Innovative healthcare financing

Large portions of the more than 4 billion people living in Asia lack adequate access to healthcare services. The lack of accessible, affordable and adequate healthcare services has led to poor health outcomes in many Asian markets. Social Enterprises (SEs) are tackling these problems by matching health service demand with new and innovative ways of organizing delivery and financing care.

A health system consists of three basic functions that collectively form a healthcare value chain: organizing delivery, financing access, and changing behaviors. Public and private health services overlap and complement each other in all the functional areas of a health system.
 
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Shujog’s forthcoming research paper on healthcare SEs analyzes the operational models of approximately 280 health service SEs in Asia and makes recommendations for innovative financing structures to scale SEs and extend access to healthcare services for the underserved. SEs innovate across three key areas to improve access to healthcare services.
 
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The majority of healthcare SEs examined focus on organizing delivery. Delivery of primary care is the most prominent, accounting for 33% of all SEs observed, followed by maternal and child health SEs (22%). Changing behaviors, in particular related to community clinics focusing on family planning and reproductive health, are the third most common focus of Asian healthcare SEs (17%).

The strong focus on these three areas both indicates which healthcare services are in higher demand and tells us something about which healthcare programs are relatively easier to scale as an SE. Primary care, maternal health, and family planning require less capital for technical facilities, and catering to larger underserved population than, for example, in-patient treatment facilities and vaccination programs.
Healthcare SEs employ a range of funding options, from pure donation and philanthropy-based funding models to fully financially sustainable models that do not solicit donations to fund their operations. There are also blended and hybrid funding models that leverage both donations and earned revenues. The difference in healthcare SEs’ business model and position in the value chain determine which funing mechanism is best suited for the individual SE.

SEs that focus on organizing delivery are often funded by private, local donors, with out-of-pocket payments by the consumer constituting the second largest source of funding. This indicates that many countries in Asia still do not have universal healthcare coverage, and that most clients do not have access to private or social health insurance.

SEs focused on changing behavior are either donor-funded, form part of a broader development initiative supported by international development institutions, or employ a blended funding model where the operations to change behaviors are cross-subsidized by a parent organization that organizes healthcare delivery.

SEs focused on financing access also exhibit a range of funding options, with a prevalence of hybrid and market-based funding models. This section of the value chain has the highest proportion of financially sustainable models.

New funding mechanisms are emerging in the spectrum of healthcare financing options from donor-based funding, through blended and hybrid capital, to capital markets-based models. Increased levels of innovation on the financing side will enable SEs to extend a broader set of healthcare services to the underserved. The five most promising funding models are crowdfunding, social impact bonds, innovative loan facilities, project development partnerships, and impact-focused public debt and equity.

Shujog’s forthcoming healthcare research paper examines in detail the prospect of each of these five funding mechanisms. The findings of Shujog’s research will be presented at a roundtable discussion in [Singapore/Bangkok] on November XX.

To find out more about the research and attend the launch event and roundtable discussion, please contact Magnus Young at myoung@shujog.org