Raising Money for Global Health: Trends and Outlooks By Dr. Allyala Nandakumar, Chief Economist, Global Health Bureau

We are embarking on a new era in financing for health, one that departs from our traditional approaches and begs for innovative thinking and greater commitment from partner countries. Responding to the health needs of soaring populations in the face of rising health costs requires financing models that can do more with less. The U.S. Agency for International Development (USAID) is looking toward financing that draws in a greater mix of sources of financial resources to reduce costs, improve access to patient-centric quality care and provide sustainable solutions.

Through innovative financing in India for example, for every dollar spent by USAID, we are leveraging between $3 and $5 from the private and philanthropic sectors and unlocking as much as $10 of government resources. This is critical in a country where 3 out of 10 people live below the poverty line. And, it is this type of financing that allows our dollars to go further. Eliminating tuberculosis and improving reproductive, maternal, newborn, infant, child, and adolescent health in India can reduce between 20 percent and 25 percent of the world's tuberculosis and reproductive, maternal, newborn, infant, and child deaths around the world.

Our work going forward requires technical expertise and more frequent dialogue between governments, bilateral and multilateral organizations about newer approaches to financing health. We are committed to creating high impact financing to reduce dependence on external assistance, increase domestic spending on health, foster market based solutions and improve efficiency and equity of the use of resources in our partner countries. In this edition of the GH Newsletter, we hope you will learn more and be inspired by the direction we are moving with our partner countries to finance the world's most urgent health needs.

Investing for Impact: Capitalizing on the Emerging Landscape for Global Health Financing

The landscape of global development finance is changing. Official development assistance is no longer the dominant source of capital in many of USAID's priority countries, yet it remains vital to support their advancement. USAID CII's new report, Investing for Impact, examines trends in development finance and highlights ways in which USAID is leveraging private investment and applying non-traditional approaches to finance the achievement of our goals in global health.

This interactive report is designed to be an educational resource for development practitioners, partner governments and other stakeholders who may be interested in learning more about recent trends and non-traditional approaches to financing global health. The report includes a high-level summary of trends in global health financing over the past two decades, identifies the implications of these trends, and highlights opportunities in the new landscape. The report also features examples of how USAID is applying non-traditional approaches and includes supplementary information on eight illustrative financing tools being utilized across the Agency.

For more information on this report, or Innovative Financing generally, please reach out to the lead authors from USAID's CII, Priya Sharma and Joe Wilson.

Investing for Impact Launch Event

Photo credit: Laurence Genon

CII and the Aspen Global Innovators Group launched the report on July 11th at the Aspen Institute in Washington, D.C. Peggy Clark, Vice President of Policy Programs at The Aspen Institute and Executive Director of The Aspen Global Innovators Group (left) moderated a panel discussion with Jennifer Adams, Acting Assistant Administrator of USAID's Bureau for Global Health (2nd from the left), Alix Zwane, the CEO of the Global Innovation Fund (2nd from the right), and Tim Ring (right), the Chairman/CEO of C. R. Bard, Inc. and Co-founder/Co-chairman of TEAMFund. Watch a recording of the event.

Making Health More Affordable in Senegal

Find out why for just $6 a year, nearly 600 families in a village in Senegal were covered for 80 percent of their health costs and how community-based programs like "Mutuelles" are making health services more accessible and affordable to more people.

Financing Alliance for Health

The Financing Alliance for Health is a collection of stakeholders (including UNICEF, the government of Ethiopia, USAID, Last Mile Health, Partners in Health, The Clinton Health Access Initiative, Harvard, Hopkins, among others.) with the collective expertise to support governments and their partners (including the private sector) to develop sustainable financing models to strengthen community health as a part of integrated health systems. Work to date includes thought leadership (Strengthening Primary Health Care through CHWS: Investment Case and Financing Recommendations [PDF, 191KB], July 2015) and technical assistance to Liberia, Sierra Leone, and Togo to review costing plans, identify financial gaps, analyze sustainable financing opportunities and develop investment cases for institutionalizing and scaling Community Health Worker programs. For more information on this partnership, please contact Priya Sharma of USAID's CII.

Lulama: Innovative Finance Partnership Aims to Strengthen Local Pharmacies at Last Mile

Photo credit: USAID

USAID's Center for Accelerating Innovation and Impact (CII), as part of its broader collaboration with GlaxoSmithKline (GSK), partnered with Absa Bank, Aspen Pharmacare, GSK, Imperial Health Sciences, and Pfizer to create Lulama [PDF, 109KB], an innovative financing model that provides independent pharmacies in underserved areas in South Africa with access to working capital by improving their access to loans. USAID provided $140,000 in insurance resources to lenders while leveraging $6.5 million from the private sector for working capital. The initiative anticipates averting 200,000 deaths due to improved access to medicine, as Lulama scales in South Africa.

Q&A with Dr. Allyala Nandakumar, Chief Economist, USAID's Bureau for Global Health

Q: What is USAID's vision for health financing?

A: Our vision is to use economic growth to reduce dependence on external assistance, increase domestic spending on health, increase the role of the private sector, and improve efficiency and equity of resource use. We provide strategic and technical expertise to help USAID mission and HQ staff participate in the important and increasingly frequent dialogue with country governments and bilateral and multilateral organizations about financing for health. We help missions choose and implement into their portfolios high impact financing activities, as appropriate for the country context and within USAID's strategic commitments.

Q: How is USAID mobilizing external resources and leveraging private capital to achieve our goals in global health?

A: USAID uses a mix of private, public and philanthropic capital to help achieve global health goals. We also engage with communities through outreach and community-focused demand-side financing mechanisms, and deploy technologies and innovations. We support accelerated scale-up of inclusive healthcare business models through financial, managerial and strategic advisory assistance. Our goal is to help build financially viable and socially sustainable health delivery and financing systems that offer an expanded service mix, standardized operating procedures and affordable pricing. We want to deploy solutions that reduce costs, improve access to patient-centric quality care and provide innovative health financing solutions. In many countries, the private sector is the predominant provider of outpatient services, especially in urban settings, so we are developing innovative approaches that use the "power of financing" to organize the market in ways that makes it more responsive to the needs of the poor and near poor populations.

Q: What is Domestic Resource Mobilization (DRM), and how does it contribute to USAID's vision for how countries can finance their health system more innovatively?

A: Economic transitions provide a unique opportunity for countries to increase domestic spending on health; ensure equitable access to quality services and reduce aid dependence. The challenge is that donor spending has crowded out domestic investments in many low-income countries. As these countries transition from low to low-middle income status, donors pull back assistance and overall health spending goes up, but governments are not stepping in to fill the gap left by donors. Consequently, the burden of out-of-pocket spending also increases, and there tends to be greater emphasis on secondary and tertiary care investments.

To counter this effect, USAID is working with our partner countries U.S. Government agencies and multilateral organizations to raise the profile and shape implementation of DRM. Our focus is not just on leveraging more domestic resources for health but on ensuring the resources target those most in need and provide the services that yield the greatest health benefits.

It's critical that we engage with the Ministries of Finance as well as Ministries of Health in these efforts. Similarly, we recognize that in most low- and middle-income countries, public financing by itself will be insufficient to meet health needs, and out-of-pocket spending is a significant proportion of total health spending. Our efforts focus on finding ways to pool out-of-pocket spending in order to reduce the burden on the poor, while at the same time leveraging strategic purchasing of health services to enhance the value and responsiveness of the health system.

Q. What do you think is one of the most important results USAID has helped partner countries achieve through innovative financing?

A: India's urban population is expected to reach 600 million by 2031. Today, roughly 100 million urban poor face a disproportionate burden of ill health; the private sector provides more than 80 percent of outpatient health services accessed by this population segment; and care is largely financed through out-of-pocket payments. PAHAL (Partnerships for Affordable Health Access & Longevity), a USAID funded effort, aims to improve access to affordable, and quality healthcare for 10 million urban poor through scaled private primary care networks. The goal is to reduce out-of-pocket spending by 30 percent. PAHAL will leverage resources from public, private and philanthropic sources; accelerate scale-up of inclusive healthcare business models; deploy innovative solutions that help reduce costs; and improve access to patient centric care. PAHAL also has the potential to establish a service delivery platform that can then be used to design the next generation of health insurance products in India that offer both inpatient and outpatient services.

GLOBAL HEALTH VOICES

Podcast

PODCAST – Investing for Impact

Joe Wilson and Priya Sharma discuss the Investing for Impact report on the USAID Global Health podcast.
Download a transcript of this podcast [PDF, 92KB].

Joe Wilson, USAID CII's Senior Advisor on Innovative Finance

Priya Sharma, USAID CII's Senior Advisor on Policy and Innovative Finance.