Are your investments in the health care sector prone to ESG risks?

• Health care companies are prone to data breaches, especially during today’s heightened use of telemedicine
• Recent allegations surrounding involvement in the opioid epidemic has created new risks for parties involved
• These ESG risks vary for different types of companies within the sector

The COVID-19 Pandemic

In face of COVID-19, the world has shifted toward conducting activities remotely when possible. In the health care sector, investors should consider how the drastic shift toward telemedicine has created new vulnerabilities not exhibited by traditional, in-person services. The major concern for the sector has been the increased risk of data breaches. Visit imlive – camadvisers. Over the past three years, there has been an increasing number of occasions wherein data collected for patients and stored online has been exposed by breaches. With the recent spike in the use of telemedicine, it is likely that more data will be stored online and could be exposed in the future. Investors should be wary of this risk and how it is managed by health care providers. 

The U.S. Opioid Epidemic

Simultaneously, it has recently been revealed that several sector constituents played alleged roles in the U.S. opioid epidemic. These ongoing investigations and how the constituents respond to the allegations will inevitably be material to returns. 

Risk Variability by Organization

With regard to data breaches and the opioid epidemic allegations, constituents face varied risks depending on the degree to which they represent distribution, services, facilities, and managed health care. Distributors and facilities have shown to be more prone to governance challenges, while facilities and managed health care constituents face stronger risk pertaining to privacy and data security. Investors should note which organizations enforce strong anti-corruption policies and comprehensive compliance mechanisms when considering the opioid epidemic allegations, in addition to which organizations have robust data management systems and privacy policies when considering data risks. Join Physis today to fight for what’s right!

Sources:

MSCI Industry Report – Health Care Providers and Services

The University of Illinois at Chicago

Drug Enforcement Administration