Opinion: Innovative financing methods driving better health care for all

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.

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.

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.

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.