A report on InFiNe Knowledge Sharing Event with Backbone (22/01/2025)

A report on InFiNe Knowledge Sharing Event with Backbone (22/01/2025)

On January 22, 2025, InFiNe, in collaboration with its member Backbone, hosted a Knowledge Sharing Event (our monthly insightful gathering) on the topic “Leveraging technology to improve access to healthcare: a case-study in Latin America”.

The session highlighted Backbone’s approach to impact investing in healthcare in Latin America, where it is pioneering efforts to improve access to healthcare by leveraging technology and providing funding to local healthcare initiatives.

Key Insights from the Session

Presented by Xavier Heude, Co-Founding Partner at Backbone, the event was attended by 25 participants, both in person at the Maison de la Microfinance and virtually. It highlighted Backbone’s approach, an innovative model that combines technology, local expertise, and a strong focus on social impact. The case study presented emphasized the critical importance of ensuring access to essential goods and services, as these are fundamental rights that uphold human dignity. It also underscored the vital role of SMEs, which play a key part in providing essential goods and services. SMEs are the backbone of a stable and sustainable economy, significantly improving living conditions.

Backbone’s Mission and Operations

Backbone is a Luxembourg-based social impact investment firm, which operates outside of the Luxembourg CSSF regulation, being governed under the Securitization Law of March 2024. It primarily manages private debt investment vehicles, focusing on financing of SMEs with a proven business model that directly support critical sectors like healthcare. The firm operates with a clear vision of enhancing the human dignity of underserved populations, focusing on four sectors that are considered essential to the preservation of human dignity: education, food, healthcare, and community services.

The firm works closely with specialized local partners with an in-depth knowledge of the market, to deploy funds where they are most needed. With a small team (three members based in Luxembourg), Backbone’s operational model emphasizes on-the-ground local expertise. This approach enables the firm to select high-impact, local financial partners who, in turn, allocate funds to SMEs.

Case study: Mexico – Addressing Healthcare Access and Technology Needs

Backbone is addressing critical gaps in access to healthcare and paving the way for a more inclusive and equitable healthcare system in Latin America.

The presenter started by providing the audience with a general overview of the access to the healthcare system in Latin America, outlining that remains a critical issue, particularly for rural populations. A 2020 survey revealed that 27% of urban households and 40% of rural households in countries like Ecuador, Peru, and Bolivia could not access healthcare when needed. Despite increasing health expenditure relative to GDP, Latin American countries rely heavily on private spending, leading to inequalities in access to quality healthcare.

The reliance on out-of-pocket spending is high, with 32.4% of health expenditures paid directly by patients in Latin America and the Caribbean, significantly above the OECD average of 20%. This highlights the need for innovative financing mechanisms to make healthcare more affordable and accessible.

Regarding Mexico, the speaker highlighted several key challenges related to healthcare access, particularly in rural areas. The country is grappling with a shortage of medical professionals, including nurses, and a lack of sufficient medical equipment, which hampers clinics’ ability to provide timely and accurate diagnoses. Key challenges faced by clinics and hospitals include achieving accurate diagnoses, monitoring treatment progress, and addressing significant social disparities linked to rapid population growth.

Backbone’s model in Mexico addresses these issues by leasing medical equipment to clinics through a partnership with Garantia, a fintech company that offers leasing options to healthcare providers. This approach not only alleviates the problem of under-equipped facilities but also enables clinics to use a portion of the revenue generated from their operations to lower treatment costs for patients.

The presenter emphasized that Backbone’s investment model relies on debt financing, where the firm assumes 75% of the risk, while local financial partners take on the remaining 25%. This structure ensures that local partners have a stake in the success of the investments, while Backbone bears a larger portion of the risk, thus facilitating high-impact investments. Due to their lower risk exposure, local partners can offer more favorable terms, such as reduced interest rates for the end beneficiaries.

Through collaborations with medical equipment vendors and private clinics, Backbone fosters a scalable model where clinics can request quotes for equipment and access financing via Garantia. This model enhances the clinics’ capacity, allowing them to treat more patients effectively.

The speaker further noted that Backbone prioritizes under-served regions to ensure its funding reaches the most vulnerable populations, thereby improving healthcare access where it’s most needed. Backbone applies specific criteria when selecting clinics for financing:

• Size of the clinic: Clinics are classified as micro (<6 staff), small (6-15 staff), or medium (>15 staff).
• Location: Clinics are chosen based on geographic areas with high poverty rates, including urban, semi-urban, and rural locations.

The presenter also emphasized that Backbone closely tracks the performance of its investments. It monitors the number of patients served by each clinic and ensures that no clinic experiences a payment delay of more than three months. This approach not only mitigates risks but also ensures that funds are used efficiently to reach the intended beneficiaries.

In 2025/2026, Backbone plans to launch a €50 million fund aimed at replicating its successful model in Mexico across other Latin American countries. This fund will leverage the achievements of Backbone’s existing operations, enabling the scaling of the model and enhancing its overall impact.

Additionally, Backbone is working to support the development of a telemedicine platform in Ecuador. This platform will provide remote healthcare access to populations in rural and under-served areas, further extending the reach of Backbone’s healthcare initiatives and improving accessibility for those who need it most.

Closing Remarks

Backbone’s insightful presentation highlighted the critical role of leveraging technology and forging strategic partnerships to address significant gaps in essential sectors, such as healthcare. We are especially inspired by Backbone’s dedication to supporting local SMEs, which play a pivotal role in ensuring that vital services are accessible to vulnerable communities. This approach demonstrates the power of collaboration in driving lasting, positive change in sectors that uphold human dignity.

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