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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.
Amanda Glassman, Center for Global Development
Maria Kirova, The Global Fund to Fight AIDS, Tuberculosis, and Malaria
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
Our recent report on next generation financing models looks at how global health donors, specifically the Global Fund to Fight AIDS, Tuberculosis and Malaria, can enhance the health impact of grants by tying grant payments to achieved and verified results. Yet there are several ways to condition payments on performance, and some ways would likely work better than others. Can economic theory suggest specific features of contract designs which would generate more health for the money?
This paper uses contract theory to suggest simple contract designs that could be used by the Global Fund. Using a basic model of procurement, we lay out five alternative options and consider when each is likely to be most appropriate. We ultimately provide a synthesis to guide policy makers as to when and how 'results-based' incentive contracts can be used in practice.
Controlling healthcare costs while promoting maximum health impact in the recipient countries is one the biggest challenges for global health donors. This paper views global health donors as the regulators of monopolistic service providers, and explores potential optimal fund payment systems under asymmetric information. It provides a summary and assessment of optimal price regulation designs for monopolistic service providers.
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.
Those who follow CGD will be familiar with our branded meme: “Cash on Delivery” aid, or COD. 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?
Founded in 2002, the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund) is one of the world’s largest multilateral health funders, disbursing $3–$4 billion a year across 100-plus countries. Many of these countries rely on Global Fund monies to finance their respective disease responses—and for their citizens, the efficient and effective use of Global Fund monies can be the difference between life and death.
Last September, we released a report on how the Global Fund could get more health for its money. In it, we offered concrete suggestions for improvements in several different value-for-money domains, all with an eye toward maximizing the health impact of every dollar spent.