they say ‘I see the records from London, I talked to the health advisor, London said your A1C is high, [other readings] are low, so we’re going to follow through on that,’ as opposed to ‘I don’t know what happened in London, I don’t have access to the records, let’s redo some of the things...and why are you on XYZ medication?’

“It could be complex...and part of also what’s happened is that healthcare delivery has grown laterally. I mean, HNW people visit

a doctor over an app or go to a local urgent care, or have an at-home doctor go to their house and do something. When the next doctor needs to know what happens, how does he get that information? If he gets it, he has to ask questions. Our work is to make it seamless and bridge those gaps.

in our country, have different IT systems. They can’t look at them.

We are the conduit in the middle to help support that. We do not outsource the job of collating all those records because we can also review them as they come in and highlight key things for other doctors to see.”

“IT plays a part. I wouldn’t say a massive part. The IT solution to that is us collecting the records, us reviewing the records, us sending the records to the next treater and synthesising them, setting them up for success.

Brian Dooreck had a similar opinion about the digitisation of healthcare: “The whole system is overburdened. Digitising is not the problem, in the sense that there’s too much digitising; it’s just not streamlined.

“We have standardised record formats that we crush everything into, so that we can always interchange them. I personally came up with the format and chose it. Everything’s subordinated to that. Our client abroad who’s been getting second opinions on his cancer...it’s been dozens of hours getting all his records to all the hospitals. It’s an onerous task and those kinds of things delay treatment. They are so onerous sometimes that people say ‘forget it, I don’t even want to do it,’ because it’s so much work to get records from one place to another.

“Scans, lab samples, doctors’ notes... different hospitals, even

1.1 As wealth increases, does the proportion of people in good health grow?

The survey asked respondents whether people became healthier as their wealth increased. Their replies were cautiously optimistic on this score, but with many qualifications.

It is certain that wealth not only affords material comfort but also supports the foundation of good health, paving the way for a prosperous and fulfilling life.

Studies have shown a positive correlation between wealth and health outcomes. For example, according to the World Health Organization (WHO), higher-income individuals tend to have lower mortality rates and better access to healthcare services. Additionally, research conducted by leading institutions such as the Harvard School of Public Health has demonstrated that income inequality is associated with health disparities.

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“The classic thing happens when a patient comes to the out room and you want records. Oh yeah, it’s in my chart. The electronic medical record system that one hospital has communicates with other hospitals but it’s a file dump of 900 pages when all the doctor wants to see is nine. So I’d say that a lot of the analogue work, a lot of the manual functionality of what we do, is sifting through the noise. I don’t need 30 pages for an ER discharge; I just need one page.

“There are so many points of contact that are more technologically based now – scheduling, getting seen, the process of that, getting records. In the end it still takes a human touch.”

With greater financial resources, individuals can prioritize their health, leading to better overall well-being and health outcomes. With increased wealth, they have larger budgets for health-related expenses within their regular household expenditures. They can afford better-quality healthcare services, better access to advanced medical technologies and better medications.

Their financial capability also allows for prompt medical interventions, leading to faster recoveries.

Wealthier individuals are more likely to have comprehensive health insurance coverage, which can facilitate access to healthcare services and reduce the financial barriers to seeking medical care. Many Americans pay towards a health maintenance organization (HMO), a type of health insurance that employs a network of physicians or medical groups to offer care at set costs. HNW patients with more money than most can find better services by going outside their networks. They can gain ‘facilitated’ (i.e. improved) access to physicians and facilities.

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

DOES WEALTH LEAD TO HEALTH? A recent British study 4

3.73

3.5

2.5 2 1.5 1 0.5

HAZARD RATIO

3 2.54

2.53

1.77

1.15 0.93

1.21 All Cause

1.36 Other

Cancer

CVD MORTALITY

0 WEALTHIEST

POOREST

INTERMEDIATE

This diagram shows the correlation between wealth and mortality on four fronts – all-cause mortality, cardio-vascular disease, cancer and all other causes of death – among 50-64-year-old patients. Source: Demakakos, P. et al (2015), ‘Wealth and mortality at older ages: a prospective cohort study,’ J Epidemiol Community Health 2015. Dr Panayotes Demakakos is a researcher at University College, London.

THE VARIABLE PRICE OF HEALTH INSURANCE FOR HNWIs The following cities feature prominently on Julius Baer's list of HNWI expenditures throughout the world in its Global Wealth and Lifestyle Report 2023. The private bank questioned high-net-worth individuals with bankable household assets of US$1 million or more in these locations about their behaviour in relation to their consumption of all manner of products and services, and financial needs, between February and March 2023.

This list records the price of health insurance, ranging from the most expensive (in Mumbai) to the least expensive (in Santiago de Chile). The most expensive city in which to hire the services of a lawyer was Hong Kong; the most expensive for a car was Singapore; the most expensive for a business-class flight was Shanghai.

MOST EXPENSIVE MUMBAI

1 2

SINGAPORE SAO PAOLO MANILA BARCELONA

3 4

MIAMI & NEW YORK

6

DUBAI

5 7

BANGKOK

LEAST EXPENSIVE SANTIAGO DE CHILE

1

SHANGHAI

3

TOKYO MONACO

8

HONG KONG

10 MILAN

SYDNEY

4

MEXICO CITY

6

LONDON

8

FRANKFURT

5 7

TAIPEI

9

2

9 10 JOHANNESBURG

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

1.2 The needs of Generation One and Generation Two The relationship between wealth and health, however, is complex. Some HNWIs’ habits are very bad for their health.

Many entrepreneurs take good care of themselves, but all respondents at medical firms agreed that others – the founders of their family fortunes – worked so many hours that they could not remain fit. Their motto, according to one health firm CEO, is “I’ll sleep when I’m dead.’” This can lead a HNWI to a major event such as a cancer diagnosis. Then, and only then, does he pay attention to his health. Alternatively, he is often prey to mental health problems and/or emotional breakdown, which leads him to go into therapy or cut out drinking.

The phenomenon of founding patriarchs neglecting their health is reflected in the manner in which they often acquire health advisory services.

It is common for them to contact such advisors on behalf of other members of their families – perhaps their vulnerable parents – while insisting that they have no problems themselves. Only when the health advisors

start asking an HNWI questions about the identity of his primary care physician, or whether he has had an annual exam, or why he appears to have an anxiety problem, does he realise that he might need support as well.

This is the opposite of proactive care for one’s health, as Jordan Shlain affirmed.

“Once we pass the age of 24, we are depreciating assets over the rest of our lives. The goal is to ensure that the slope of that curve is as flat as possible.”

“Once we pass the age of 24, we are depreciating assets over the rest of our lives. The goal is to ensure that the slope of that curve is as flat as possible. Should you fall into a medical ditch, the longer you stay in that ditch, the higher the likelihood that you will not revert back up to the aforementioned curve. Rather, you will restart your decline from a lower set point. Effectively, you will have negatively impacted your longevity, vitality and resilience.”

WHICH LIFE-CYCLE TRAJECTORY ARE YOU ON? How do you know?

CHILDHOOD

PUBERTY

ADULTHOOD

AGEING

Supra norm

al

Catc

h-up

YEARS HEALTHY

Normal

Below normal

Pre

ma

20

40

Ea

tur

rly

ed

eat

h

60

de

clin

e

80

AGE YEARS

Reproduced by kind permission of Dr Jordan Shlain. This chart contains a vague idea of the different trajectories on which different individuals might be living their lives before a full check-up occurs using the latest techniques. The idea from then on is to treat their health as a wasting but valuable asset and to try to keep it on as high a trajectory as possible.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

Respondents also agreed that the second generation, freed by the family wealth from having to work, can suffer from anxiety, depression or loneliness because their lives lack purpose.

This syndrome is sometimes called ‘failure to launch’ and often leads to mental problems and/or substance abuse. Healthcare consultancies often find a solution for it by providing the patient with an education, a career, a consultant and a coach to help him meet that need. The prevalence of mental health problems is greater than ever.

As people of means have access to the best lawyers and the best accountants, their reckless actions often end with the payment of a cheque from the patriarch or the family office. According to the respondents, second-generation family members, who have developed an “I can get out of anything” mentality because of this, often internalise the idea and apply it to their attitude towards health, thereby lulling themselves into a false sense of security and taking deeply unhealthy decisions.

1.3 The pitfalls of healthcare for HNWIs HNWIs have many problems that are particular to their healthcare, as respondents illustrated during the survey.

SIX PITFALLS Of healthcare for HNWIs

The correlation between cost and quality in healthcare is nowhere near 1:1 Concierge doctors (who offer membership-based, personalised healthcare and can do everything that primary-care physicians can) are often passive and unwilling to challenge the HNWIs who retain them for fear of losing them as clients.

HNWIs’ unhealthy habits and VIP syndrome They often have connections in the medical world and become enthused about various doctors, attempting to foist their new favourites on their existing medical advisors without verifying their skills properly. At other times they might be tempted to use their status to influence a medical professional to make unorthodox decisions under pressure. This is sometimes called VIP syndrome.

As one respondent put it: “Wealthy people typically always know somebody in the medical profession and they say, oh I’ve got a guy. A guy who can help. That guy may not be the best guy, so pay attention to the down side and don’t buy into the hype. The hype is driving me crazy. A lot of our HNW clients say hey, I just bumped into a guy at a cocktail party and he told me this! My question is: ‘OK, what does the science say?’ And they say, ‘I don’t know, but he’s a good friend of mine!’ I then say ‘OK...that’s not helping me! Be a little more diligent.’”

Other respondents had problems with real VIPs and their histrionic ways. Jordan Shlain, speaking for many, said that he did not tolerate many celebrities.

“Our clients are the people behind the camera, to use the metaphor, like in Hollywood. The people who own the production houses, the business people. They’re not ‘the dramas,’ as we call them. We have found that major stars think of us as servants or paid help. They don’t have a lot of respect for the medical profession.

They think we are medical valets. This is one of the main reasons we have an interview process. To put not too fine a point on it, we’re not the practice that you can text and ask for Viagra and Ritalin because you’re going out to a party.”

Another respondent echoed this by describing some HNW celebrities as “individuals who are just seeking a conduit to a prescription.”

1 The correlation between cost and quality in healthcare is nowhere near 1:1

2 HNWIs’ unhealthy habits and VIP syndrome 3 Overtreatment 4 Obsessive behaviour 5 Fraud 6 Insurance coverage

Overtreatment Equally, according to many respondents, HNWIs fall prey to medical facilities that are desperate to please them because they are angling for donations and, consequently, they run too many tests or over-treat the patient in an effort to show how valuable they are.

Alternatively, sometimes they are intimidated and will do too little because they do not want to offend him or waste his time, even though it is the right thing to do.

The generally-agreed cure for these problems is a trusted medical advisor, patient advocate or consigliere.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

Overtreatment can take many forms. There are medications such as antibiotics that everyone in medical care knows are overused. Doctors sometimes try to treat HNW people for several diseases when it is possible that they may have mental-health problems instead.

Sometimes a patient might see 30 doctors in six months and still be none the wiser about what is wrong with him, while all the time he has been suffering from bad mental health. In this case, his doctors have not only over-treated him but have also gone down the wrong path.

Obsessive behaviour Respondents also pointed to another HNW medical phenomenon. Wealthy people are often very proactive and industrious. When one of them has, for instance, a new cancer diagnosis, he often turns his attention to learning everything about the disease, sometimes spending hours a day reading. Even though he might have one of the leading treatment teams in the country looking after him, he tries to exert the same type of control over his health that he does with his businesses and finances. This causes immense problems for the team and might compromise his recovery. Alternatively, he might be squandering the last months of his life.

Fraud Respondents to the survey often had to cope not only with overtreatment on the part of medical facilities, but also outright fraud. One example of a client who was paying $300,000 a year for a treatment for dementia came to light when a respondent researched the treatment and realised that it had zero clinical effectiveness. The firm then extracted her from the situation, subjected her to a study that was evidence-based, saved her money and found the right care for her.

“I want to ensure this market doesn’t get full of poseurs and sadly, especially in the nascent longevity space, there are plenty. This is not child’s play – we are dealing with people’s lives. I fear the grifters will not be discernible from the real doctors given the rise of influencers and marketing.”

Shlain commented: “I want to ensure this market doesn’t get full of poseurs and sadly, especially in the nascent longevity space, there are plenty. This is not child’s play – we are dealing with people’s lives. I fear the grifters will not be discernible from the real doctors given the rise of influencers and marketing.”

Insurance coverage Many respondents who advised patients about their medical care encountered another need of HNWs – to acquire the right insurance. One asserted that 20-30% of them did not seek or obtain the right care because they lacked the right coverage. Independent advisors are needed here.

An HNWI is often tempted to cut through delays or problems in his healthcare by paying straight out of his pocket. In doing this, he might pass up on the right kind of insurance, pay a lifetime penalty and fail to see the doctors that he needs to see. Medical insurance in the United States is extraordinarily complicated. Much of it is tied to employment. Indeed, when a HNWI sells his company and makes $100 million, he is often losing the vehicle through which he bought insurance. He might then be unable to persuade an insurance company to sell him an individual plan. It is also very common for an American HNWI to go to a medical clinic that uses a plan organised by an insurance company, only to find that he cannot have the operation he needs because he has the wrong kind of plan from that company. Insurance is a weighty problem for HNWIs and the need for trustworthy advisors to organise it is correspondingly great.

“Affluent people struggle with where to use their resources effectively.”

One commentator summed up a much more general problem that bedevils HNWIs in a world of endless opportunity and endless information: “Affluent people struggle with where to use their resources effectively.”

1.4 A more complex life Life has never been very simple for ultra-high-net-worth (UHNW) families, who tend to have assets and relatives on several continents, and healthcare is often complex for them as well. Respondents listed several ways in which this is the case.

Access to specialized care UHNWIs often demand access to specialized care by applying pressure on the staff of medical facilities. A good deal of healthcare delivery is protocolised – and for good reason. When a typical patient walks into an emergency room (ER), he is registered and the ER runs a sepsis protocol to ensure that he does not have sepsis. If a VIP insists on going in through the back door, he is not registered, the facility does not know what allergies he has and it does not know whether he has sepsis. Another common scenario happens when the HNWI goes golfing with a dermatologist who says “come and see me on

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

Tuesday at 2 o’clock.” When he walks in, the front office has never heard of him because he did not go through the process, causing confusion.

A medical advisor who works through family offices provided some more examples.

“Doctors often have a hard time talking back at the VIPs. A doctor might say ‘I want you to stay another day at this hospital.’ The VIP might say ‘I’m on the board here.

I want to do what I want to do,’ or ‘I want to get treated by this doctor over here,’ or ‘I want to take this medication’ or ‘I want to take my medications from home.’

“Joan Rivers famously died. A doctor who wasn’t credentialled came into her clinic and did a procedure. So there are times when VIPs don’t go through the process that I spent decades creating at a hospital for safe care.

“A VIP will say ‘I want to be on the VIP floor.’ We’ll say ‘OK, but the staff aren’t experts in cardiology because you’re on a general floor as opposed to a cardiac floor.’

“He might say ‘I want to be in the big VIP room in the corner of the unit’ and we’ll say ‘OK, but I’d rather you be in a room that’s smaller but it’s right by the emergency station, so if something happens they can watch you close up.’

“My solution to helping people get better care isn’t screaming at the hospital ‘a VIP is here!’ It’s educating doctors about what’s happened previously and helping to guide the treatment process.”

“My solution to helping people get better care isn’t screaming at the hospital ‘a VIP is here!’ It’s educating doctors about what’s happened previously and helping to guide the treatment process. People get really good care when somebody on our team is talking to other folks on their team in front of us, saying ‘here are [the names of] his doctors, here’s his medication, here are our treatment goals, call me if you need this, make sure you check his liver enzymes’ – not when the chairman of the board and the president of the hospital come running down to greet the VIP. The VIP only wants to meet the president of the hospital because he’s puffed up with his own self-importance.”

Global lifestyles (either travelling to, or owning residences in, other countries) The problem here lies in the differences between healthcare systems such as the British National Health Service and the US private system and the totally

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different French system. It also stems from the different climates that an HNWI might visit, especially in more remote locations where hospitals are rare. One of the respondents to the survey had one client who lived in South America and often visited London and the USA who was in the habit of choosing the condition that he wanted to be addressed depending on where he was.

The need to co-ordinate medical records is important here – HNWIs’ impulsive decisions to be treated for different complaints in different jurisdictions create problems, with their records being lodged at the wrong facilities.

Another problem arose at the height of the recent pandemic. In some cases, HNW women were about to give birth while suffering from the early stages of COVID-19 and travelling at the same time. HNWIs are far more likely to find themselves in situations like these than others.

Other complexities • Complex medical conditions. The issue here is not that HNWIs suffer from these more than anyone else; it is that they are more likely to travel to places that are bad for their conditions. Complex medical decisions ought to take place before an HNWI flies his private jet out to Africa on a safari.

• The common HNW obsession with privacy and security. This is most important when it comes to information about an HNWI’s health. Criminals are operating phishing schemes and these affect everyone in healthcare. People who are famous, however, are especially vulnerable to them. Medical practices and plastic surgery clinics are always on the receiving end of email phishing attempts to extract their records.

Some hospitals deal with the problem very well; others do not.

• Family health dynamics (between generations and individuals). Once again, non-affluent people have these, but HNW families are more prone to disputes in this area. Different generations in a family might have different legal representation or a different legal say in the health-related decisions of their family office.

They may try to curtail each other’s involvement in decisions about healthcare or privacy. A large volume of legal representation may make the situation more complex than it would be in a family of modest means.

• Personalized health and wellness. People who have attained wealth can become extremely focused on maintaining longevity and health. They might take vitamins and injections, or receive hyperbaric treatment.

• Philanthropic health initiatives.

• The involvement of a family office.

• Travel and medical tourism. This might happen when an HNWI wants a particular surgical procedure but then wants to recover in a beautiful place with a warm climate. That place can be full of facilities with highly-trained medical people, or it might be a place where they are not so highly trained.

• Complex insurance needs.

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

HEALTH AS A PROPORTION OF CHARITABLE DONATIONS IN THE USA ($ in billions, total = $499.33 billion) 5%

3% 2%

6%

27%

9%

10% 14% 11% 13%

RELIGION $143.57

HUMAN SERVICES $71.98

EDUCATION $70.07

GIFTS FOR GRANTMAKING FOUNDATIONS $56.84

HEALTH $51.08

PUBLIC-SOCIETY BENEFIT $46.86

INTERNATIONAL AFFAIRS $33.71

ARTS, CULTURE & HUMANITIES $24.67

ENVIRONMENTAL /ANIMALS $16.10

TO INDIVIDUALS $12.98

The latest report from the University of Indiana and the Giving USA Foundation, dated 22 June 2023, has shown that donations to healthcare in the USA have risen in the last year from 8% of all donations to 10%. The report, whose key results are in the public domain, is a summation of US philanthropic giving in 2022. The generosity of HNWIs, businesses and others hit record levels in 2020-21; overall giving, however, declined in 2022. Donations from foundations made up a larger percentage of the total than in 2021. Charitable giving in 2022 was US$499.33 billion. This is a 3.4% decline on the previous year in present-day dollars but, with adjustments for rapid inflation, giving declined by slightly more than 10% in 2022. Nobody expects the decline to be permanent.

1.5 Problems at family offices Despite their responsibility to plan for death and ill health, family offices on the whole do little to prevent either from happening, according to Echelon Health, a provider of preventative health assessments in London that runs studies of the healthcare industry. Respondents to our survey had a medium-to-low opinion of family offices’ healthcare efforts, although they all conceded that it was difficult to generalize.

One respondent said: “It is important to note that there are family offices and wealth management firms that recognize the importance of healthcare management and wellness as part of their comprehensive wealth and estate planning services. They may collaborate with healthcare advisory services to address this aspect of their clients’ lives. Ultimately, the extent to which family offices are involved in healthcare management and prevention will depend on the preferences and priorities of their clients. I would think that the basic message to HNW clients would be that it’s better to plan in advance than react in a crisis.”

Some family offices do not prioritize healthcare management, prevention, or planning for death and ill health to the extent that they could. This is understandable given that medicine is by far the most difficult subject to learn – more difficult than accounting and finance, the subjects on which family offices tend to concentrate.

Family offices are primarily established to manage the financial affairs and wealth of high-net-worth and ultra-high-net-worth individuals and families. As a result, their core focus is often on investment strategies, asset protection and estate planning, with less emphasis on healthcare management. Many of them have healthcare management in their constitutions, according to some respondents to the survey. Many subcontract healthcare managers to help them and some family offices are affiliated with healthcare managers.

High-net-worth individuals place a high premium on privacy, so some respondents suspected that these people were reluctant to share health and medical information with their family offices. As well, since healthcare decisions are ultimately a personal matter, HNW individuals and families may prefer to take direct responsibility for their health, working with providers and specialists as needed. Family office staff lack expertise in healthcare management and preventative health measures in some cases.

Where family offices sometimes falter, wealth management firms can step in, as Yanyi Choy, the managing partner at Hywin Wealth Fiduciary Services in Hong Kong, explained.

“At Hywin, we recognize the inherent link between wealth and health. Wealthy individuals and families understand the importance of holistic well-being, and our mission is to provide comprehensive solutions that encompass both

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

financial and health management. That’s why we have made a strategic move into the health space.

selecting a jet, choosing a health solution – these are weighty, and sometimes irreversible, decisions and clients take such decisions very, very seriously and always come back to review results, compare against expectations and ask what could have been done and what should have been done.

“The biggest problem faced by private banks, wealth managers and family offices trying to offer a health proposition, I am afraid to say, is the superficiality of the attempt. As long as the wealth managers see health merely as a new conversation starter, a new touchpoint on family members of the client, or a new avenue to generate lucrative insurance sales, the efforts will be half-hearted, opportunistic and potentially risky, given the sometimes unspoken conflict of interest.

“In a way, wealth managers should view healthcare as a substantive and high-stakes proposition. If you want to offer it, you must have commitment and stamina. You must embrace the technicalities and operational onus.

Remember private banks and their ‘arts banking’ business in early 2000s? If you are not committed and if you are not a pro, clients and the wealth managers could be equally woeful in the end.”

“UHNW clients live their lives by telling good from bad and exceptional from mediocre. Picking a school,

THE PARTS OF A FAMILY OFFICE THAT MIGHT DEAL WITH HEALTHCARE DOCTORS NURSES

BANKERS

COORDINATORS ACCOUNTANTS PRIMARY CARE

BANKING SERVICES FAMILY EDUCATION CONSULTANTS

EXPERT NETWORK MEDICAL SPECIALISTS

COACHES

APPS

LIFESTYLE/ LONGEVITY EDUCATION & ADVISORY

FAMILY PHILANTHROPHY

FAMILY HEALTH

GLOBAL CUSTODIAN

WEARABLES TECHNOLOGY

AI

YOUR FAMILY BOARD MEMBERS

ASSET SERVICING

FAMILY OFFICE

FAMILY BUSINESS

TENCHNOLOGY & CYBER SECURITY

INVESTMENT SOLUTIONS

FIDUCIARY SERVICES

TRUSTEES

INSURANCE PROVIDERS

PHILANTROPHIC ADVISORS

ATTORNEYS INVESTMENT CONSULTANTS INVESTMENT MANAGERS

Reproduced by kind permission of Dr Jordan Shlain. The inner ring of this pie chart exhibits the different functions of a fictional family office, with the outer ring representing the sub-functions which are vaguely tied to the more central ones. The outer factors are, in turn, tied loosely to them.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

CHAPTER 2

SOLUTIONS PROVIDED BY HEALTHCARE PLAYERS We now turn to the solutions being provided by established and emerging healthcare players, starting with the arrangements that family offices make themselves, before moving on to those of healthcare consultants, concierge firms and consiglieres.

2.1 Healthcare networking groups through private banks Healthcare consultancies can often dissipate the confusion that some HNWIs and family offices have when it comes to health insurance. John Samuels of Wellworth in Connecticut evaluates medical bills for them. He related: “An advisor will have a client who says ‘these medical bills for my mother are pretty high, I’m not sure what to do.’ We get called. We address the billing side and look at what’s going on medically and help guide the process for the patient and help the family office advisor to forecast expenses. The trigger for us or for the family office is ‘the bills are high,’ then we can improve that and mitigate risk.”

Samuels also thought that the role of a family office should be to identify a medical need and then move the family member in question towards the right resource.

Some family offices have their own healthcare networking groups, which they sometimes operate through banks. Healthcare consultants are sometimes approached by large private banks that perform family-office and wealth-management services and

want to differentiate themselves from other private banks. Some forward-thinking wealth managers at the big financial institutions want to organise proactive health for their clients. A respondent in London, meanwhile, reported that many family offices there now had much better health insurances.

2.2 Healthcare consulting firms The top ten healthcare consulting firms and consultants in the USA are, in order, according to ocmsolution.com: BDC Advisors, Boston Healthcare Associates, ECG Management Consultants, Health Advances, John Snow Inc, Kx Advisors, McKinsey & Company, The Chartis Group, ClearView Healthcare Partners and IMS Consulting. These advise other healthcare consulting corporates about their business plans and profit maximisation. Only one respondent to our survey uses one of them (as a data provider, by subscribing to a database) but does not speak to them.

Respondents generally expressed surprise upon hearing that accountancy firms such as Deloitte’s and KPMG ran healthcare consultancies, although most had heard of the one run by McKinsey & Co, the management consultants. One did, however, work with pure healthcare advisory firms such as Better Health Advisors that identified the best physician in the United States to manage this-or-that situation, or the most important trial in which a patient might like to participate in order to obtain ground-breaking medication.

Healthcare Networking Groups ups Through Private Banks

Healthcare Consulting Firms He

Concierge Firms

Consiglieres

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

These services, as well as concierge physicians, appear to be employing people in more nuanced roles all the time in the USA. Some doctors are deciding to give up their practices and start out as small, one-person operations that visit family offices, review prospective patients’ records and translate diagnoses or reports into plain English for them. They also attend appointments with patients. This is especially true in the field of mental health, where it is difficult to be admitted to see high-quality providers. There might be an increasing need over time for any type of service that helps to make the system easier and more understandable for UHNW clients.

A typical pure-healthcare consulting firm or health management provider has an intake team that listens to the HNW family in question, or its concierge physician, or its financial advisor, or its attorney or some other advisor, who outlines ways in which it can be helpful, what the costs are and which of its experts can work a case. The work is very variable. One week it might have to deal with someone’s bipolar daughter, finding someone to live with her and look after her while her medication takes hold and she settles into a routine with her therapist. The next week it might have to deal with a HNW patriarch who has dementia but insists that he can still drive. In this case the firm might send a facilitator in to talk to the family and then negotiate with the father.

A true crisis intervention, as it is called, might involve a daughter in her 20s whose parents have discovered her heroin addiction. She may not want to go to rehab

WHEN FAMILIES ARE OVER-ZEALOUS What happens when a HNW family asks its health management provider to come up with a plan to look after one of its junior members – perhaps a daughter – who actually needs no help? One respondent was candid.

“That absolutely happens. A family called us about something that really wasn’t appropriate. The daughter was overweight. They were really disappointed. They were calling us to try and see how we could encourage her to lose weight. If somebody has an eating disorder, in other words they have an over-obsession with food and there are medical consequences, that is one thing that we might get involved in, but telling someone “your family really wants you to lose 15lb,” that’s not the type of scenario we’re going to get involved with.

and the consulting firm might stage a surprise ‘intervention meeting’ at the house in which the family tries to motivate her by refusing to keep paying rent for her apartment. The family members might even read out letters about how her drug use has affected them. The consulting firm often gives the family a couple of choices, because UHNW families make idiosyncratic choices.

Every health management provider has a shortlist of specialists – such as rehab units – on which it can rely.

Does it build up its contacts through serendipity, or is a deeper process at work? The answer is that both processes occur. It visits certain programmes across the country in which it operates that it thinks might be beneficial to its clients and it talks to their teams and clinical directors. Most HNW patients with psychological/ substance problems do not want to go into institutional settings, although some have problems that are so acute that they need to. The provider also talks to similar providers. It obtains an idea of the cost of every programme and then tries to fit one to the expectations of the family in question.

Sometimes a consultancy has a HNW client to whom it recommends a stay at a psychiatric hospital because he is unsafe at home or has a very serious mental illness, but he refuses to go. The consultancy then moves on to its second option – to send a coach to live with him for weeks or months and to keep him safe. If something happens, the coach can transport him to the hospital.

This is a common phenomenon.

“Then we also see very powerful families where the dad is convinced that the son may have a mental health diagnosis and he may be doing quite well with therapy, psychiatry and what we call a ‘get-well job,’ where he works at a Starbucks or some other place that’s not super-intense, but he’s engaged in treatment, he’s feeling healthier, he’s living in a better place... but the dad is hyper-focused on how to get him to join the family business again.

“So a lot of it is working with the family, setting reasonable expectations and talking to them about our perceptions, to get them better educated on how the clinicians involved view the case and what they’re seeing in his behaviour. I have to be honest, sometimes that works and sometimes that’s not successful.

Some families, they’ve got to a certain place in life and they want everybody to subscribe to the way they see things. They’re just going

to remain frustrated that their child, in their eyes, isn’t achieving what they think is reasonable.

“Other times, family members back off and it changes their perception and they realise that what they’re asking for is not reasonable... or what they assumed was problematic behaviour was really only problematic behaviour because of their values. It does happen.

“And a lot of it is patient education.

I don’t mean patient like a client-patient, I mean thoughtful and gradual education with families.

Some of it is also just really being empathic with them and convincing them that you’re seeing things from their [perspective], so really we have a team of clinicians who aren’t going to judge how a family approaches a certain situation.

Then, as much as we can, we foster open dialogue amongst both the family and the individual who is struggling or perceived to be struggling.”

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

2.3 Concierge firms Many concierge firms are private members’ clubs for HNWIs which manage their healthcare provision and customise it in a bespoke way. Sometimes all they need is a doctor to travel around the world with them on their cruises. Even though some of them have health insurance already, with a concierge they are able to use that insurance a lot better because the concierge gives them access to the ‘best of the best’ in terms of doctors.

If they go skiing in Switzerland, the firm might send a personal doctor to go with them in case of an accident.

It might fly people out to them all the time because of their concierge membership. Other concierge firms only perform one-off services.

“One of the issues that high-net-worth individuals run into is that they’re travelling a lot and they have a regular or home hospital they like.”

Families can be rather demanding. Sometimes a family that is midway through its holidays decides to change its whole plan. Another family might be very specific about wanting a carer who is a certain height. Sometimes the firm has to dismiss a carer because the family took a dislike to him. Concierge firms always have people on standby.

One respondent said of his demanding patients: “One of the issues that high-net-worth individuals run into is that they’re travelling a lot and they have a regular or home hospital they like. It’s just human nature to tend to prefer medical care from this known institution and defer to their primary care physician when they’re away. For example, a client might be skiing at his lodge and think: ‘You know, I’m having chest pains, but I’m going to get on my plane and I’m going to fly home and go to my regular doctor.’ Sometimes that’s fine but many times, especially with things like abdominal pain or chest pain or headaches, you want the closest and best place that has the capacity to treat that issue.

Often, a member calls such a service and says, for instance, that he is on a flight to London, has just sprained his leg and would like a doctor flown out to meet him. The firm pays the doctor a premium rate to do that and the company absorbs a loss, but in the end it is worthwhile because the only way in which the business grows is by recommendation.

“I’ve had patients who have been assaulted in the southern tip of South America and wanted to fly home and I responded: ‘It’s not safe for you to fly home until you get a certain degree of medical evaluation.’ I might further clarify that comment with ‘Before you get on your next ‘plane, here’s where you should go. Here’s the test that would make it safe for you to go home.’”

REMOTE TRAVEL OFF-GRID Concierge services look to the future in the sense that they send doctors along on mountaineering expeditions or yachting holidays in case of mishaps. Some firms – described as emergency medical consultancies – have taken highnet-worth healthcare to a new level by focusing on global remote travel and medical preparation for exotic off-the-grid journeys. Not only do such companies effect immediate medical evacuations from countries where HNWs have been injured; they also give them containers containing medicines for their journeys. In several countries in Africa that are full of snakes and mosquitos, hospitals use dirty needles; on those excursions, there are clean needles in the bags.

A good example of a firm that organises rapid responses to emergency medical and traumatic

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situations – especially in out-of-theway parts of the world – is Emergency Black Bag of Massachusets. Its founder and CEO, Chris Sidford MD, describes it as “like a little compact emergency room with 12-15 physicians on our team with additional experts and support staff available as necessary.” Its HNW clients pay it for a personalized and expedited approach to whatever medical emergency in which they or their families may find themselves.

“There are two different bags: a good-sized bag full of items ranging from over-the-counter medications, to ways to fix your teeth or wash out your eyes, to trauma bandages, to water sterilization, and all sorts of wound care supplies. The ‘I may be in a situation where I may experience a medical trauma’ bag has syringes, clean needles and syringes, particularly for regions of the world where people might not have access to clean medical supplies.

All its patients carry prescription medications. There are certain conditions that Black Bag may begin treating or that it may treat while it refers a patient to a local facility, but most of the time it provides advice about medical decision-making.

“Clients don’t all carry all the equipment; they carry the supplies they may need, depending on where they’re going. There’s a special bag for nausea, for boating trips, for motion sickness, etc. There are different bags for paediatric patients. If a client is going to a more remote location with few resources, they carry everything. All the prescriptions are in their names, labelled by the pharmacy, which is required to

When a HNWI becomes a Black Bag customer, the firm literally gives him a black bag, as Dr Sidford explained.

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

travel across borders and so that there are no anticipated challenges getting through customs.”

This not a normal business structure for a medical concierge firm, according to Dr Sidford.

“Typically a concierge firm, at least in the United States, would imply that you are seeing a private/ priority care doctor and you’re paying for preferred access to them. This results in being able to spend more time with the physician, better access, phone calls, etc. That’s how a typical concierge practice works. These are becoming increasingly popular in response to the physician shortage in this country. However, there are not many firms who have the

expertise to cover the situations we do.

“We deal with clients with all types of medical conditions. Most of our families right now are dealing with COVID, but our team handles anything: car accidents, heart attacks, broken limbs, sudden onsets of illness. However, I’m not taking care of a car accident victim over the phone. I’m advising the family about how to manage their current situation in this emergency.

Our clients are already in the medical system. I’m helping the family make decisions about treatments, medications, or responses that are being offered to them.”

“We keep our membership extremely exclusive because we want to be able to manage the families. Their needs are quite a lot...and not just healthcare.

Even though they’ve got only a health-like membership, they’ll call you for lots of things like, ‘Oh, my kids are moving school. What do you recommend?’ A lot of them can be a bit demanding but it’s fun, because giving them the best that they want leads them to recommend other people, so it works out well either way.”

Concierge firms sometimes find themselves straying into non-medical areas at the behest of their HNW clients.

Dr Chichi Menakaya, the managing partner at Annomo Health in London, said: “We keep our membership extremely exclusive because we want to be able to manage the families. Their needs are quite a lot... and not just healthcare. Even though they’ve got only a

The firm occasionally sends doctors along with HNWs on expeditions or into dangerous countries in a pre-planned way, but Dr Sidford said that a layman would be surprised at the restrictions that these doctors face.

“Most of the countries don’t allow international physicians to practice.

You can’t just walk into one of their hospitals and be credentialled to start treating patients. There are some countries where it’s illegal to practice without a licence from that country. We don’t see patients in person because of the time it would take for us to physically get to someone in a remote locale.

We help advise patients who have a variety of medical conditions in various stages of treatment.”

health-like membership, they’ll call you for lots of things like, ‘Oh, my kids are moving school. What do you recommend?’ A lot of them can be a bit demanding but it’s fun, because giving them the best that they want leads them to recommend other people, so it works out well either way.”

2.4 Consiglieres The word ‘consigliere’ carries with it the cachet of a trusted advisor. In medical terms, such a firm prides itself on its contacts. It acts as more than a matching service that finds one doctor for one HNW patient; it manages his journey through the medical systems of multiple countries from start to finish. One such firm in the survey was based in the USA but had a client in another country who was diagnosed with a form of cancer. That country has good healthcare but the best hospital there was going to perform radical surgery on him that had significant implications for his lifestyle. The firm researched thousands of medical articles and journals.

In four days it connected him to the top doctors and hospitals in the United States, obtained a second opinion for him, wrote a list of questions for him to ask the doctors and ended up helping him with treatment and support every step of the way. One of its physicians led the case. The firm has two doctors, two ER physicians, two nurses and seven case managers who work hands-on in a bespoke fashion. It holds team meetings every week in which all these people – plus others on request – discuss every case. This is another healthcare player’s solution to HNW health problems.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

THE HEALTH MANAGEMENT MODEL OF HYWIN Shanghai-based Hywin Holdings is well known as an independent wealth manager in Greater China, covering clients in Mainland China, Hong Kong and elsewhere in Asia from more than 180 business locations.

When Hywin made a move into the “health management” arena by purchasing a majority stake in Life Infinity, analysts and industry peers applauded the projected synergies but wondered how the Sharpe Ratio of a portfolio and anti-ageing therapy could be blended into the same client conversation, by the same client advisor.

In the end, Hywin discovered that wealth and health were indeed one ‘continuum’ topic for China’s high-net-worth families and that the challenges and milestones in life tended to impact and pertain to the health and wealth aspects, at the same time.

As Shuming Zhu, a member of the Board of Directors of Hywin Holdings (NASDAQ: HYW), said: “We already have a large base of substantive and validated in-house knowledge on clients. The ‘know your customer’ process regarding a client invariably provides insights into his/her aspirations and concerns, which – apart from money, equity stakes and voting powers – also covers health, age, longevity, medical history, and the quest to live life to the full.

“We launched the Hywin Health brand two years ago, in a way, as demanded by our clients. With so many health technologies emerging with rosy promises and so many health providers competing for their attention, trust and, of course, spending, more and more clients asked Hywin to short-list providers, to do due diligence, to compare commercial terms and to release information to providers, and sometimes to help convince family members of the merits of a therapy or the imperative of a test.

“Therefore, with a comprehensive database of client-families accumulated over the past years,

2.5 Foresight and planning The survey detected an enormous groundswell of opinion among respondents in favour of one vital solution to the risks that HNWIs run with their health: foreplanning. Western governmental health services are reactive; people use them when something has already gone wrong with their health, in the hope that everything will go back to normal at the end of treatment and/or care. Most respondents to the survey were strongly in favour of health experts predicting diseases in HNWs and then taking steps to ward them off.

“There are an awful lot of wealthy people who don’t pay attention to their healthcare and don’t get any preventative healthcare, the result being that they’re the richest people in the cemetery.”

and more than 1,000 client advisors who genuinely care and truly listen, as well as a pan-China network of branches which are centres of local entrepreneurial communities, Hywin said OK, let’s bring health offerings in-house, and thus we doubled up as the guide on clients’ health journey, apart from already being the guardian of their wealth for almost two decades.

“Today, Hywin Health has grown into a health asset operator and a health advisory provider – collectively known as health management to Hywin clients.

Hywin’s ability to learn fast, to integrate resources, to execute with artisanal zeal, has served us well in our healthcare buildout.

“Looking forward, Hywin believes – as eloquently endorsed by our clients – that between hospitals and casual health consulting, Hywin has blazed a new path with a health management business model that owns and operates assets to ensure holisticity and quality, and provides retainer-style, full-life-cycle health monitoring and advisory with specialists who really care.”

This does not always happen. In the words of John Prufeta, the founder of Medical Excellence Group, which has offices in New York, Moscow, London, and Shanghai: “There are an awful lot of wealthy people who don’t pay attention to their healthcare and don’t get any preventative healthcare, the result being that they’re the richest people in the cemetery.”

There are now sophisticated blood tests that can check for 50 types of cancers with a little drop of blood. One respondent tested the blood of a 38-year-old man with a family history of stomach cancer whose mother and grandmother had died of that illness, both at 60. The test found that he had colon cancer. He then had a colonoscopy, which found that the cancer was at the earliest of stages. After surgery, radiation and chemotherapy, he was cancer-free and remains so to this day. HNWIs have the money to pay for far more frequent tests than those to be found on the National Health Service of the UK or the French healthcare system and, if their family histories or genomic tests indicate that they have a disposition towards an illness, this is vital.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

Jordan Shlain thought that HNWIs with access to the best healthcare had no excuse for failing to know their risks.

“There’s a new blood test that looks at the composition of proteins – a new, exciting field called proteomics. The blood test elucidates your 4-year risk of a cardiovascular event – think heart attack, stroke.”

“There’s a new blood test that looks at the composition of proteins – a new, exciting field called proteomics. The blood test elucidates your 4-year risk of a cardiovascular event – think heart attack, stroke. Wouldn’t you want to know what your risk of a heart attack was? If it’s high, then you have to go all-in on the statins, blood pressure medications and, most importantly, lifestyle changes.”

The ease with which a medical facility can now break someone’s genome down is such that it is ceasing to be a service for rich people. Genomics has totally changed in that it is much cheaper and faster. Whereas it used to cost thousands of dollars, it is now in the hundreds. All members of many concierge services have de rigeur genetic breakdowns when they join. Genomics, moreover, is becoming more and more predictive of future situations; it has and will change both diagnoses and medical treatments fundamentally. It took years and billions of dollars to do it the first time. Today, Ewan Ashley has the new world record for processing a human’s entire genome with 32 billion base pairs – done in four hours for mere hundreds of dollars. Moore’s Law dictates that computing becomes twice as cheap and twice as fast every 18 months; something similar operates here.

Another respondent described their version of foreplanning for HNWIs. “What you need is (i) a comprehensive, routine preventative medical regimen and (ii) use of advanced diagnostics. Here’s the deal. The NHS and the insurance companies in the US have certain standards for the general population, as does the US Government.

Those standards are made within the prism of social affordability, both for the government and the individual.

“When you take the question of affordability out, you have a plethora of tools available to the affluent. We recommend a colonoscopy every three years and the government does every five years. We recommend that people start at 40 instead of 50. The chances of somebody at 40 having colon cancer, colo-rectal cancer, is low, but [as an HNWI] you don’t want to be one of those people. The idea is for you not to be part of that statistic. So it’s to do with bringing advanced diagnostics that are not routine into the picture and paying for it.

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“The other thing is not to rely on just one doctor for your physical. In other words, having a GP plus – specialists organised around your healthcare. It brings better analysis and better outcomes. That doesn’t mean that we recommend them [an HNWI] to go to another firm and have another identical check-up done. What we’ll do is not the same check-up. We’ll give the individual a co-ordinating internist. He’ll be seeing one specialist in every sphere. He’ll only see two specialists in a sphere if he gets a positive result. Then, you must always get a second opinion of course.”

Don So, the CEO of Humansa, a large healthcare organisation, thought that HNWIs in Asia were waking up to the need for foreplanning in health.

“Health is defined by more than just cure base. This is what Humansa sees a lot and actually this is the thesis of the business. We have hospitals, we have clinics, but we have increasingly a lot more preventative health services.

A lot of people are looking for them. It’s a direct correlation with knowledge and literacy as to what health is. It’s no longer about going to the best hospital. It’s really about ‘I don’t want to go to the hospital, I don’t want to get sick to begin with.’

“The financial institutions and insurers are the natural first ones to react to this. Their business is about protecting their clients on multiple fronts. And then HNW wealth management...beyond just wealth management they have a value-added service. They are used to giving clients access to the educational system globally, estate planning, internship, training and many different things.

On the medical side they have long been giving people access to the top hospitals. But the news is ‘what happens when they are not sick? What happens to my clients and their wellbeing for the rest of the 364 days when they are healthy?’

“People are willing to invest in this. An example is an exclusive partnership we have with the insurers AIA, a leading player in this part of the world, to build a wellness centre for the HNWI. It’s a first in Asia and this is a top player putting money into something to actually realise that vision. Five years ago, people talked about that, but nobody actually did anything about it. I think that the industry is responding to what people want.”

2.6 The effect of the Coronavirus What effect has COVID-19 had on firms’ efforts to solve the healthcare-related problems of UHNWs? In some cases the pandemic made things permanently worse.

In the United States in 2020-22, nurses in all hospitals who had to cope with the surge of extra work were overtaxed and they left the profession in their droves; the drop in staffing in the case of nurses remains to this day.

According to respondents to the survey, the pandemic had a catastrophic effect on the already-deteriorating state of American UHNWIs’ mental health, much of which remains. Social drinkers became dependent on alcohol,

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

while people who were slightly anxious became very anxious. It became much more difficult for concierge firms, health consultants and others to find providers of treatment.

Because of the pandemic, respondents claim, it is now almost impossible for a wealthy family to gain quick access to a provider of therapy or psychiatry who has an in-network deal with an insurance company. In major cities, most qualified therapists have realised that they can charge in cash and not have to negotiate deals with insurance companies, whose habits of not paying and denying claims they dislike. A high-net-worth family with a suicidal daughter that wants to gain access to a psychiatrist immediately might prefer to use its insurance to pay for it, but it will be frustrated unless its timeline is three weeks or so.

Psychiatry was already a profession with not enough providers before the pandemic. Because of the increasing rates of anxiety and depression among children in 2020-22, the situation is now worse rather than better. Even beforehand, adolescents in the 13-17 age range had high suicide rates, but that has increased dramatically.

Because the pandemic frightened many HNWIs, they are now spending much more on their healthcare and are generally much more proactive about their health. The epidemic highlighted the fact that most HNWIs do not have a plan or a trusted advisor to support their care and treatment. Respondents have noticed that many families are deciding to take on concierge services and improve their health insurance. More of them are interested in health and wellbeing treatments, going on mindfulness retreats and taking vitamin tablets. There has also been far more interest in foot therapies, saunas, nutritionists, chest management, etc.

The surge in telemedicine and remote care advice that the pandemic engendered has been a positive gain.

International travel ceased. UHNWIs suddenly realised how difficult it could be to have access to health care once they had left big cities to live in more isolated conditions. Physicians are now much more willing to talk on Zoom with their patients because it is more intimate than an exchange of emails. The doctor can see the patient and the patient can describe things that are too lengthy or technical or difficult to write down in prose.

Telemedicine is now part of the regular regimen everywhere. Much more is now being delivered online and more people are open to it.

“Clients are now considering more dimensions of health, such as the importance of strong immune systems, mental resilience and social well-being.”

Yanyi Choy summed up this phenomenon in her own way: “Clients are now considering more dimensions of health, such as the importance of strong immune systems, mental resilience and social well-being. The pandemic has underscored the interconnectedness of various aspects of health, leading to a more holistic approach among those with increased wealth.”

In the Far East, the pandemic has caused a significant shift in the demographic make-up of HNW health insurance and life insurance clients. These tended to be older but now more are younger, having realised that their health can be at risk as well. There has also been a surge in clients seeking advice and guidance on estate planning, wills, trusts, and other aspects of succession planning.

“Switzerland has arguably the most developed wellness industry.”

The age-shift appears to be a global phenomenon. Don So, for instance, observed: “Switzerland has arguably the most developed wellness industry. Their client base has dropped by more than 10-15 years in average age, just in the last five years. So the planning, awareness, is happening a lot earlier.”

2.7 Healthspan v lifespan Another effect of the pandemic has been to interest HNWIs much more in healthspan, the number of disease-free years that someone lives, as opposed to lifespan, the total number of years that somebody lives.

Another way of expressing this goal is as a desire to live until one’s natural expiration date with as few visits to the doctor as possible. The respondents to the survey generally agreed that their HNW customers were always interested in lifespan but are only just starting to be interested in healthspan. Healthspan is in the Zeitgeist.

2.8 How government bodies help The survey asked healthcare practitioners whether they might ever ‘piggy-back’ their services off government services in various countries. In general they did not, but they noted that in case of a dire emergency, the local hospital will help in every country, even though it may charge the healthcare firm. Many a concierge firm has told its client to go straight to the local accident and emergency (A&E) ward in a country where it has no associates or contacts, settling the bill later.

Scientists who work for government-run laboratories are generally willing to help. Healthcare firms have business relationships with those institutions in any case and can often have a patient put on a cutting-edge trial of treatment. Some cancer patients last for years on investigational (i.e. not-yet-approved) drugs after being diagnosed with fatal illnesses. In some cases, they survive on two generations of new drugs.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

CASE STUDY: HEALTHCARE CONSULTANCIES This is an account of a typical initial encounter between a top-notch US private healthcare consultancy and a HNW patient, in the patient’s own words. Note the serendipitous nature of first contact and the fact that, like other HNWIs, he has social contacts in the medical world.

Sometimes these social contacts can lead to helpful revelations about the rich man’s health; at other times they may be a hindrance.

In February of 2020, I underwent a knee replacement. I am an active and healthy 60-year-old, who has never had to go to the hospital.

About three months after surgery, I couldn’t get up the stairs, couldn’t breathe. I called my physician and, due to the Coronavirus pandemic, he wanted to try and solve the issue virtually. He thought I might be anaemic. I’d been very sedentary for twelve weeks. He wanted me to walk and move around. He also wanted me to get a pulse oximeter, but I couldn’t find one anywhere, due to COVID-19.

I had just listened to Dr X, the head of a healthcare consultancy, present a COVID update to the Family Wealth Alliance. I called him to get his thoughts and he told me he disagreed with my physician. He gave me an oximeter and told me to share my numbers as I walked around the house. The numbers

were bad, dropping immediately as I moved. When I informed Dr X of this over the phone, he said I needed to get to an ER immediately because he thought I had a blood clot in my lung.

His diagnosis was spot on. I had multiple blood clots on my lungs.

I spent four days in the hospital on an IV blood thinner. I’ve since had a CAT [computed tomography] scan and a consultation with the pulmonologist and have been given the all-clear. The whole time I was in the hospital, Dr X reached out multiple times. Later, a cardiologist friend said I should have died, that the clots should have lodged in my lungs and then killed me or moved to my brain and I would have had a stroke.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

CHAPTER 3

KEY SECTORS, TECHNOLOGIES AND BUSINESS MODELS IN HEALTHCARE THAT ARE ATTRACTING INVESTMENT AND CAPITAL Healthcare, moreover, is a mega-trend propelled by the global forces of supply and demand. The global population is growing, ageing and becoming more health-conscious, leading to much more demand for healthcare products and services. This long-term trend creates opportunities for investors to capitalise on the growing market.

The main sectors that investors are targeting are as follows: Pharma services. Pharmaceutical services companies provide a wide range of services to pharmaceutical companies, including clinical trial management, contract manufacturing and regulatory consulting. These companies play a crucial role in the development and commercialization of new drugs and therapies.

Biotechnology/Therapeutics. These companies develop new and innovative technologies to diagnose, treat and prevent diseases, with a focus on unmet medical needs.

They are at the forefront of medical innovation and their products and services have the potential to revolutionize healthcare.

Home health. Home health companies provide a variety of services to patients in their homes, including skilled nursing, physical therapy and occupational therapy.

Home health care is a growing industry, as more people are choosing to receive care in their homes rather than in hospitals. The reason for this is that the cost to treat a patient in the home is considerably less than in the hospital.

Value-based care. This is a new healthcare delivery model that focuses on paying providers for the quality of care they deliver, rather than the volume of care. This model is gaining traction among payers and providers.

HNW investors are backing companies that are developing technologies and solutions to support value-based care.

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Michael Sun of the Bank of China International listed five key emerging areas of healthcare technology that were of particular interest to investors: generative AI (artificial intelligence) drug discovery; next-generation biologics; radioisotope drugs; antibody drug conjugates or ADCs (which PharmTech has described as monoclonal antibodies linked to a cytotoxic small molecule); and active microbial drugs.

Biotech and life sciences are among the top investment choices for single family offices. This has led to breakthroughs in the pharmaceutical industry. The Strüngmann family office, to take one example, was an early and major backer of BioNTech, which partnered with Pfizer to make a vaccine for COVID-19. The Strüngmann brothers had already co-founded the generic drug maker Hexal in 1986 and sold it to Novartis in 2005 for some US$7 billion. Meanwhile, family offices – including Morningside, the office of a real-estate family – produced the first batch of biotech ventures to be based in China.

One respondent in Hong Kong said of healthcare: “It’s a growing segment, a growing sector. In the Greater China area investment in healthcare is a bit down, but the greater trend is going upward. For example, ten years ago, no-one would imagine investing in biotechnology and innovative drugs in China. Now, even though the market has gone a bit low, there are still funds and investors who invest in this sector in China.

“The Greater China area has been a great player in the drug/medicine producing market since a long time ago.

It has become more and more prominent. If you look at the API [active pharmaceutical ingredient] market, it is the raw material that is used to create supplements and drugs. Most of the APIs in the world are supplied from China. That has been going on for decades. It’s just the fact that the biotech and innovative drug segment has developed at a very high pace over the past 10-15 years in China, but essentially, in terms of the drug market,

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

“Advancements in pharmaceutics and biotech have brought greater possibilities to cure major diseases, i.e. tumours, and extend life spans. For drug therapy, there have been rapid developments of immunotherapy and cell therapy drugs; with regard to treatment technology, the increase in interventional therapy and immunotherapy has expanded the treatment matrix and gene editing technology and cell gene therapy facilitate the precise treatment of tumours; there have been further developments of stem-cell technology for anti-ageing, which are largely driven by the big demand from HNWs.

China has already played an important role. It’s just diversifying and evolving into much more innovative segments.”

Don So, for his part, thought that Hong Kong, already a centre of excellence in healthcare, was poised to become the world’s number-one location for longevity, with average ages of death ranging as high as 92 or 93.

Only time will tell whether his prophecy is correct.

Rainer Ender, the global head of private equity at Schroders, enumerated the most exciting recent developments that had come to his attention in the Far Eastern healthcare investment market.

“There has been a resumption of medical tourism and overseas medical treatments, particularly following China’s lifting of all of the COVID-restrictions, which made it more convenient for wealthy people to seek high-quality physical examinations and medical services abroad.”

“There has been a booming of healthcare insurance products covering high-end American and European medical services in the East, which is also driven by high interest rates in the US.

HEALTHCARE - A HEAVYWEIGHT AMONG HNW PREFERENCES FOR INVESTMENT % OF FIRMS COVERED

Information Technology Healthcare

34%

Real Estate

27%

Energy

26%

Financials

18%

Communication Services

16%

Consumer Discretionary

15%

19%

17%

37%

20%

16%

31%

24%

19%

41%

22%

20%

21%

41% 50%

12%

49%

Industrials

11%

49%

Materials

10%

38% 36%

7%

OVERWEIGHT

NEUTRAL

14%

30%

Consumer Staples

Utilities

16%

27%

43%

UNDERWEIGHT

22% 19%

19% 19%

16% 19% 21%

28%

24%

34%

24%

NOT APPLICABLE

A recent survey by Goldman Sachs drew data from 166 family offices, of which 57% were based in the Americas, 21% in Europe, the Middle East and Africa (EMEA), and 22% in the Asia-Pacific zone (APAC). It observed growing interest among HNW investors at the intersection between healthcare and technology. As this graph demonstrates, more than one-third of firms that Goldman’s survey covered said that they were “overweight healthcare,” which means that they owned more healthcare assets in proportion to their other assets than various benchmark indices. Healthcare, moreover, was the second most popular investment.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

CHAPTER 4

HOW THE WEALTHY PLAN THEIR HEALTHCARE INVESTING AND INCORPORATE THEIR PURSUIT OF ESG GOALS Not only did the pandemic convince more HNWIs to take proactive care of their health with the aid of healthcare professionals; it inspired them to invest in cutting-edge medical research. Sometimes they do this for philanthropic purposes, sometimes for eventual profit, often for both.

Healthcare investments require a deep understanding of the health sector’s dynamics, including evolving medical technologies, changing demographics and shifting regulatory landscapes.

4.1 Types of vehicle Stocks and shares, public and private market funds, co-investments and DFMs Respondents varied in their choices of favourite investment vehicle for the healthcare sector. Some favoured stocks and shares, some public-market funds and private-market funds. Some favoured a co-investment, by which a discretionary fund manager (DFM) acts as the lead investor for a private company

INVESTMENT VEHICLE TYPES For the healthcare sector PUBLIC MARKET FUNDS

STOCKS & SHARES

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IPOs & ADVISORS

CO-INVESTMENTS

PRIVATE MARKET FUNDS

DISCRETIONARY FUND MANAGERS

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

and invites co-investment from its HNW networks into a specific company. It is in this very company-specific context that a HNW client might be particularly interested in cardio, for example, because his family has a history of heart attacks. No respondent mentioned special-purpose vehicles (SPVs).

believed, was through an agent or an advisor. They advised HNWIs who wanted to buy companies that were already listed to do their own research or receive insights from their advisors.

IPOs and advisors

Investors can also use indices such as the Hywin FactSet Global Healthcare Index. There are selection criteria for the underlying constituent stocks. The aim is to hand-pick companies that demonstrate strong financial performance, innovation, market leadership and sustainable business practices. HNWIs invest in companies included in the index, thereby gaining exposure to diversified portfolios.

The panel thought that HNWIs who were not affiliated to any family offices and had no investment professionals on hand ought to go through their private bankers or their advisors to scout for opportunities for investment in this area. Panellists thought it quite likely that they might want to invest in companies before the initial public offering (IPO) occurred. The best way to do this, they

Hywin FactSet Global Healthcare Index

BIOTECH & PHARMA SET THE PACE FOR HEALTHCARE IPOs Executed throughout the globe 2018 - 2023 400 365 350 78 300 250 200 150

238

50 0

49

180

176

38

40

23

31

100 119

2018

53

29

157 234

160 105

2019

BIOTECH & PHARMA

2020

2021

HEALTHCARE FACILITIES & SVCS

37 42

106 20 31

78

55

2022

2023 YTD

MEDICAL EQUIPMENT & DEVICES

The chart above displays the number of healthcare-related initial public offerings (IPOs) executed throughout the globe between 2018 and 2 November 2023, many of them in biotech and medtech. The spike of activity in the year after the pandemic struck is most striking. Recent activity has been subdued, but is expected to pick up. This chart is part of the background to the surge of HNW investment in healthcare in 2020-22. Source: Humansa Research.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

4.2 Patient capital Patient capital – that is money from HNW investors who are not obsessed with quick returns and are patient enough to wait years for a return on investment – often goes hand-in-hand with healthcare investments, particularly when philanthropists are injecting money into a company’s stock, a fund or a project. Respondents to our survey asserted regularly that practically all monies that HNWs invested in the healthcare sector answered to this description. As Yanyi Choy put it: “Patient capital and healthcare investments are inherently intertwined, as the healthcare sector often requires long-term investment horizons to realize the potential for significant returns.”

company should start to perform well sometime in the first five years. This is an inherent feature of private equity and a time horizon that fits changes in the healthcare sector well.

Capital must also be patient in the world of patents.

In biotechnology, the term ‘discovery’ involves the exploration of experimental results and current literature in order to determine the feasibility of a project. It is, in short, the first phase of life sciences and biotechnological research. This phase, followed by clinical trials and then government approval, can take ten years and often longer.

“Patient capital and healthcare investments are inherently intertwined, as the healthcare sector often requires long-term investment horizons to realize the potential for significant returns.”

Once a government has approved a product and the manufacturers have put it on the market, the length of the patent – their monopoly on its production – is variable. In some cases, the developers need to patent it before the government approves it, which might in some cases lead to the patent expiring while the clinical trials are still in progress. There are some ways to avoid or mitigate this problem; companies can tweak the formula slightly to expand the reach of their intellectual property but, at the end of the day, no patent lasts for 40 years or so. All patents lapse eventually. National regulators might also want to have their say before commercialisation can occur.

Some observed that private equity is always patient capital in the sense that it is illiquid, with a fund life of perhaps 10 years. The illiquidity of capital invested in a private company is always risky. The HNWI investor in question will not be able to pull it out – or, at least, not easily – if he needs to do so at some time during the illiquid period. It is generally thought that the underlying

In short, the journey from ‘drug discovery’ (the slow process by which new candidate medications are discovered) to market can be lengthy and requires significant capital investment. Patient capital allows healthcare companies to navigate this complex process, providing the necessary resources for research, clinical trials, regulatory approval and, ultimately, commercial success.

TWO VERY DIFFERENT TYPES OF HEALTHCARE INVESTOR Yanyi Choy offered some interesting observations on the healthcare/biotech investments

by Asia UHNW families served by Hywin.

“There are two distinct types of healthcare/biotech/life science investors in our clientèle. One type looks for the next big thing in healthcare, trying to spot the next BioNTech whilst it’s still undiscovered. These investors, through Hywin’s topical luncheons and events, mingle with scientists, heads of R&D at medical schools

and venture capitalists. They really survey the world for the next systemic threat to human health and attempt to identify emerging solutions, or even just theories that might come to the rescue of humanity one day.

“On the other hand, some investors see healthcare/life science as a landscape dominated by big research/production/ distribution multi-national companies, which can easily buy out emerging players and load new solutions into their global clinical trials/licensing/distribution platform. To activate this spreading-bets-among-winners trade, the typical investor constructs a portfolio of leading

medical/pharma/biotech companies, or he can just invest as per leading indices, such as the FactSet Hywin Global HealthCare Index, which tracks 40 big-cap pharma/biotech/healthcare services firms across 4 continents and 19 stock exchanges.

“Healthcare is probably one of the most intuitive but also one of the most technical investment arenas for investors. Capturing Alpha [a measure of performance, indicating when a strategy, trader or portfolio manager has managed to beat a benchmark over some period] through early-bird insight and participating in the historical acceleration of healthcare rollout can both be a winning thesis.”

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

HEALTHCARE INVESTMENT IN THE GREATER CHINA AREA 2016-1H 2023 (USDb) 28.4 3.0 2.5 18.9

3.3

2.2

9.0

11.0 4.6

2.3

1.2

0.9

1.3

1.9

5.0

4.6

2016

2017

2018

2019

BIOTECH & PHARMA

1.9 18.6

4.0

3.0

13.1

2.6

2.2 2.6 4.2

11.1

7.3 2.5

2020

MEDICAL EQUIPMENT & DEVICES

2021

2022

HEALTHCARE PROVIDERS

1H 2023 OTHER

Healthcare has long been – and remains – an important generator of economic growth in the Greater China Area. The leading segment on this histogram is biotechnology. The last few years have seen more market dislocations in pursuit of mature or growing healthcare businesses with healthy cash flows. There has been much advancement in the equipment segment because of the demand created by the sheer number of people in Asia. The spike caused by the pandemic’s first onslaught is very noticeable here, as it was in the previous graph. Source, as of 30 June 2023: Global Private Capital Association.

4.3 Official guidelines that help investors in healthcare Many HNWIs want to invest in environmental, social and governance-oriented (ESG) businesses and healthcare fits into the ‘social’ arm of this triad.

United Nations’ Sustainable Development Goals (SDGs) The United Nations’ Sustainable Development Goals or SDGs offer up one blueprint for such investments and fund managers in whose funds HNWIs invest tend to take it seriously.

• SGD 3 is most relevant to healthcare, stating that “Ensuring healthy lives and promoting well-being at all ages is essential to sustainable development.”

• SGD 4 covers “quality education” and therefore ought to include health education and medical degrees.

• SGD 6 regards the management of clean water and sanitation for all, which is certainly a health-promoting measure.

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• SGD 11 tackles slum clearance in the name of public health.

No investment house in our particular survey, however, pays attention to any goal except the third one.

The European Union’s Sustainable Finance Disclosures Regulation (SFDR) Another official standard that interests funds that cater for globally-active investors is Article 8 of the European Union’s Sustainable Finance Disclosures Regulation or SFDR, which applies to funds that promote environmental and social objectives. Articles 6 (on sustainability risks) and 9 (green funds) are slightly related but are on different subjects.

All investment houses in the survey invested in both listed and unlisted (i.e. not-yet-public) companies. Some respondents to our questions mixed the two standards together, with one using Article 8 of the SFDR for all of its UCITS [Undertakings for Collective Investment in Transferable Securities] funds (not-yet-public) which invested in public companies, and UN SDG 3 for other investments in publicly-traded stock.

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

OFFICIAL GUIDELINES THAT HELP INVESTORS IN HEALTHCARE • United Nations’ Sustainable Development Goal 3 is most relevant to healthcare, stating that “Ensuring healthy lives and promoting well-being at all ages is essential to sustainable development.”

• European Union’s Sustainable Finance Disclosures Regulation Article 8 applies to funds that promote environmental and social objectives.

• QALY (Quality adjusted life years) is used to assess the effect of a given treatment on how long a patient will live (in years) multiplied by his quality of life in those remaining years with that treatment (1 = perfect health, 0 = dead).

• DALY is the Disability-Adjusted Life Year, a health metric that quantifies the number of years lost due to premature death or disability.

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

SNAKE OIL AND LONGEVITY Jordan Shlain issued a stark warning to HNWIs who are pampered at spas and who might be susceptible to the blandishments of less-than-scientific longevity products and services.

“There are a bunch of charlatans and snake-oil people preying on rich people with longevity tonics and solutions. Earlier in the year I gave a keynote speech abroad at a conference about ageing research and drug discovery which looked at longevity-related biotech, where I got to see everybody selling things or talking about what to do. Many were legitimate scientists at real scientific foundations. Some of them were representing longevity clinics in Poland or Iceland and Switzerland and Munich and Singapore. While I appreciate the bleeding edge of longevity medicine, I am still a sceptic when it comes to solid, peer-reviewed science – and, candidly, they are pushing the envelope. People need to recognize that any intervention

(putting something in or on your body) carries a risk.

“All science is in pursuit of the truth.

If you take away the politics, the conspiracy theories and the capitalism and just look at the truth or the pursuit of the truth, you’ll find that anybody who has a longevity solution would have to look you in the eye and tell you that he’s done a study, he’s done the science on people that has proven that they have lived longer on this intervention. That’s going to take two generations of humans! So, therefore, no person claiming to have a longevity solution is legit. They can’t prove it.

“This goes to the risk on/risk off concept. In financial terms, this would be ‘risk-on’ which represents the people who make risky bets.

There could be a great outcome, but there could also be a less savoury outcome. There are side effects to everything. If someone’s telling you that there are no side effects, he’s hiding something. If you are an 80-year-old guy and someone tells you that taking this hormone and doing that ozone treatment is going to make you live

DALY and QALY For the purposes of evaluating the worth of privately-issued stock, various investment houses told the survey that they used two less formal, but very fashionable, measurements – DALY and QALY. The survey did not reveal any evidence that family offices used these measurements.

QALY (Quality adjusted life years) is used to assess the effect of a given treatment on how long a patient will live (in years) multiplied by his quality of life in those remaining years with that treatment (1= perfect health, 0=dead). The QALY is used in cost-utility analysis as the measure of health benefits of medical interventions and to compare the value of different medicines with each other. For new medications, health agencies in Europe often use the cost/QALY in order to approve new reimbursed medicines (not used by the US Federal Drug Agency, since approval is not tied to pricing).

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longer, maybe taking that bet works within your risk tolerance scheme.

This is because hormone pills/ozone treatment will harm you and there is no reproducible scientific evidence that it works. If you’re willing to gamble with the last years of your life and hope to get some ‘energy’ or ‘muscle,’ I get it – but I’m not keen on you making that bet if you are a 40-year-old. The problem is that if you’re wrong and the gamble doesn’t work, you just lost some years of your life that you’ll never get back...or you’ll lose some functionality or capability. When people gamble with their money, the only thing they can lose is their money – and they can make it back. If you gamble with your health and you lose, you can’t get it back. Why not wait till the science clarifies itself?

“I met a 40-year-old woman who was taking metformin because of some doctor-guru in New York telling her to do it. I’m like, ‘You’re crazy! You’re so young! What are you putting rubbish in your body for? That is totally unproven in people who don’t have disease.’ It’s only been studied in people with metabolic syndrome and diabetes.”

Meanwhile, according to HealthAnalytics, the DisabilityAdjusted Life Year, or DALY, is a health metric that quantifies the number of years lost due to premature death or disability. In other words, it captures the overall burden of disease in a population. A family office can determine it by calculating the Years of Life Lost (YLL) by multiplying the number of deaths by the remaining life expectancy at the age of death. It must then calculate the Years Lived with Disability (YLD) by multiplying the number of prevalent cases with a certain health outcome by the disability weight assigned to this health outcome. It then sums up the YLLs and YLDs. In other words, DALY = YLL + YLD. DALY is measured on a scale between 0 and 1, with 0 implying perfect health and 1 equalling death.

Sometimes, according to the respondents, funds follow rules that dictate that 80% of the stock that they hold in single-company investments should be ‘aligned’ with the SDGs of the UN or with the SFDR. They then invite family offices and HNWIs to invest in them.

GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

4.4 Towards a brighter future Medical consultancies and concierge services play a vital role in extricating HNWIs from dangerous situations, and this role is expanding. Thanks to the pandemic, more and more HNWIs are interested in improving their healthspans, i.e. the quality of their lives, and are heeding their consultants’ advice about constant checks and treatments. Even now, far too many HNWIs of the first generation push themselves too hard at work and neglect their health, while far too many of the second generation suffer from ‘failure to launch’ and fall into a listlessness that puts their health at risk in many ways. The services that rescue both types of people from their problems are improving all the time, with genome technology and blood analysis making it easier and cheaper for their medical consultants to anticipate those problems.

According to many respondents, the COVID-19 pandemic has added to the mental-health problems that high-networth individuals face, but there are many factors on the positive side of the ledger as well. The surge of HNW investment in biomedicine and other healthcare research

SAN FRANCISCO

FLORIDA

NEW YORK

and facilities has been prodigious. Despite some wobbles in the market in the last year, the overall trend is up. More and more healthcare consultancies and patient advocates are arranging for treatments for serious HNW maladies by placing their patients on ground-breaking drug trials and other programmes.

The entire healthcare industry is expanding worldwide.

All relevant trends are in favour of the burgeoning healthcare sector attracting more patronage and capital.

The entire healthcare industry is expanding worldwide as populations – especially in China and Europe – are ageing and growing wealthier, creating more demand for it and more money to pay for it. HNW interest in investment in the sector is high and respondents to our survey generally expected it to rise inexorably in the long term. Technology is advancing at an ever-more-rapid rate, as it is in many other sectors.

The future of HNW healthcare is a flourishing one.

BOSTON

LONDON

ZURICH

CAIRO

HONG KONG

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GLOBAL HEALTHCARE TRENDS – A timely examination of the interaction between the U/HNW ecosystem & healthcare

CONTRIBUTORS All contributors helped enormously to provide the commentary in the text of this report. Our special thanks go out to the following experts who contributed information to our survey in ways that went above and beyond the call of duty.

• YANYI CHOY Managing Partner - Hywin Wealth Fiduciary Services (Hong Kong) Ltd. • BRIAN DOORECK MD, President & Founder - Executive Health Coaching LLC, Miami, USA • RAINER ENDER Global Head of Private Equity - Schroders Capital, Zurich, Switzerland • JEREMY KNOX Senior Investment Director, Private Equity - Schroders Capital, New York, USA • ARWEN LIU Senior Portfolio Manager - Sectoral Asset Management, Hong Kong • DR CHICHI MENAKAYA Founder & Managing Partner - Annomo Health, London, UK • ARDEN O’CONNOR Founder & CEO - O’Connor Professional Group, Boston, USA • JOHN PRUFETA Founder & General Partner - Medical Excellence Capital, New York, USA • JOHN SAMUELS Founder & CEO - Wellworth, New York, USA • JORDAN SHLAIN MD, Founder & Chair - Private Medical, San Francisco, USA • CHRISTOPHER SIDFORD MD, Founder & Medical Director - Black Bag Global Emergency Medicine, Massachussets, USA • DON SO CEO - Humansa, Hong Kong • MICHAEL K SUN Managing Director, Head of Healthcare & Biotechnology, Investment Banking - Bank of China International, Hong Kong • SHUMING ZHU Director - Hywin Holdings Ltd.

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