MIT team proposes securitization of healthcare loans

A team from the Massachusetts Institute of Technology (Cambridge, Mass.) and Dana-Farber Cancer Institute (Boston, Mass.) proposed using securitization to create a diversified portfolio of healthcare loans (HCLs) to finance drug costs, and tying the continued repayment of those loans to drug performance. In a (see BioCentury, Sept. 1, 2014).

The new paper gives a detailed proposal of how diversified pools of HCLs could work. In the short term, the authors proposed the creation of a special purpose entity, which would be funded by investors who purchase securities issued by the entity that have different risk-return characteristics. A patient could borrow funds for a co-pay, and then have a loan that would be amortized over a set period. ...