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With shifting disease burdens, growing populations, and rising expectations comes a greater focus on value for money. International health funders and agencies want to know how to make the most of money spent by focusing on the highest impact interventions among the most affected populations. Whether through better procurement systems for health commodities, results-based financing, or more detailed assessments of the effective ness of health technology, CGD’s work aims to make health funding go further to save, prolong and improve more lives.
In the coming week, a series of high-level meetings will thrust mental health into the spotlight of the development world. Five days of events (listed below), centered around the World Bank annual spring meeting, will bring the topic of mental health in low- and middle-income countries to a wider audience than it has ever reached.
Speaking to this audience requires a variety of languages, and global mental health speaks several: public health, medicine, anthropology, and human rights. But the language of economics is relatively new to the mental health space, much as mental health is new to the community of development economists. So what does an economic perspective have to offer the field of mental health, and what can development economists learn by embracing mental health?
Mental health is currently the orphan child within the long-overlooked field of noncommunicable diseases in low- and middle-income countries. Less than 1 percent of development assistance for health is directed towards mental health despite the fact that it represents approximately 10 percent of the global burden of disease. The status quo is not the result of malevolence, but rather of poor planning and a false impression that nothing can be done to improve these conditions. Yet there is much that can and should be done to improve the health of mental health systems globally, starting with improving mental health financing.
In a set of recommendations published today, CGD’s Making Room for Mental Health Working Group outlines five concrete actions to increase mental health coverage substantially and move toward universal health coverage. In brief, we recommend that country governments and international donors work to:
Invest more in mental health care to achieve coverage at scale.
Work with the World Bank to ensure implementation of the mental health components of the United Nation’s Global Strategy for Every Woman and Every Child.
Include common mental health services in primary care as part of guaranteed packages of health benefits.
Prevent mental illness through cash transfers.
Improve specialist care for acute episodes of mental illness.
If adopted, these recommendations stand the chance of significantly improving the lives and quality of lives of millions of individuals living with mental disorders globally. Good mental health is good for both society and GDP, as evidenced by the heavy cost of illness resulting from the contrary. Globally, the cost of mental health conditions was estimated at $2.5 trillion in 2010 and is projected to rise to $6 trillion by 2030. In contrast, treating mental disorders shows demonstrable effects on reducing poverty, and there are a number of cost-effective interventions for mental health care.
The upcoming meetings raise important new lines of inquiry around how best to finance mental health care in countries where per capita health spending is as low as a few dollars per year. They create an unprecedented opportunity to address and redress the parity of mental health in relation to other areas of health care. But they also run the risk of simply preaching to the choir and missing the ears of development economists. If mental health is to sing a new tune, it must learn to speak the language of economics, and if we development economists are to truly care about human capital, we ought to lend an ear to this new tune.
April 13: Mental Health Innovation Network, Innovation Fair
April 14: World Bank/WHO, Out of the Shadows: Making Mental Health a Global Priority
April 15: NIMH/Grand Challenges, Solving the Grand Challenges in Global Mental Health
April 16: Lancet Commission on Sustainable Development and Global Mental Health
April 17: Georgetown University, Global Mental Health: Transdisciplinary Perspectives
The topic of priority-setting has gained some serious momentum since CGD’s 2012 seminal working group report: in January, nearly 1,000 policymakers, practitioners, researchers, donors, and advocates gathered at the 2016 Prince Mahidol Awards Conference (PMAC) in Bangkok, Thailand, to discuss priority-setting for universal health coverage (UHC).
Representatives of global organizations and government health agencies of low- and middle-income countries (LMICs) kicked off the conference in an opening plenary (pictured below), recognizing the importance of priority-setting as demands for health services increase in limited resource environments. And the Bill and Melinda Gates Foundation announced additional support to the International Decision Support Initiative, set up in 2013 following CGD’s report (see recent our blog post and podcast for more about why this is such great news).
Pictured: Opening plenary, moderated by Amanda Glassman (CGD) with Untung Suseno Stuarjo (Secretary General, Ministry of Health, Indonesia), Soonman Kwon (Professor and Dean of the School of Public Health, Seoul National University, Republic of Korea), Michael Rawlins (Former Chair, NICE, United Kingdom), Tim Evans (Senior Director for Health, Nutrition and Population, World Bank), and Lincoln Chen (President, China Medical Board)
CGD was pleased to help organize several sessions, including one titled, "Missed opportunities and opportunity costs: reprioritizing UHC decisions in light of emergence of new technologies and continued budget constraints." Here are a few takeaways from the session:
"Old" technologies can be "new" for low- and middle-income countries
The pace of technological growth in health is quick: each year, large numbers of new medicines and devices enter global markets. While some new technologies can be cost-saving or extend lives, others can be effective but extremely costly, and still others are just costly without being transformational for UHC goals.
Meanwhile, public resources available for health, even if they see an uptick, don’t increase at the same pace as the availability of new technologies. As a result, adoption of a new technology may imply disinvestment and reallocation away from other uses of public monies or crowding out of more cost-effective uses of spending toward UHC goals.
It is therefore important for LMICs to keep in mind that some technologies that have been available in other countries can still be "new" to their health systems—and to give those technologies the same consideration as the shiny new ones. As Kun Zhao, director of health technology assessment at the China National Health Development Research Center, put it, "your ‘old’ can still be ‘new’ for me." Investing in these older, potentially more cost-effective, technologies could be an opportunity for LMICs to enhance value for money.
Priority-setting has a role in global health
The decision to adopt an intervention or not is one challenge; knowing what’s on the market or potentially coming to market is another.
We’re seeing more and more innovation—defined by Amie Batson, chief strategy officer at PATH, as "not just the new and expensive, but new approaches that significantly affect access and effectiveness compared to standard of care"—in LMICs, by those who understand the needs of the poor. And, as Batson underscored, it is important that LMICs are able to identify and adapt the innovations that are appropriate for their health systems.
When it comes to these new innovations, Alexandre Barna, head of unit at CEDIT, France and representative of the EuroScan Network, and Sang Moo Lee, executive director in the Office of Research Planning at NECA Korea, showed that health technology assessment and horizon scanning are part of the process and highlighted resources available to all countries to support priority-setting. For example, EuroScan provides a collaborative platform to share information on emerging health technologies; South Korea uses a modified version of EuroScan’s toolkit to identify and assess new technologies.
Priority-setting can make new products more affordable
The Pharmaceutical Management Agency of New Zealand (PHARMAC) uses a relative prioritization list of medicines (using a QALYs per $1 million metric) and is uniquely legally mandated to stay within a certain budget. As such, despite a relatively small population which can mean less leverage, PHARMAC has the ability to negotiate very low drug prices. Rachel Melrose, manager of the policy team at PHARMAC, showed us the result: prices of the 30 most commonly prescribed drugs in New Zealand are one-third of the cost in the US, and actual total drug expenditure in 2014 was less than half of the estimated expenditure.
Be mindful of incentives for innovation
What incentives for innovation are created by priority-setting? What are potential unintended consequences of priority-setting? "What if health technology assessment and if all the bureaucratic controlling of new products stifles innovation?" Andreas Seiter, senior health specialist at the World Bank, asked. "Investors might take their money to other sectors. How would we know whether this was happening?" These are important questions to consider.
"If we want to support innovation," Karl Claxton, a professor in the Department of Economics and the Centre for Health Economics at the University of York, argued,"give a strong signal of what we’re able to pay."His research on how new technologies can displace existing, potentially more cost-effective uses of public health funds provides one method for how countries could arrive at a "willingness to pay" benchmark for a new technology. With awareness of such a benchmark, external assistance can be focused on where it’s required (i.e., where countries can’t pay the generic costs); donors can target funding where there isn’t incentive for manufacturers; and health systems can access new technologies.
As priority-setting remains firmly part of the UHC agenda, we at CGD are excited to continue thinking about these topics and engaging with the International Decision Support Initiative (iDSI) as it scales up. In the meantime, we encourage you to check out the presentations from our PMAC session here and from all other sessions here.
Pictured: Parallel Session 2.2 panelists – Rachel Melrose (Policy Team, PHARMAC New Zealand), Andreas Seiter (Senior Health Specialist, World Bank), Amie Batson (Chief Strategy Officer, PATH), Karl Claxton (Professor, University of York UK), Alexandre Barna (Head of Unit, CEDIT France), Kun Zhao (Director of HTA, CNHDRC China), Sang Moo Lee (Executive Director, Office of Research Planning, NECA Korea)
No one really understands why the first letter is lower case and the rest are in capitals. But one thing that is clear to anyone who has heard of iDSI is that it fills a growing gap in how developing countries decide how to allocate their strained health budgets. The International Decision Support Initiative is a network of expert organizations that helps policymakers make effective, efficient, and ethical decisions about how to prioritize limited resources. And it just got bigger, thanks to a new grant to scale up its operations (you can read about it here).
With evidence and rational decision-making at its heart, it is no surprise that iDSI began as the recommendation of a report by a 2012 CGD Working Group. Its chair and director of our global health program, Amanda Glassman, tells me in a new podcast that iDSI will become increasingly important in the years ahead.
“What really matters right now for middle-income countries, which are most of the countries in the so-called developing world, is how they choose to spend their own public resources. So informing that process with evidence and with good process, for me, it’s the only way forward,” she says.
So why is iDSI needed? Because some countries currently spend large amounts of money on ineffective treatments such as prescribing vitamins or sending a few patients overseas for costly procedures, while many thousands at home go without basic health provisions. In addition, as countries become wealthier, richer donor nations will move away from entirely underwriting their health sectors, and low- and middle-income countries (LMICs) will increase their own public health spending; thus the need for better priority-setting will skyrocket. And as more countries aim towards universal health coverage (UHC), it will be even more crucial to get the most health for their money.
It’s been a short and speedy evolution for iDSI. Following that CGD report, the initiative was set up in 2013 by the UK’s NICE (National Institute for Health and Care Excellence) and Thailand’s HITAP (Health Intervention and Technology Assessment Program), with funding by the UK’s DfID, the Bill and Melinda Gates Foundation and, earlier, the Rockefeller Foundation. Originally, it focused on five countries—Indonesia, India, Vietnam, China, and South Africa—and it is credited with helping those countries make better healthcare spending decisions. Recently, the Gates Foundation announced a $12.8 million grant to scale up the practical support iDSI offers to countries that aspire to UHC. This will mean not only working harder in the five flagship nations, but also expanding its geographical reach, particularly into sub-Saharan Africa.
We think of iDSI as a classic CGD success story: we started by identifying a problem in the economics of health (the inefficiencies of LMIC health budgets and a lack of processes and institutions to help prioritize health spending), we convened a group of experts to focus on the problem, found a toehold, and worked it until we came up a new simple, low-cost solution. Now we are delighted that policymakers and funders have seen—and realized—the potential.
As Glassman says, “I feel that’s exactly what CGD was created for. To come up with what makes sense, try and get all of these different people working in the same direction, and now it has a life of its own. Our job is to collaborate and to support and celebrate but it’s… bigger than us now and I think that’s what CGD is all about!”
The International Decision Support Initiative, initially launched as the result of a CGD working group, is scaling up, and that’s good news for people making life-and-death decisions in low- and middle-income countries. It means more data on what works and more guidance on how to get the most out of scarce resources for health.
Health-care decisions are hard everywhere. The United States, for example, spends almost one-fifth of its total national income on health but still has a hardtime deciding whether health insurers should cover a new treatment for Hepatitis C. Imagine the scale of that challenge in a place like Ethiopia, where physicians (1 for every 32,000 people), money, and almost every other resource are in short supply.
In this context of extraordinary resource limitations, nearly all physicians in Ethiopia are forced to make difficult choices about “who gets what” with little guidance of any kind. According to a study by Defaye et al. (2015), a representative sample of physicians in the country cited “first come, first served” as the most often used strategy to allocate care and medicines, followed by limiting tests and providing second-best treatments, among others. Also disconcerting, about 88 percent reported they were so troubled by the lack of resources, and the decisions it forces them to make, that they regretted having chosen their profession.
Although much progress has been made in recent years, these difficult patient care decisions co-exist with decisions to spend on products and services that have little evidence of cost-effectiveness. In Ethiopia, multivitamins are on the essential medicines list, for example.
Ethiopia is not alone. These kinds of difficult decisions, called rationing, are behind the massive inequalities in health and access to health services that are so common in health systems around the world. More money is one answer to these problems. But because resources will always be finite and demand almost infinite, rationing will happen regardless. The only difference is whether those rationing decisions are taken with the goal of improving health and well-being, or according to some other imperative such as “first-come, first-served”—which I think most can agree is unfair and unhelpful in meeting important health goals.
iDSI’s scale-up will help governments and other payers make these critical decisions. The initiative is led by the UK National Institute for Health and Care Excellence (NICE) International and the Thai Health Intervention and Technology Assessment Program (HITAP) and funded by the UK Department for International Development (DfID), the Bill & Melinda Gates Foundation, and, earlier, the Rockefeller Foundation. iDSI was initially launched as the result of a 2012 Center for Global Development working group on building institutions for smarter health spending.
HITAP and NICE are leading a new generation of agencies whose goal is to influence the allocation of scarce public resources in favor of more health for the money. They are quasi-governmental technical agencies that conduct or commission cost-effectiveness and budget impact analyses of medicines and technologies. These analyses become the basis for making coverage and reimbursement decisions as part of health budgets or insurance subsidized by the public sector.
HITAP, for example, helps Thailand’s National Health Security Office decide what’s in and what’s out of the country’s famous Universal Coverage (UC) scheme. HITAP has helped the UC scheme improve health given a fixed budget, and has also found opportunities for the system to save money that can be reallocated to expand coverage in other dimensions. For example, HITAP’s participation in the analysis of human papillomavirus vaccine candidates helped the Thai government define the price at which the vaccine would become cost-effective and affordable in the Thai health system. Armed with this information, the UC scheme achieved a lower price in negotiations with industry—crucial for a middle-income country without access to Gavi’s discounted prices.
But many low- and middle-income countries found the global cost-effectiveness recommendations tough to implement because local data on budget and health impact were missing, and because these types of recommendations had little to do with how public budgets were actually prepared and allocated. Further, these governments, like those in high-income countries, face many competing demands and pressures from patients, advocates, donors, industry and employers to choose one way or another, and no formal process through which to manage these pressures.
That’s the basic idea of HITAP and NICE: to bring a formal, participatory, fair, and transparent process to the examination and discussion of evidence, and to the decision-making about budgets and payments based on this evidence. In other words, these organizations are taking on the ongoing responsibility of informing choices and making sure that the right vaccines and medicines are purchased.
As middle-income countries graduate from aid that has historically funded the most cost-effective health interventions like vaccinations and infectious disease control, having formal, evidence-based ways to decide how to spend the next peso or pula, or how to design health benefits plans as part of movements towards universal health coverage, is absolutely critical.
iDSI hopes to contribute, scaling up its efforts to work side by side with low- and middle-income payers and commissioners moving towards universal health coverage. NICE and HITAP won’t make decisions for countries or push any specific institutional arrangement, but they will help to set up the agencies, studies, methods, and processes that policymakers consider most useful for their particular health systems—and help ensure that more money equals more health and equity.
The global health community has made great strides in addressing AIDS, tuberculosis and malaria: fewer people are contracting these diseases, fewer people are dying from them, and far more people are enrolled in life-saving treatments. Yet to sustain this progress and defeat these three diseases, the global community must find more efficient ways to allocate and structure funding.
This week, the Global Fund partnership will meet in Tokyo to plan for its fifth voluntary replenishment, covering the period 2017-2019. The stakes are high: in an austere budget climate, the Global Fund’s ability to raise the needed resources—and then to spend them effectively over the subsequent three years—will have outsize importance in determining the trajectory of the historic fight against AIDS, tuberculosis, and malaria.
Why are the next few years so important? First, the good news: the global community has made great strides in addressing all three diseases and saving lives. For HIV, fewer people are contracting the disease (down 35 percent since 2000), fewer people are dying (down 42 percent since 2004), and far more people are enrolled on antiretroviral treatment (up more than 100 percent since 2010). TB and TB/HIV interventions have saved an estimated 43.5 million lives since 2000. And just last week, the WHO released its most recent estimates, which suggest that malaria deaths have been almost cut it half over the same period. Yet global progress is threatened by growing drug and insecticide resistance; high rates of treatment dropout among ART and TB patients; and the ballooning cost of lifelong HIV treatment.
Creating a Bigger Tool Box: Next Generation Financing Models
To meet these challenges, the global community needs strategic thinking and a bigger tool box. Some of those tools will be new medicines and better technologies, emerging from the world’s best labs and biomedical researchers. But the fight against AIDS, TB, and malaria would also benefit from better ways to allocate and structure funding—the subject of our 2013 report on More Health for the Money. One important component of the More Health for the Money agenda: the introduction of new modalities that can marshal stakeholders, align their incentives, and ensure mutual accountability for achieving shared goals.
Specifically, many researchers and policymakers have hypothesized that models tying grant payments to achieved and verified results—what we refer to as next generation financing models—offer an opportunity for the Global Fund to push forward its strategic interests and accelerate the impact of its investments. And indeed, since its creation, the Global Fund has aspired to link funding to results achieved, has established routine internal processes toward that end, and is one of the few donors to do so across its entire portfolio.
Still, there is a perception that the Global Fund’s original performance-based financing (PBF) system has not fully succeeded in increasing programmatic performance, incentivizing innovation, or building sustainable country ownership, in part due to its complex and discretionary structure. The PBF process combined too many performance elements; did not include a direct link between results and payments; and relied largely on grantees’ self-reports, with only limited data verification—all of which limited the power of the incentive. And in the broader global health and development ecosystem, just a handful of true PBF projects have made the jump from concept to reality. A 2015 paper from Perakis and Savedoff found 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, CGD convened a working group on next generation financing models in global health, with the aim of providing 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 previously underutilized experiences and literature on adaptive contracting and regulation for public sector utilities and other monopolistic industries, the working group adapted economic theory on optimal contract design to the real world context of agencies funding global health programs. The working group’s final report, the culmination of these efforts, offers a practical guide to the design and roll out of Next Generation grants.
We were delighted to collaborate closely with the Global Fund on this effort, and to co-chair the working group with Maria Kirova, a Global Fund Department Head. However, it is important to note that the Global Fund does not necessarily endorse the report’s findings, nor does the Global Fund commit itself to any policy actions through its participation in this working group.
Next Generation Financing Models: Getting to the “How”
The final report addresses the how of next generation financing models—that is, the concrete steps needed to change the basis of payment of its grants from expenses to outputs, outcomes, or impact. For example, when is changing the basis of payment a good idea? What are the right indicators and results to purchase from grantees? How much and how should grantees be remunerated for their achievements? How can the Global Fund verify that the basis of payment is sound and that the reported results are accurate, reliable, and represent real progress against disease control goals? And what is needed to ensure that these new incentives don’t drive unintended consequences?
The report starts with a conceptual framework that explains why traditional grantmaking often gets the incentives wrong, why that matters, and how next generation financing models might offer a way for the Global Fund and other health funders to increase the value for money of their investments. It also describes the growing use of incentives at the Global Fund and elsewhere, including the current incentives embedded within Global Fund grants. It then discusses contexts where a move to next generation grant models could drive faster impact or other benefits and describes the technical elements and design choices required to bring them to life. Illustrating how this would work in practice, the report offers four case studies across the Global Fund’s three disease areas.
To bring these new financing mechanisms from theory to practice, the report offers seven medium-term operational recommendations for the Global Fund Board and Secretariat:
Secure strong Board and Secretariat commitment through inclusion of next generation grants as a key priority within the next Global Fund Strategy (due to be presented to the Board for approval in April 2016).
Leave no room for ambiguity: ensure that next generation grant agreements stick to their agreed disbursement protocols—against progress on independently verified results.
Reflect the needs and requirements of next generation grants in relevant related policies, including the allocation formula, counterpart financing requirements, sustainability framework, and differentiation initiative.
Reflect the needs and requirements of next generation grants in the guidance and terms of reference given to key Global Fund bodies, including the Technical Review Panel, Country Coordinating Mechanisms, and operational divisions within the Secretariat.
Assure Global Fund and Principal Recipient access to needed expertise and resources to design and operationalize next generation grants, with particular attention to performance verification.
Revise Key Performance Indicators to accommodate differences in the management and evaluation of next generation grants.
Evolve financial management policies to accommodate less predictable cash flow and reduce restrictions on the use of funds.
Those who follow the Center for Global Development will be familiar with our branded meme: “Cash on Delivery” aid, or COD. As early as 2006, Owen Barder and Nancy Birdsall authored a working paper on the COD approach to foreign assistance, which was distinguished from “input-financing” and proposed as a mode of payment that would enhance efficiency and, by revealing government performance to local populations, improve the recipient government’s accountability to its own citizens. Subsequent work from CGD includes a book by Savedoff and Birdsall and most recently a paper by Savedoff and Perakis. Many are enthusiastic about COD’s potential to revolutionize aid effectiveness. Yet within some global development organizations, leadership and staff alike express common concerns: is COD practical in the real world? Have you thought about this problem, or that constraint? How would this work in the context of our organization? And if we decided to move forward, how would we design a COD grant?
To help answer these questions, our new report Aligning Incentives, Accelerating Impact differs from CGD’s past efforts in two important ways. First, due to the Global Fund’s engagement with our working group over many months, this report reflects and responds to the concerns raised by the staff of a single donor institution about the ways that cash on delivery could fail to improve results or could even create perverse incentives within their specific institutional context. As a result, the report avoids promoting COD as a panacea applicable to all of the Global Fund’s financing. Instead, it stresses the need for contractible, externally verifiable indicators and for a willing grant recipient that is able to pre-finance some aspects of service delivery in order to successfully implement a COD strategy. We therefore hope the report will prevent those with a more distal view of Global Fund activities, such as outside observers, board members, and even higher management within the fund, from pushing Global Fund staff to implement COD in situations where it is doomed to fail.
Second, more than any of its predecessors, this report explicitly adopts the “principal-agent” framework for understanding the relationship between the Global Fund (“principal”) and its counterpart in the recipient country called the Principal Recipient (“agent”). This framework comes from the fields of contract theory and mechanism design—which were recognized by the Swedish Nobel Prize committee in 2014 when they awarded the prize in economics to Jean Tirole, one of their most important contributors. (For a more technical presentation see here.) Importantly, the framework allows us to acknowledge that the Global Fund will always have less information than the Principal Recipient about the cost of service delivery—and especially about alternative ways personnel could be managed to reduce costs. Our report, therefore, proposes contract designs that will better align the Principal Recipient’s financial interests with its efficient expansion of health service delivery. In addition, forthcoming background papers by Liam Wren-Lewis and Han Ye suggest how specific examples of efficient contracts, drawn from the extensive literature and practice on industrial regulation and contracting, can be adapted to improve the efficiency of Global Fund expenditure. For instance, a particularly promising contract, the “Fixed Price/Cost Reimbursement” design, allows the Principal Recipient to choose the most advantageous option from a menu of contracts. This clever design could improve health service output per dollar of Global Fund financing.
We hope our new report will be useful not only to the Global Fund, but also to other donors in the global health arena. (PEPFAR, are you listening?) However, we caution that any other donor’s application of COD deserves the same detailed attention to their own institutional capabilities and constraints as the Global Fund received for this report. The last sentence of the Nobel Committee’s summary of Jean Tirole’s contributions warns that "desirable [mechanism designs] are different from market to market.” Similarly, we warn that desirable results-based contract designs differ from donor to donor—and, for any given donor, from recipient to recipient. Worst case scenario: failure from an inappropriate application of a COD approach could lead critics to reject incentives altogether, simply because a poorly designed project proved unworkable.
So please: say no to a cookie-cutter approach! And say yes to the careful, thoughtful, and tailored application of incentives as a strategy to improve the efficiency and effectiveness of global health investments.
The global commitment to universal health coverage—target 3.8 of the Global Goals for Sustainable Development—is as ambitious as it is energizing. Ensuring everyone, everywhere around the world has access to quality health care without being forced into poverty will require stronger health systems that generate better patient services and improve people’s health. And, to that end, investments in hospitals and their performance will be key.
UHC is about timely, appropriate and high quality services at an affordable price, yet hospitals are often overlooked by country governments and donors alike. This needs to change given the shift in disease burden—whereby cardiovascular disease, cancer and trauma, rather than infectious diseases, now dominate the burden of disease even in the poorest countries. Cancer and cardiovascular disease each claim more lives in Sub-Saharan Africa than AIDS, tuberculosis and malaria combined—although the latter remain the focus of funders. Health investment priorities must shift to meet the changing disease profile.
If we continue to give little attention to upgrading and integration of hospitals and their services, low- and middle-income countries will remain ill-equipped to meet their commitment to UHC. Sticking with the status quo leaves modernization and expansion of hospitals to the private sector, which typically skews investments to the upper and middle classes and often increases inequalities within and across countries. For example, the boom in private hospital construction in many middle income countries in East Asia compensates for the lack of public investment in hospital services. But these private hospitals are used by the wealthy who can afford their services, while the poor are relegated to seek care at public hospitals. The poorest citizens in low- and middle-income countries ultimately suffer the most.
Although bilateral and multilateral donors focus almost exclusively on primary health care to meet UHC goals, and philanthropic institutions like the Bill & Melinda Gates Foundation have followed suit, this strategy falls short of the needs and preferences of country governments and their citizens. And it undermines the quality of the evolving health care system.
First, countries are clearly concerned about the lack of hospital investments. This is most evident through the fact that countries are increasingly seeking support from the multilateral development banks and their private sector arms, such as the International Finance Corporation, to make new investments.
Middle income countries moving towards UHC, such as China, Brazil and Nigeria, already spend 70 percent of their health budgets on hospital care. Improving hospitals’ efficiency and quality, as well as integration with primary care, is critical to raising performance. It would also be cost effective to do so. Without hospitals, primary health care services, and investments made in hiring staff or new equipment, lack a point of reference and an effective referral network. If hospitals are dysfunctional, services at all levels suffer.
Second, the specialized expertise and support of hospital care remains central to the treatment of trauma, cancer, and other chronic diseases—which require new and more costly health care strategies. Although primary health care remains important, building integrated care networks that link hospitals to outpatient services can offer cost effective and critical services to people increasingly dependent on them.
As countries and donors seek to manage the rise of non-communicable and chronic diseases, prioritizing the building-up of health system capacity and improving health system performance can bring healthy returns. As I’ve written about before, this means renewing their efforts to upgrade health care systems, investing in secondary and tertiary facilities, and integrating care across inpatient and outpatient services. Furthermore, investments should be made to improve hospital leadership—an indispensable tenet of quality hospitals, management, and health care.
Without putting efforts towards hospitals, UHC goals risk becoming hollow exhortation rather than empowering targets. That’s why I’m helping host an event at CGD on December 7 to launch a new report, Better Hospitals, Better Health Systems, Better Health. I hope you’ll join us for a discussion on the critical issues around and importance of improving and reforming health systems and hospitals in low- and middle-income countries, where it’s needed most. (Register here)