Faced with mounting operational pressures and a shifting demographic and labor landscape, healthcare systems are being forced to rethink how their investment portfolios support long-term resilience. BlackRock's latest publication details how healthcare systems are reimagining and innovating portfolio construction for the new era.
Innovating and evolving for a new era in healthcare
Key takeaways
01.
Asset allocations
Balance sheets can serve as engines for growth—unlocking potential value from non-core assets and exploring alternative investments.
02.
Investment framework
Hybrid investment models blending institutional rigor with healthcare-specific needs have emerged.
03.
Implementation strategy
Tailored execution strategies with emphasis on overall mission and risk profile are essential for sustaining financial strength.
Overview
Amid an aging U.S. population and tight clinical labor market, not-for-profit healthcare systems increasingly rely on investments to sustain operations. With U.S. healthcare spending projected to hit nearly $7 trillion by 2031, systems are rethinking strategies to support their mission and communities.1
Unlocking value: Turning the balance sheet into a strategic resource
Balance sheets are no longer solely seen as financial records.
Healthcare systems are unlocking potential value from non-core assets such as real estate, infrastructure, and intellectual property. To diversify income streams and support innovation, some are exploring partnerships in venture capital and private equity. This trend reflects a broader movement toward using financial flexibility to sustain long-term mission delivery, especially as traditional revenue sources become less reliable.
Redefining resilience: Evolving portfolio construction
Traditional investment models, often built on static asset allocations and siloed liquidity pools, are increasingly viewed as inefficient in today’s environment.
Healthcare systems are increasingly employing a hybrid model that blends institutional and healthcare system-specific needs. This includes formalizing investment policy statements (IPS), implementing liquidity tiering to match operational needs, and enhancing risk management protocols. This approach advocates for more agile decision making and better alignment with enterprise-wide goals.
Strategic alignment: Tailoring execution to mission and market realities
Effective implementation strategies are not one-size-fits-all.
Investment decisions are increasingly tied to each healthcare system’s mission, risk tolerance, and operational profile. Systems with higher debt loads or more volatile revenue streams might prioritize liquidity and capital preservation, while others may pursue higher-return strategies. Continuous scenario planning and stress testing promotes the resiliency of portfolios under changing economic and policy conditions.
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