THE BUSINESS OF HEALTH IN AFRICA

The Power of Two

Khama Rogo MD PhDLead Health Sector Specialist & Head,

Health in Africa Initiative, World Bank Group

2

Contents1. Private Sector Participation in the Health Sector

2. Constraints to Private Sector Participation

3. Addressing the constraints- HiA’s work in Africa

4. HiA’s Objectives, goals and work streams

5. Coverage in Africa

6. Concrete Results

7. Strengthening Health Systems

8. Opportunities in East Africa

9. Recommendations from the HP report

10. Catalyzing openness prudence and growth

3

The private sector plays a dominant role in health

~50

~50

Providers

Public

Private

100%

~65

~15

~10

~10

Private sectorproviders

For-profit

Socialenterprise

Nonprofit

Traditionalhealer

Public

Private

Health care expenditure by provider ownershipPercent*

$16.7B

When measured on a usage basis:• Private sector providers likely comprise larger share of market due to

under-reporting of non-profit and informal segments• Social enterprises, non-profit and informal segments comprise larger

share of private sector due to smaller user fees and under-reporting

~50

~5~5

Public

Financingagent

Otherprivate

Out-of-pocket

100%

Privateprepaid

~40

Health care expenditure by financing agentPercent

$16.7B

~50

~50

Providers

Public

Private

100%

~65

~15

~10

~10

Private sectorproviders

For-profit

Socialenterprise

Nonprofit

Traditionalhealer

Public

Private

Health care expenditure by provider ownershipPercent*

$16.7B

When measured on a usage basis:• Private sector providers likely comprise larger share of market due to

under-reporting of non-profit and informal segments• Social enterprises, non-profit and informal segments comprise larger

share of private sector due to smaller user fees and under-reporting

When measured on a usage basis:• Private sector providers likely comprise larger share of market due to

under-reporting of non-profit and informal segments• Social enterprises, non-profit and informal segments comprise larger

share of private sector due to smaller user fees and under-reporting

~50

~5~5

Public

Financingagent

Otherprivate

Out-of-pocket

100%

Privateprepaid

~40

Health care expenditure by financing agentPercent

$16.7B

The “Red Report” and Key Findings

4

Jan – Dec 2008Initial Preparation Phase

Jan 2009 OnwardsImplementationResearch & Analysis, Policy Advice, Debt & Equity Financing

Report dissemination, fundraising formation of joint IFC-World Bank Team based in Nairobi, Kenya and Washington DC

The Business of Health In Africa Report published and strategy presented to the Board

Dec 2007Scoping Study & Strategy Development

IFC and the Bill & Melinda Gates Foundation formulate partnership

Dec 2005 – August 2006Formulate Partnership

We are approximately three years into a five year program

Key Findings 60% of health care in SSA is financed by private sources 50% of health care in SSA is provided by private sector The private sector serves all segments of the population Government constraints means the private sector will

continue to play an important role in the medium term Investment demand is expected to be $25-30 billion over

the next ten years Most investments in the private sector will be in SMEs The role and potential of the private sector is not well

understood. It is ignored by governments and donors alike

IFC’s Strategy to the Board Use IFC’s core competencies; apply market principles Work with local businesses, financial intermediaries, and

policy makers plus the international community Comprises: i) Investment, including an equity vehicle;

increasing availability of long-term debt; and increased focus on life sciences; ii) advisory services to complement the Bank’s work with governments; iii) health worker education; and (iv) risk pooling

Aspiration of investingUS$1 billion over 5 years

5

Constraints to Private Sector Participation and HiA’s role in addressing the issues

Increase Access to Capital

Improve Regulatory Environment

Promote Risk Pooling Vehicles

Alleviate the human resources shortage

Limited access to capital, including both debt and equity, is a significant constraint to growth and a driver of sector fragmentation

The regulatory environment often impedes growth of the private healthcare sector in many SSA nations

Risk pooling vehicles are superior financing mechanisms to out-of-pocket payments and can help mobilize revenue for providers, supporting the growth of a formal, organized private sector

Though the private sector receives most of its revenue from the general population, the public sector, international donors, and employers are alternative sources of funds

Increase Revenue Flows from

Alternative Sources

Short supply of skilled health workers and healthcare managers has an adverse impact on the potential for healthy, sustained private sector growth

The investment strategy of the WBG’s Health in Africa Initiative addresses the need to increase capital for private sector entrepreneurs

The policy and analysis strategy of the WBG’s Health in Africa Initiative proposes advocacy and technical assistance mechanisms to address the other major challenges faced by the private sector in SSA

Engagement scores across SADC

6

Country P&D (10) Inf. Ex. (8) Reg. (13) Fin. (6) PPS (2)

Angola 6 4 5 3 2Botswana 7 6 6 3 2Congo, Dem. Rep. 2 2 5 1 1

Lesotho 4 3 6 2 2Madagascar 6 5 8 3 2Malawi 7 4 9 2 2

Mauritius 8 8 11 4 1Mozambique 4 3 7 0 1Namibia 6 5 11 3 2Seychelles 5 8 12 1 1South Africa 9 5 13 3 2Swaziland 3 4 7 2 2Tanzania 8 5 7 2 2Zambia 7 4 9 3 2Zimbabwe 6 4 10 1 2

HiA: Goals and Organization

7

US$1b mobilized

8 countries deeply engaged – 20 reforms

Advocate for the positive role of the private sector

C. Access to Debt/Equity

Financing

A. Research, Analysis, and Dissemination

B. Advisory Services to

governments

Mission

Goals

Catalyze sustained improvements in:

(a) access to quality health-related goods and services in Africa; and

(b) financial protection against the impoverishing effects of illness,

with an emphasis on the underserved.

Approach:Three Workstreams

Bank experts

Externalexperts

Researchpartners

Donors

Localgovern’t

Locals/holders

Funds

Banks

Otherinvestors

8

Overview of the HiA Initiative: Coverage (as at Nov 2012)

In-depth policy work + all investment activities

Policy work only

All investment activities

Investment through AHF/IFHA only

Key

Policy Workstream

9

• Support public and private sectors in engaging in dialogue

• Establish formal platforms for continued dialogue

• Simplify registration and licensing

• Improve quality standards and inspections of private providers

• More investment capital• Increase insurance coverage;

enhance quality through accreditation

• Facilitate contracting between public and private sectors

Public-Private Dialogue

Policy & Regul. Reform Insurance & Investment

• Increased in Private investment • Private sector savings/pass on to consumers• % firms compliant with patient safety standards• # of people with access to new/improved health services• # of people effectively covered by health insurance

Expected Impact

Policy Work – In-depth country work

10

Ghana Country assessment and

engagement completed New PHS policy adopted 3 PPP transactions signed 3 new laws passed AHME project

Kenya Country assessment and

engagement completed New Health Bill passed NHIF audit/New NHIF Bill

in Parliament Joint inspection

tools/Revision of regulatory laws

AHME project

Uganda Country assessment

completed (with USAID) New PPH policy passed Regulatory bodies and Acts

reforms underway PPP transactions on course Financial instrument for

health SMEs by USAID

Congo (Brazzaville) Country assessment

and engagement completed

3 Presidential decrees Parliamentary

endorsement

Burkina Faso Country assessment and

engagement completed Reform agenda: review of

all legal and regulatory texts; enforcement of regulations; PPPs in reproductive health, public health programs and training.

Mali Country assessment and

engagement completed Reform agenda: PPD

Committee/PS Alliance; Management of PHC; API -adapting generic private sector investment facilities to health; licensing

Nigeria NHIS reform/health

financing reform project on course

Regulatory and PPP priorities identified

AHME project

South Sudan Six new health

laws prioritized 3 PPP projects

under consideration

HR training by private institutions started

3 new private hospitals targeted

Results: Analytical Work

11

Title: “The Business of Health in Africa: Partnering with the Private Sector to Improve People’s Lives”

Purpose: To demonstrate the importance of the private sector in delivering healthcare to Africans

Target audience: The international donor and NGO community, African governments, the private sector both in Africa and outside, and other stakeholders

Publication date: December, 2007 Title: “Healthy Partnerships: How Governments Can Engage the Private Sector to Improve

Health in Africa” Purpose: To demonstrate to governments the ways in which the private sector can be engaged

in health and to show how they are performing in doing this compared to their peers Target audience: Primarily national governments in Africa Publication date: June, 2011

Title: “Private Health Sector Assessments” (country specific reports) Purpose: To document the role that the private sector is playing in particular

countries and a reform agenda. These reports were developed within a framework of engagement with policy makers, the private sector, donors and other stakeholders

Publication dates: Various, beginning with Kenya in 2010

Title: Health Policy Toolkit, an online website Purpose: To provide health policy practitioners access to information about policies

and practices that can enhance the contribution of the private sector to health goals

Target audience: Primarily, policy makers in Africa Publication date: June , 2011

IFC Direct Investment (total $107.4m)• Hygiea (Nigeria/$2.2m) - Hospital & HMO• Life Healthcare(South Africa/100.0m) - Hospital• Nakasero Hospital (Uganda/$3.0m) - Hospital• IMG (Uganda/$2.2m) - Hospital & HMOFund Investments - Investment Fund for Health in Africa (IFHA) – (total Eur 13.6m)• Hygeia (Nigeria/Eur 2.0m) – Hospital and HMO• Pyramid Pharma (Tanzania/Eur 1.4m)- Pharmaceutical distributor• Strategis Insurance (Tanzania/Eur 0.6m) - Health insurer• Hello Doctor (South Africa/Eur 0.6m) – Telemedicine provider• AAR (East Africa/Eur 7.0m) – HMO• Sourcelink (Eur 2.0m) - Singaporean diversified medical holdings company seeking to expand its operations in the

manufacture of medical disposables (gloves, masks etc.) into AfricaFund investments - Equity Vehicle for Health in Africa (EVHA) – (total $15.52)• Nairobi Women’s Hospital (Kenya/$2.67m) – Hospital• C&J Medicare (Ghana/$1.0m) – Hospital/Specialist clinic• Revital (Kenya/$2.75m) – An early stage manufacturing company (Conventional Single use syringes and Auto-Disable

syringes)• Avenue Group (Kenya/$2.5m)–Hospital & Managed Healthcare plan provider • Biasa Clinic (Togo/ $1.6m)– Clinic (inpatients & outpatients)• Bridge (Nigeria/$5.0) - specialized fertility treatment and medical laboratory servicesPipeline• IFHA’s active pipeline consists of transactions totaling Eur 22.0m• EVHA’s active pipeline consists of 37 transactions totaling $138.5m

Result: Investment

12

Our Private Sector work in Africa contributes to the strengthening of countries’ health system – some examples:

Health Systems Pillars

Governance Human Resources

Pharmaceuticals

Service Provision Information Systems

Health Financing

• 6 countries:

• PPD platform – strengthening PP Units in MOH; Private Sector Federations

• Mainstreaming PS activities in national health strategies

• Uganda, Ghana, Kenya:

• Analysis – Role of private sector in training of health workers

• Regulation and accreditation of nursing schools

• South Sudan:

• PPP for managing the pharmaceutical supply chain

• Ghana, Kenya, B Faso, Uganda:

• Establishment of service standards and quality based inspections regimens

• Access to credit to private entities for expansion of quality services to underserved populations (eg: Nairobi Women’s Hospital -$2.5m)

• All countries:

• e-Registration and digitalization of data by health regulatory bodies

• Nigeria, Ghana, Kenya:

• Social health insurance – effiecient national health insurance agencies/ universal coverage

• PPP transactions – policy/transaction pipelines

• Access to credit/Equity financing

Opportunities in East Africa

OPENNESS Expanding the definition: Non state actors Dispelling the myths Supporting effective public private dialogue Policy and regulatory reforms Consumer voices

PRUDENCE Public private partnership transactions Health financing/Health insurance Access to credit Information – HMIS – use of ICT

GROWTH Access to basic and tertiary care (reduce external referrals/invest locally!) Use of new technologies HRH training Production of quality pharmaceuticals/goods Employment creation

15

Recommendations

Government

• Government must lead• Quick wins

Establish effective dialogue

Know who is doing what• Start now

Review policies and practices

Focus on implementation

Expand insurance Support quality

enhancements

Private Health Sector

• Organize; then, seek dialogue

• Encourage members to Formalize Join provider

networks Build capacity in

clinical practice and in business management

16

• Support engagement and take active role

• Include private sector in country support programs

• Align programs with priorities coming out of national dialogue

Donors, Third Parties

• 17

• PE Fund investments - Equity Vehicle for Health in Africa (EVHA) – (total $18.5)• PE Fund investments - Equity Vehicle for Health in Africa (EVHA) – (total $18.5)

• Investment

• Policy

• Advisory

• Analysis

• Brief History • HiA Goals

• IFC Direct Investment - (total $104.4m)

• HiA Highlights

• Launched by the World Bank Group in 2009 with support from the Bill and Melinda Gates Foundation to address the policy and market failures that constrained achievement of the full private sector potential to address Africa's health care needs.

• HIA is supporting the governments of Kenya, Ghana, Burkina Faso, Uganda, Nigeria, South Sudan and the Republic of Congo

Improve the regulatory environment for the private sector

Implement reforms leading to expanding coverage of risk pooling mechanisms

Unlock private investments in health through PPPs and innovative financing mechanisms.

Shifting the debate in Africa and the donor community and brought much-needed attention to the role and potential of the private sector,

Mobilized around $350m through two equity investment funds, four IFC direct investments, two output-based aid project, and various donor-supported trust funds;

Published six private health sector country assessments, one major pan-African benchmarking report ("Healthy Partnerships") and developed a web based toolkit for PP sector engagement;

Established PPP platforms to support sustainable dialogue, including PPP units in ministries of health and private health sector federations in six African countries

Initiated multiple priority reforms in policy, regulatory and health financing in eight countries (Burkina Faso, Ghana, Kenya, Mali, Nigeria, Uganda, South Sudan, and the Republic of Congo).

• IFC

• Investment

• Portfolio

• IFC

• Investment

• Portfolio

• Catalyze sustained improvements in:

• Access to quality health-related goods and services in Africa; and

• financial protection against the impoverishing effects of illness, with an emphasis on the underserved.

• HiA Mission

Catalyzing Openness Prudence and Growth: Health in Africa Initiative

• IFC Direct Investment - (total $104.4m)

• PE Fund Investments - Investment Fund for Health in Africa (IFHA) - (total Eur 13.6m)

THANK YOU

18