Caring, AC Health’s business — Borromeo

When Paolo Maximo Francisco Borromeo talks about hospitals, he does so like a business strategist. Talking about cancer, his voice changes. He has just come from a PET (positron emission tomography) scan of his own, he said, at the same Taguig hospital his group built from the ground up during the pandemic, where the procedure costs about half the going rate, at P50,000 to P55,000.

“It’s a strategic managerial choice,” he said in an interview that will premiere on Straight Talk, DAILY TRIBUNE's online program at 10 a.m. on Wednesday. The hospital still earns, “but just the right amount” to reinvest in itself, he said.

The pursuit encapsulates the philosophy he now carries as Ayala Corporation’s chief social infrastructure officer and as vice chairperson of Ayala Healthcare Holdings Inc., or AC Health. The thesis is that a business can be a public good without abandoning its profit motive.

From SanFran to Ayala Av

Borromeo grew up in the Philippines but spent most of his adult life abroad, an overseas Filipino worker (OFW), he proudly proclaimed, like so many Filipinos.

He did graduate work in the United States. He settled in San Francisco, where he worked as a strategy consultant at Booz Allen Hamilton, a prominent American management and technology consulting firm specializing in government and military contracting.

His clients were Kaiser Permanente and the massive Blue Cross Blue Shield, which are both giants in American healthcare, and he came away with an idea he could not shake: what if even a fraction of that integrated system could be replicated at home, where every hospital, clinic and drugstore operated on its own?

Borromeo said that around 2010 and 2011 the timing felt right. Benigno “Noynoy” Aquino III was president, gross domestic product (GDP) growth ran at 6 to 7 percent, and the peso was strong enough that coming home did not mean a punishing pay cut.

Only a handful of employers could have lured him back. Ayala was first among them, partly because of a memory from 1999, when Jaime Augusto Zobel de Ayala, the group’s chairman, delivered the Ateneo commencement address Borromeo graduated under.

The speech urged graduates to be the change agent they wanted to see in the country. “That stuck,” he said.

Serendipity then took over; Ayala happened to be hunting for a head of strategy, and Borromeo was one of the few Filipinos who had made partner or principal rank in strategy consulting.

He took the job, tasked with finding the group’s next businesses. The group was already investing in what he calls hard infrastructure: toll roads, rail, energy that would become ACEN (AC Energy), and, then, water through Manila Water.

He advised the board to add what he called “soft or social infrastructure,” starting with health and extending to education.

The group listened. Health came first, and education followed when Fred Ayala, who had run the group’s BPO business, steered that unit toward schools and universities.

By about 2015, the group had schools and universities on one side and clinics, pharmacies, and hospitals on the other.

Med network grows

A decade on, the numbers are substantial. The Healthway Medical Network comprises seven hospitals and some 300 clinics, and AC Health also operates roughly 1,000 drugstores through Generika and St. Joseph, with IE Medica handling medicine imports. The hospitals include Healthway Cancer Care Hospital in Taguig, a Quezon City hospital tied to Far Eastern University-Dr. Nicanor Reyes Medical Foundation (FEU-NRMF), and the Cebu hospital of the Cebu Institute of Medicine, most recently acquired.

On the education side, iPeople, formed in partnership with the Yuchengco Group, owns Mapúa University, National Teachers College, the University of Nueva Caceres in Naga, and the affordable private APEC Schools, serving well over 80,000 students. Together, Borromeo said, the education and health arms represent more than P20 billion in invested capital.

This year, he and the group’s leadership decided to stop running these units in parallel. Health, education and the Ayala Foundation, the group’s charitable arm, were brought under one banner: Alagang Ayala, a platform with four pillars of health, education, livelihood and community development, and sustainability. The premise is deliberate coordination, using each unit’s strengths in the same community rather than scattering them.

Profit with purpose

Alagang Ayala built a clinic in a public school in Santa Rosa, Laguna, which opened just last week. PhilHealth reimburses the for-profit clinic. Borromeo sees no contradiction. “Hindi naman siya pwedeng palugi lang palagi,” he says: it cannot always run at a loss, or it will simply close.

His distinction is between charity and sustainability. The Ayala Foundation is purely philanthropic, funded by contributions from the group’s big brothers and sisters, Bank of the Philippine Islands, Ayala Land, Globe, and others.

AC Health and iPeople are expected to stand on their own, beat their cost of capital, and keep enough cash for reinvestment, since hospitals need new equipment every year.

Dividends are important, but affordability matters more. The group does not expect these businesses to outperform its other holdings. It expects them to be healthy enough to keep growing.

The logic extends beyond the cities. Borromeo admitted that a full-service hospital is hard to sustain in a far-flung town, where nurses and doctors are scarce. His answer is partnership.

“In Iloilo, with the provincial government, the group is leasing space in 12 district hospitals to dialysis operators, so patients no longer travel four to six hours to the city for a treatment that itself takes hours,” he explained.

In El Nido, Palawan, working with Ayala Land, the local government put a primary and emergency care clinic on the mainland, because the resort island has little access to care.

Since 2022, Borromeo has led the health group of the Private Sector Advisory Council (PSAC), a seat he credits to AC Health’s frontline role in the pandemic vaccination effort.

He recalls some of his “most painful, difficult days” during the health emergency in terms of hospitals full to the brim, friends and family lost, and the sense of aging years in a few months.

His recommendations to President Ferdinand Marcos Jr., during the PSAC meetings, rest on three planks: affordable, accessible medicine through a faster, better-staffed Food and Drug Administration; capacity, meaning more hospitals, doctors and nurses; and a stronger PhilHealth.

He rejects capping nurse migration. Filipinos cannot be stopped from going abroad, he told the president, so the country must produce more nurses and improve conditions at home.

He pointed to PhilHealth as proof that collaboration works. Dialysis benefits rose from about P2,000 to P6,000 a session, and a breast cancer package from roughly P200,000 to P300,000 to P1.4 million. The share of health costs Filipinos pay out of pocket fell from about 55 percent to 41 percent this year.

If it reaches 30 percent in his lifetime, he says, he would be satisfied. He stays away from the PhilHealth fund controversy, saying only that the spirit of moving excess cash around makes sense, while the execution is another matter.

The measure

How does Ayala know it is working? Borromeo offers three lenses: reach, outcomes and engagement. On reach, the group says it touches 6.5 million lives in a year, including about 13,000 cancer patients.

“Outcomes are harder to measure, but he wants the group held to them. Engagement counts the capital committed and the partnerships formed,” he conceded.

Beneath those metrics is a conviction about the country’s youth. The Philippines, he said, is a young nation, and that “demographic dividend” turns into a liability if its people are neither educated nor healthy.

He explained, “One catastrophic illness, especially cancer, can wipe out a family’s life savings. Education and health, to Borromeo, are the same investment: in the Filipino.”

Asked of life outside work, Borromeo beamed saying three boys keep him busy.