Private Sector Participation in Development Cooperation – experiences and potential East Africa Healthcare Federation Conference 2012: „Partnerships: Harnessing opportunities and Innovation“

Julia Fimpel (Program Manager, KfW)Presenting on behalf of the Health Program ofGerman Development Cooperation, Kenya

May 2012

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1. The role of the private sector in the present GDC portfolio

● Germany‘s strategy on Public Private Partnership in Development Cooperation

Objectives:● Mobilizing private capital and know how to drive development● Increase efficiency in the delivery of public services● Complement government regulations by voluntary commitment by private companies● Enhancement of development programs by private contributions● Supporting small and medium enterprises in tapping a new market

„…a dynamic and innovative private sector is the ultimate engine for growth, creating new, productive jobs, generating tax revenues and thus making a major contribution to the funding of social security systems. An effective strategy for boosting the private sector can result in lasting increases in employment and income levels, also for the poor and disadvantaged. In a context of sound public policy and in close cooperation with the public sector, these can be used to boost a country‘s development prospects.“

Dirk Niebel, Minister for Economic Cooperation and Development, April 2012

shift purchasing power to consumers

address demand-side barriers aimed at stimulating demand for health services

To clients, introduce the concept of a pre-payment, which is unrelated to risk

Pay providers for outputs (e.g. no of deliveries), rather than inputs (like salaries and supplies)

To providers, introduce a competitive environment, where providers need to advertise their services and adopt a client oriented and quality conscious perspective

Guarantee payment to providers

Provide services without additional payment

Integrate private and public provision of health care

Develop systems for long-term health financing (e.g. claims processing, accreditation systems)

Example 1: Demand side financing systems in Kenya and Uganda …

Photo: Dirk Mueller

Choice!

Sustainability!

Complementarity!

Confidence!

Quality/service orientation!

Efficiency!

Solidarity!

Targeting

Successful targeting of poor and at risk populations. Uganda: fewer women reported lack of money as barrier to care after

program began.

Knowledge

Uganda: Knowledge of the program spread significantly in the population and more people were able to identify STI symptoms.

Impact of voucher programs

Utilisation

Uganda contracted clinics: 200% increase in STI visits; 15% increase of STI treatment among those with STI symptoms

Cost-effectiveness

Uganda: Safe motherhood programme is most likely cost-effective when comparing existing public services with the added voucher scheme:

Incremental cost-effectiveness ratio: < $ 200 per DALY averted More detailed cost-effectiveness analyses needed

Impact of voucher programs

Health impact

Uganda: marked reduction of syphilis prevalence in just one year from 7.3% (2006) to 2.9% (2007) in areas near to contracted facilities (<11 km) – a reduction of 57%!

Utilisation of STI treatment went up in the same timespan from 30% to 39%

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Example 2: Social Franchising Network „AMUA“

The AMUA-network● Franchisor and Franchisees pursuing a social

objective● By end of 2012 there will be 270 franchisees in

5 regions in Kenya

Results● Over 700.000 clients served and over 230.000

CYP generated between July 2010 and January 2012

● Cervical Cancer Screening introduced (effective and highly demanded)

● Effective linking HIV/AIDS and FP (over 30.000 PMTCT, over 100.000 VCT/PICT)

● Community health workers are essential for sensitizing and mobilizing target groups

● Cost-efficient approach (counselling, choice of FP method)

Public-Private-Cooperation● Use of national guidelines for medical

interventions ● Strengthening cooperation with DHMTs,

especially in reporting and contraceptive supplies

● Private providers receive FP commodities through public system

● Steering committee with the Ministry of Health

Example 3: Promising practiceViable Solutions for Health Care Waste Managment (HCWM)

HCWM Package

Target ClientsSmall and medium sized private clinics and hospitals for which formal HCWM set up is not cost-effective

Results till date Affordable HCWM services

NWH runs its waste mgt facility at margin with 10 regular customers

NEMA licensed transportation companies and NWH

Clarified mandate of regulatory bodies (NEMA, MoPHS and MoMS)

PartnersNWH (Nairobi Women’s Hospital)

GIZ (German Technical Cooperation)

Regulation

National Environmental Authority (NEMA)Rules, Inspection and Licensing

Transportation

Contracted Transportation Companies

Treatment of Waste

NWHagainst service fee/ kg waste

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Collection Transport Storage Treatment Disposal

GIZ: Facilitation, Training, MIS development

Regulation by NEMA, MoPHS, MoMs

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2. Mutual benefits of cooperation for donors/government and private stakeholders

Donor Agencies and Government

Private Sector

Advantages from cooperation

- More support in addressing the Health Care Challenge- Mobilising private ressources for health - Direct and cost-effective achievement of outputs (MDGs)- Outsourcing of services can yield efficiency gains- Innovative solutions - Well trained staff and expertise- Better access to information on private sector activities and quality monitoring

- Strategic partnerships, e.g. through Joint Ventures- Long-term business relationships- Market entry / extension of coverage- Risk mitigation through subsidies (e.g. Funds with first loss tranches, subsidies to cover the poorest etc.)- Reputational advantages- Dialogue with government

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3. Challenges in working with the Private Sector

● Sustainability aspects (knowledge transfer, funding…)

● Communication / government ownership / „Steering", i.e. continuous coordination/cooperation between public and private sector

● Different circumstances (e.g. costs of service provision)

● Own contribution (financial or in kind) by private sector

● Compatibility of objectives: market entry; profit, turnover, reputation, CSR…vs. coverage, quality, low-cost products for the poorest, risk sharing…

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4. Outlook: Innovative solutions by the private sector

● Outsource certain activities to TPA but insist on knowledge/systems transfern (BOT)

● Make use of existing well-developed private networks to reach out to more people, esp. In the informal sector

● Joint Ventures between public and private institutions to increase their efficiency and enable organisational learning

● Innovative and adapted solutions, to reduce cost and address the people at base of the pyramid

● Incentives to deliver quality and evidence

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Thank you for your attention.