Opinion: Innovative financing methods driving better health care for all

By Omar Campos, Jan-Willem Scheijgrond 05 June 2017

Nurses training. Photo by: Philips

Universal health coverage was adopted as one of the targets under Sustainable Development Goal 3, to ensure healthy lives and promote well-being for all at all ages. UHC includes access to quality, essential health care services, and to safe, effective and affordable medicines and vaccines, as well as protection against financial risk.

But in the drive to improve people’s lives and to extend access to care, how can we best ensure that progress towards UHC — and a sustainable and inclusive model of health care — is structural, not merely incidental or sporadic?

Strengthening primary health care, with outreach into the community and a well-functioning referral chain, is the most efficient and effective way to improve access to good-quality health care, thereby paving the way for UHC.

However, this requires a number of significant changes. First, primary health care systems need to be redesigned, based on community needs, to include services ranging from prevention to emergency care. This would ensure the systems are fit-for-purpose in tackling today’s and tomorrow’s disease burden, especially with the rise of noncommunicable diseases. Secondly, health care systems need to harness the full potential of technology, in particular digital technology, to improve the quality and efficiency of care.

At the same time, hybrid public-private health care models or other forms of partnership with the private sector should be considered. Governments need to decide on their role in delivering primary health care. Some governments may decide to let market actors provide care and take on a stewardship role, paying for results — either directly or through a public health insurance system — and assuring care providers meet national quality standards. Others may maintain strong ownership of service delivery, but will need to partner with the private sector to transform primary care through the effective application of innovations.

Results-based financing

In pursuit of the SDGs, financing schemes need to change from input-based to results-based in order to provide incentives to improve health outcomes and efficiency of service delivery. There are several types of results-based financing models:

1. Output-based models, where payment is linked to the volume of services provided.

2. Outcome-based models, measuring the benefits to the patients treated.

3. Impact-based models, where results are defined at population level.

The key to this transformation — and to the realization of the health care-related SDGs — is the pressing need for innovative financing and business models. For example, public-private partnerships that combine government funding with private income flows could facilitate new, sustainable business models that drive better health care for all.

Hybrid financing: The way ahead for health care

The way things are just now, something has to change. At present, donor funding alone is not sufficient to achieve the SDGs, especially with Western countries reducing their development cooperation budgets. Private investors, in particular impact investors, are interested in closing this funding gap, provided they can combine impact with financial return on investment. They are hesitant to invest in projects that are solely dependent on government payments, due to the poor track record of governments in target countries — e.g. developing economies — in meeting their long-term payment obligations.

via Devex YouTube channel

We believe that a new, hybrid business model bringing together donors and impact investors, governments and the private sector has the potential to deliver on the SDGs. Certainly, private companies are willing to invest in innovations towards the SDGs, providing that reasonable returns can be achieved.

An example of a hybrid model would be where basic services paid for by government are combined with additional services paid for by patients, preferably through health insurance. Such hybrid business models can be deployed in PPPs, where the management capabilities, efficiency and innovation power of the private sector are applied to improve government service delivery.

Partnering for the long term

With our mission to improve people’s lives through meaningful innovation, at Philips we are committed to long-term partnerships with governments and other stakeholders to strengthen their (primary) health care systems. As a promoter of the World Economic Forum Primary Healthcare Coalition and the Kenya SDG Partnership Platform, we are investing in technology and business model innovation in support of UHC.

For example, through our Community Life Centers — an open platform aimed at strengthening primary health care and turning the local health facility into a community hub, where technology is bundled with an integrated service package. The success of the first pilots in Kenya and Democratic Republic of the Congo gives us confidence that such platforms, implemented in collaboration with governmental and civil society partners, can be replicated at scale and so improve access to quality care for all.

Another essential change is that donors should allow the private sector to compete for their funding based on maximum impact per dollar spent. Currently, most donors allow private companies to participate in competitive bidding processes, but often do not allow profit-making, and sometimes even require a financial contribution, thus rendering the contract loss-making. These types of models are not sufficiently scalable.

A commitment to long-term partnerships with governments and other stakeholders is vital in order to strengthen health care systems. It is by working together — and pursuing financing models where results on health care and service delivery are defined at population level — that we can scale the impact on people’s lives.

What kinds of innovative financing models do you believe are most likely to help in the pursuit of the SDGs? Have your say by leaving a comment below.

Over 10 weeks Devex, along with our partners the European Investment Bank, the International Finance Corporation, Philips, and the United Nations Development Programme, will take an in-depth look at the innovative financing mechanisms driving forward the 2030 sustainable development agenda. We’ll explore how the funding gap can be filled, ask how cross-sector collaboration can lead to improved global health care, and look at what it takes to build successful partnerships for change. Join us as we examine the innovative financing powering the Global Goals by tagging #Going4Goals and @devex.

About the authors

Omar%2520campos
Omar Campos

Omar currently supports Philips by building global Sovereign Financing and Alternative Funding capabilities. In this role, he focuses in structuring innovative financing schemes aimed to facilitate the implementation of large healthcare integral solutions to be provided by Philips, and works in close collaboration with private hospitals, clinics, governments, funding institutions and agencies worldwide.


Jan willem profile
Jan-Willem Scheijgrond

Jan-Willem Scheijgrond heads up the global network within Philips that is responsible for the relations with governments and related stakeholders to address societal challenges in particular in the area of large scale healthcare transformations. He is also responsible for partnerships with partners such as the United Nations, GAVI, and the World Economic Forum. In that role he is focusing on partnerships that strengthen health systems in support of achieving universal health coverage. He is a board member of the Partnership for Maternal and Newborn Child Health and a member of the Global Finance Facility Investors Group.


Join the Discussion