Next Generation Financing Models in Global Health

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Paying for global health programs on the basis of their outcomes has the potential to focus various actors on a single goal and make those investments more efficient and impactful. Yet in the face of institutional inertia, risk aversion, and operational challenges, few such projects have made the jump from theory to real-world implementation. The Next Generation Financing Models in Global Health Working Group, co-chaired with the Global Fund to Fight AIDS, Tuberculosis and Malaria, will explore how to put these new grant-making designs into practice, taking into account the constraints faced by global health donors. A final report is expected in December 2015.

Recognizing the many inherent tensions and limitations of traditional input-based aid, several CGD fellows and working groups have proposed new aid modalities designed to enhance impact and efficiency. In 2009, a working group on Performance-Based Incentives documented results-based financing experiences across the world, concluding that there was strong evidence “that [such] incentives can improve health and strengthen health systems in a variety of settings.” In 2010, Nancy Birdsall and Bill Savedoff released their comprehensive proposal for Cash on Delivery, a radical take on results-based aid that would tie all disbursements to verified outcomes or impact – no strings attached. And in 2013, CGD’s Value for Money Working Group identified contract design as one of four “domains” within the grant-making cycle where global health agencies could improve the efficiency and impact of their investments.

Yet despite enthusiasm from some corners – and despite the stated commitment to performance-based funding among some global health and development organizations – just a handful of results-based projects have made the jump from concept to reality. A 2015 paper from Perakis and Savedoff finds that “relatively few [results-based aid] programs are being piloted” – and those that exist “are relatively cautious adaptions of conventional approaches.”

To help bridge this gap from theory to practice, this working group aims to provide global health funders with concrete, practical guidance for applying these new aid modalities to their grant portfolios. Drawing from an extensive literature base on incentives in health financing, coupled with heretofore underutilized experiences and literature on adaptive contracting and regulation for public sector utilities and other monopolistic industries, the Working Group will work to adapt economic theory on optimal contract design to the real world context and constraints faced by global health funding agencies (click here for a background paper on that subject).

To bring these mechanisms from theory to practice, the Working Group will consider the following questions:

  • What are the characteristics of “contractible” indicators – that is, those indicators that could be the basis of payment under results-based aid modalities? Which potential global health indicators, and particularly indicators for the Global Fund’s three target diseases (HIV, tuberculosis, and malaria), meet these criteria? 
  • How can global health funders structure their grants to derive maximum impact while protecting themselves and their beneficiaries against various types of risk? For example, what is the optimal mix of ‘guaranteed’ funding for core services or essential medicines versus variable funding tied to achievement of impact? What is the optimal relationship between various levels of achievement and grant disbursements? Should these design elements change based on grant- or country-level characteristics, for example disease burden, GDP per capita, government capacity, track record/past performance, or grant size?
  • How can a global health funder “verify” that payments are tied only to results that were actually achieved? How can the design and implementation of verification procedures deter fraud, reinforce incentives for impact, and strengthen domestic data systems?
  • What safeguards are needed for a global health funder to ensure that results are not achieved through unacceptable programmatic tactics, for example coercion or other human rights violations? How can appropriate indicator selection help mitigate the risk of such unintended effects?

Working group meetings were held on January 22-23 and July 9-10 near Geneva, Switzerland; a supplementary technical workshop of economists and epidemiologists was held April 1-2 in Berkeley, California. A final report is anticipated for December 2015.

 

Co-Chairs:

Amanda Glassman, Center for Global Development

Maria Kirova, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Meeting Participants:

David Barr, The Fremont Center

Sebastian Bauhoff, Center for Global Development

Alexander Birikorang, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Olga Bornemisza, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Michael Borowitz, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Robert Brinckman, Formerly of the Clinton Health Access Initiative

Dave Burrows, APMGlobal Health

Jason Clark, The Global Fund to Fight AIDS, Tuberculosis, and Malaria+

Lucica Ditiu, Stop TB Partnership

Rajesh Divakaran, The Global Fund to Fight AIDS, Tuberculosis, and Malaria+

Erin Eckert, President’s Malaria Initiative+

Peter Godwin, Independent

Matias Gomez, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

George Gotsadze, Technical Review Panel, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Katherine Guerra, Clinton Health Access Initiative

Kate Harris, Bill and Melinda Gates Foundation

Jacqueline Huh, Stop TB Partnership

Ashaque Husain, National Tuberculosis Control Program, Bangladesh

Pablo Ibarraran, Inter-American Development Bank

Harinder Janjua, The Global Fund to Fight AIDS, Tuberculosis, and Malaria 

Sebastien Lenelle, Office of the Inspector General, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Julia Martin, Office of the Global AIDS Coordinator+

Linden Morrison, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Cynthia Mwase, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Regina Ombam, National AIDS Control Council, Kenya+

Mead Over, Center for Global Development

Nancy Padian, Berkeley School of Public Health

Hoangmai Pham, Center for Medicare and Medicaid Innovation

Ferdinando Regalia, Inter-American Development Bank

Suvandand Sahu, Stop TB Partnership

Yuna Sakuma, Center for Global Development

Motoko Seko, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

George Shakarishvili, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Alexandra Shields, Clinton Health Access Initiative

Rachel Silverman, Center for Global Development

Pavlo Smyrnov, International HIV/AIDS Alliance

Tracy Staines, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Kate Thomson, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Veronica Walford, World Health Organization

Lisa Waugh, Clinton Health Access Initiative

David Wilson, World Bank

Aneta Wierzynska, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

Nathalie Zorzi, The Global Fund to Fight AIDS, Tuberculosis, and Malaria

 

Funding Source:    Bill & Melinda Gates Foundation