Even before the first cases of COVID-19 were detected in Brazil, the management and staff of São Paulo’s Hospital Israelita Albert Einstein knew that they needed to get ready for hard times.
The non-profit, founded in 1955 by members of the city’s Jewish community, runs an integrated medical care, education and training system that includes its own private network of hospitals and medical centers – frequently recognized as the best in Latin America – as well as two highly regarded public hospitals and a network of primary and secondary care units under HIAE ́s management through agreements with São Paulo’s municipal government. In normal times they serve about 8 million patients a year.
HIAE’s leadership acted quickly on an emergency plan to expand their ability to deal with the looming pandemic, rushing to purchase medical equipment and supplies such as mechanical ventilators, orthopedic beds, intensive care units and personal protective equipment, as well as hiring more medical staff. They nearly tripled the bed capacity in the public hospitals, from 423 to 1,146, by building two field hospitals and increasing triage facilities.
All the additional spending came out of HIAE’s own pocket – resources that in a normal year would have gone to capital investments and ordinary expenses. But a few months later, Brazil’s hospitals were not only grappling with one of the worst explosions of coronavirus in the world. Like other health systems around the world, they experienced a drop in the demand for consultations, tests and surgeries related to other maladies and conditions. Consequently, revenues fell, even as operating costs continued to rise.
The conservatively managed non-profit had to find a way to bridge the shortfall at a time when local banks were facing their own troubles with deteriorating credit portfolios. HIAE also needed to spread out the cost of incurring in debt over the longest possible term, in order to smooth out its impact and guarantee the continuity of its operations over the medium- and long-term in both their private and public activities.
Around that same time, IDB Invest was looking for opportunities to provide support to private sector health care organizations in the region. “We knew it would be one of the best uses for our resources, but we didn’t have a long record in the health sector, compared to our work in the financial industry or the energy sector,” says Sector Expert of Social Infrastructure of IDB Invest, Cristina Simón.
One of her colleagues, Juan Parodi, had worked with HIAE leaders in the past. “HIAE’s management believed that the crisis presented a very good opportunity to join forces with an international development finance institution such as IDB Invest, which lays the ground for a long-term relationship between both institutions,” says Parodi.
A loan for 200 million Brazilian reais (roughly US$38 million at the time of disbursement last October) was put together in record time for a new client in a not-so-familiar industry, and while many of the people involved were working remotely. Specialists from the IDB’s public sector operations in health and social infrastructure pitched in, as well as the IDB Group representative in Brazil, Morgan Doyle.
“This transaction set an example of cooperation, leveraging the skills of a multi- disciplinary team that drew on specialists from both the private and public sectors of the IDB Group. We worked as a unified team to provide our client a quick and well- structured solution, tailored to their needs at the time,” says Doyle.
HIAE’s preventive measures paid off, as their facilities reached high occupation rates during the peaks of the pandemic. They plan to donate the additional equipment purchased during the crisis to increase the permanent capacity of the public hospitals in their network. The challenge is not over.