Development-Driven Public-Private Partnerships in Health

Transcription

1 Development-Driven Public-Private Partnerships in Health Emerging Priorities from Roundtable Discussions World Economic Forum Financing for Development Initiative in cooperation with

2 World Economic Forum route de la Capite CH-1223 Cologny/Geneva Switzerland Telephone: +41 (0) Fax: +41 (0) World Economic Forum All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording, or by any information storage and retrieval system.

3 Background The UN-sponsored Financing for Development conference in Monterrey in 2002 concluded that greater coherence between public and private actors will be required to achieve internationallyagreed development goals and to overcome the inadequacies of development finance. As a followup to this conference, the World Economic Forum s Global Institute for Partnership and Governance and the UN Department of Economic and Social Affairs have undertaken the first in a set of practitionerdriven, multistakeholder roundtables to determine where some of the greatest opportunities lie for harnessing public-private partnerships (PPPs) to advance development objectives. These gatherings are examining the question of what works and what does not in the planning and implementation of development-driven PPPs. Work has focused on three sectors: health, education and water. On 3 and 4 December 2004, the first health Roundtable on PPPs was held in New Delhi, India, on How to make PPPs more effective: The example of HIV/AIDS, TB and their interface. This document describes the context and summarizes key discussion topics from this first Roundtable. Priority issues identified by participants were sustainable financing, how to develop strong governance structures, and the role of government and intergovernmental organizations at the country level. All three areas will be discussed further at a second Roundtable, planned for May The Roundtable discussions, and supporting commissioned research, will be distilled into recommendations for the public and private sectors on engaging in effective PPPs in the health sector. The project results will be presented at the UN Financing for Development High Level Dialogue in June 2005, the High-level Plenary Meeting of the sixtieth session of the General Assembly in September 2005, and the World Economic Forum s Annual Meeting in January Key Success Factors and Obstacles in the Partnering Process Forty-one practitioners and experts from philanthropic foundations, ministries of health, NGOs, global health partnerships, multilateral and bilateral development assistance agencies, and a range of private sector companies participated in the initial discussion on how to improve health PPPs. PPPs are not a new concept, but there remains today no one single agreed-upon definition. On the contrary, various existing definitions add to confusion rather than clarify it. During the first Roundtable alone, a number of different models of PPPs were identified; examples included mixed policy frameworks, pharmaceutical industry-led partnerships as well as very specific disease eradication-focused partnerships at a global, national or even district level. Most of the models reviewed had innovative components particularly notable was the widespread range of roles the private sector was seen to undertake, with some of the best examples being where the private sector was implementing disease eradication initiatives at the local level. Consensus emerged on the fact that as a tool for development, PPPs today exist because other models of collaboration or individual actions have failed, and because in many cases PPPs are working better than traditional approaches. True partnership is really about combining different skills, expertise and resources to achieve a common goal that is unattainable by 2

4 independent action within a framework of defined responsibilities, transparency and accountability. In an ideal world, these partnerships aim to maximize health benefits for the poor and minimize potential risks for the partners involved. That being said, the challenges to successful implementation and scale up are still significant. Participants in the New Delhi Roundtable were asked to draw from their experience in identifying key obstacles and success factors in the areas of planning, development and implementation of PPPs, based on a menu of 63 generalized variables. Their responses are presented in Figures 1 and 2. Figure 1 PPP Planning and Development Figure 2 PPP Implementation 3

5 Summarizing both the charts and the Roundtable discussion, successful partnerships are facing a number of key challenges: the establishment of adequate trust among partners, for which the key factors are strong negotiation skills, a transparent operating environment, time and effective systems; the lack of political will and public support for the PPP concept; the need for a well-connected champion in a partnership, and the challenge of ensuring continuity if that champion leaves the partnership (e.g., through job changes). It is the commitment and passion of such individuals, rather than the institution itself, that has often made PPPs successful. During the implementation phase of a health PPP arrangement, access and eligibility to sustainable funding are considered a prime obstacle. Key requirements include: availability of funding for scaling up successful health partnerships; improved financial forward planning for service delivery of global health PPPs; new funding structures that allow for funding of public and private sector partners; and effective management of high transaction costs, and development of governance structures that can sustain the collaboration process over time. In addition to governance and funding, the following topics emerged and will be addressed in more detail below: the collaboration of government and business in health PPPs, and more specifically the role of workplace programmes for disease control; the role of intergovernmental organizations in health partnerships at the global and national levels; the potential for PPPs focused on single diseases to leverage increased capacity across healthcare systems. PPP examples discussed at the Roundtable included: the International Trachoma Initiative, including its achievements and lessons learned, particularly in reaching out to women; Reliance Industries role in the Indian Business Alliance to Stop TB, particularly focusing on their experience in aligning different perspectives to achieving an overarching public health goal; Exxon Mobil s involvement and lessons learned from providing malaria bednets in Africa, discussing the need of a common partnership goal versus individual partners motivations; Riders for Health and their efforts to provide transport resource management to deliver healthcare to isolated communities in various African states; Sesame Street and its efforts to bring health education to children in India and South Africa; the Global Polio Eradication Initiative and its recommendations for financial forward planning in health PPPs. In conclusion, participants felt that new PPPs are constantly emerging where previous systems have failed. PPPs were seen as an effective way to overcome barriers and obstacles encountered by more traditional systems yet the challenges of scaling them up are significant. Participants felt the time has come for traditional actors to accept and help advance and develop PPPs as a new and effective way of doing business. Setting the Scene for PPPs in Health 1. Effective governance within health PPPs Effective governance within a public-private partnership arrangement is a complex subject. The public sector and intergovernmental organizations still have preconceived notions about the motives of the different actors, especially the private sector. This keeps transaction costs in PPPs high and makes the planning of strong governance arrangements even more important. Effective partnership governance is problematic not least because of ambiguity in the concepts of good governance: accountability, transparency, legitimacy, disclosure, participation, decisionmaking, grievance management and performance reporting. The multiple parties involved in health PPPs, and their sometimes 4

6 contrasting motives, present new kinds of challenges. For example, when negotiating the most efficient allocation of risk in investing funds, the public sector is generally more risk averse than the private sector. It is important to note that while methods for tracking and evaluating PPP negotiations, governance and performance do exist, they are rarely applied internally. Many practitioners are not aware of the necessary tools, and effective training is not readily available to them. Participants in the New Delhi Roundtable emphasized the factors for success in PPP governance. These include: 1 shifting from satisfying shareholders to satisfying stakeholders, by ensuring equal opportunities for participation and contribution by all partners; selecting partners carefully involvement should be based on the needs of the partnership, and roles should be defined according to comparative advantages; setting up good governance and accountability structures many partnerships fail due to a lack of programme accountability, weakly defined roles and an absence of advisory committees; ensuring strong representation of affected sectors involving the domestic health sector increases programme relevance, ownership and effectiveness, but is challenging for the private sector and vice versa; establishing clear management processes new management systems for PPP governance and performance, for example the augmentation of existing management systems used in businessto-business strategic alliances and the introduction of budget lines in public and philanthropic health funds to strengthen participants capacity to collaborate. Box 1 In 2003, total US philanthropic grants (companies and individuals) for international health causes were US$ 0.8 billion. 2 An estimate of total G-8 philanthropic grants to international health causes is US$ 3 billion (+/- US$ 1 billion), of which US$ 0.6 billion was contributed by the Bill & Melinda Gates Foundation. The Bill & Melinda Gates Foundation has assets of US$ 25 billion, and an (inverse) investment income to grants ratio of 8:3. 2. Access to the sustainable funding of health PPPs Financing for PPPs is not currently well linked to the prime concerns of the international community or seen as a core component when developing public health strategies. Yet the results of many PPPs reviewed would suggest this could be advantageous. In the interim, availability, access and eligibility to long-term funding for all stakeholders involved are key obstacles that prevent partnerships from happening or from being scaled up successfully. All participants concurred that healthcare PPPs reveal major gaps in both direct and complementary investments, as well as gaps in global public policy such as developed-country policies in trade, aid finance and intellectual property rights. How can funding barriers to health PPPs be overcome? Some ideas volunteered by participants and to be explored further in the second roundtable include: identifying underfunded long-term global publicgoods programmes that benefit the poor, such as global health research, and improving procedures to create a more informed approach to funding venture capital programmes; diversifying sponsors directly related to this issue is the importance of one single sponsor in health partnerships: the Bill & Melinda Gates Foundation (see Box 1) and the success of its donation and lending activities. Diversification in sponsors and sources of funding needs to be encouraged; 1 LeLe U. (2004) Effectiveness of Global Health Partnerships in Development: Findings and Lessons from a World Bank Evaluation, prepared for the Roundtable in New Delhi and Addressing the Challenges of Globalization An Independent Evaluation of the World Bank s Approach to Global Programs. OED. The World Bank. 2 Bril, B. (2004) A World of Philanthropic Opportunity: A Global Perspective on Giving. Chicago. Strategic Philanthropy Limited. 5

7 developing stronger and more flexible funding models the key is to enact and staff strong governance structures and not just to implement totally different programmes for different project stages and requirements. New strong and flexible funding models that are adapted to individual partnership needs and goals, e.g., seed or bridge funding, short-term versus long-term lending, etc., need to be developed. Representatives from the Global Polio Eradication Initiative (GPEI) highlighted what can be learned from their initiative for securing funding through structured and targeted proposals and thus manage the financial forward planning process of a health partnership adequately. The initiative is facing significant funding challenges, with an estimated US$ 275 million needed in The GPEI brings together the World Health Organization, Rotary International, the US Centers for Disease Control and Prevention and UNICEF. Since 1988, through the initiative, two billion children around the world have been immunized against polio, involving an international investment of US$ 3 billion. Only seven reservoir countries remain endemic. The risk is growing that previous investments in the initiative will be undermined, with the disease gradually imported into countries that are now polio-free. Some options for financial forward planning of global health PPPs are given in Box 2. Box 2 Options for Financial Forward Planning of Global Health PPPs link funding packages to results-based performance milestones, possibly divided into impact, outputs and outcomes; ensure that milestones are conservative and not oversold to increase funding prospects, e.g., marketing for polio eradication funds was built in part on the promise of stopping polio transmission by end-2005 ; coordinate funding from different sources and explore innovative funding mechanisms, e.g., IDA buy-downs, bond-based finance linked to future aid commitments, or underwriting contingency funds to cover the unpredictability of the last mile ; ensure upfront communication of realistic expenditure predictions, taking full account of the exponential increase in costs as programmes progress towards the most inaccessible cases; consider inverting the normal pattern of programme implementation, i.e., starting with the most inaccessible and highest latent risk cases first, then moving on to those areas where cost-benefit ratio per person is lower, and the risks of resurgence is low; ensure a balance between (i) the volume of funds decentralized to countries and municipalities and (ii) the volume of global funds; establish independent programmes of evaluation and feedback. 6

8 3. Optimizing the collaboration of government and business in disease eradication PPPs Policy is simple nondiscrimination, 100% awareness and education. Healthcare provision: A new role for all business sector employers? One of the most important trends in international development has been a growing awareness of the crucial role that a productive, competitive, welldiversified and responsible private sector plays in society, and more specifically in controlling the spread of diseases like HIV/AIDS, TB, malaria, polio, etc. Companies have new rights and opportunities, but are also facing new pressures and risks, many of which they cannot or should not face alone. Optimizing the collaboration between government and business and the role of each respective partner to improve primary healthcare was one of the main discussion points of the Roundtable. At the same time, the private sector appears to be underestimating the current and potential impact that certain diseases can have on their operations. We already know that the private sector can do everything that the government can do, but it can do it better. We appeal to the corporate sector to help us. It controls the organized workforce, the 7%. The government has to deal with the unorganized workforce, the 93%, so the government has its own responsibilities. Too few companies are responding proactively to the social and business threats of HIV/AIDS, according to a recent survey undertaken for the World Economic Forum s Global Health Initiative. Despite the fact that 14,000 people contract HIV/AIDS every day, most companies (71%) have no policies in place to address the disease. Over 65% of the business leaders surveyed could not say or estimate the prevalence of HIV/AIDS within their own workforce. 3 Participants reaffirmed that the need to address these issues does not change the core role and responsibility of business, which is to create wealth through products and services in a responsible manner. In addition to the way in which they conduct their core business activities, most companies can contribute to health and development goals through strategic philanthropy, and through engagement in public policy dialogue, advocacy and institution-building. 4 Private sector participants emphasized that they could provide numerous complementary means to fund health programmes through inkind resources such as people, services and products, project management expertise and knowledge of local markets and customers. Well planned workplace programmes can raise awareness, provide training and medical diagnosis, and provide drugs for treatment to employees and their families. Large employers located in rural and remote areas are ideally placed to develop employee-specific health facilities. However, workplace programmes alone cannot stop the spread of disease. By partnering with government, the services of workplace clinics can be extended to the adjacent rural community. Extending well-managed programmes into the community, providing infrastructure and access, and effective advocacy are equally important. Both classic business models or business How very simple and easy it is to spread the word and not the disease within your employees. alliances can be effective with elements of success including operating with a resource constraint mindset, standardizing for scale, measuring for impact and segmenting the market correctly. The private sector can extend public health services by using their infrastructure and supply networks, as has been successfully demonstrated by the Global Health Initiative of the World Economic Forum and the Indian Business Alliance to Stop TB. More details on the Alliance 3 Global Business Survey Business and HIV/AIDS: Commitment and Action? 2005 World Economic Forum Global Health Initiative. 4 Partnering for Success. Business Perspectives on Multistakeholder Partnerships World Economic Forum Global Corporate Citizenship Initiative/IBLF/CBG. 7

9 can be found in Box 3. General principles discussed emphasized that the best way of involving the private sector in a PPP is by closely aligning involvement to a company s core business expertise, e.g., Fed Ex helping with emergency supply and shipments. Living with HIV/AIDS is part of our values. We want to be an innovative, creative company that inspires trust. We cannot be that if we cannot look after our own employees. While Roundtable participants agreed that the private sector is a crucial partner for disease control, the time has come for the global public sector community to proactively and fully engage with them. Collaboration between the public health sector and the public and private sectors has the potential to drive breakthrough changes in the global efforts to control disease. There is no one model for action and guaranteed success when developing health PPPs. However there is broad consensus that successful development requires strong and effective governments and public institutions, which harness the competencies and contributions of all sectors, including the resources, productivity and innovation of the private sector. No one group has all the solutions to the many complex problems we are facing today. In this context, many questions were raised: What are the policies and services already in place that enable employers to make positive contributions to diseases control? Have these policies been successful? How can they be improved and scaled up? Why is there so little effort to combat co-infectious diseases (such as the interface between HIV/AIDS, TB and malaria)? How should partnerships between the public and private sectors be structured for best results? Box 3 Building the Indian Business Alliance to Stop TB The Indian Business Alliance to Stop TB was developed by the World Economic Forum s Global Health Initiative (GHI), a first for India and worldwide. As part of the process, the GHI interviewed many potential Alliance member companies; while doing so it became clear that some Indian employers were already running successful health and welfare programmes for their workers families and communities or had the resources to do this, but were not including TB. Focusing on the companies that had resources and commitment to move quickly, the Alliance was formed. Eight companies were chosen: Aditya Birla, Larsen Toubro, Lupin, Modicare Foundation, Novartis India, Reliance Industries, Tata Steel and Triveni Sugar. The companies agreed to join forces with the GHI, the Revised National TB Control Programme (RNTCP), the Confederation of Indian Industry, the World Health Organization and the Global Partnership to Stop TB. To ensure the model was sustainable, the Alliance is coordinated by the GHI and feeds directly into the Indian Ministry of Health s National TB Programme. In total, Alliance companies cover a population of 4.4 million and have publicly committed to controlling TB in India. The Alliance uses public and private resources to raise TB awareness, increase case detection and meet treatment rate targets. Specifically, the Alliance works in collaboration with the Indian RNTCP on three core workstreams: raising national public awareness of TB and its symptoms; implementing the management of TB (awareness, prevention and treatment programmes) in the workplace; and broadening business sector engagement in TB. 8

10 4. An effective role for intergovernmental organizations in health partnerships Intergovernmental organizations such as the agencies and programmes of the United Nations system, multilateral development banks and bilateral development assistance agencies play many different roles in respect to PPPs. Typically they cover three roles: Promoters of public-private partnering, encouraging the use of this modality in an ever larger number of their country-level activities. Part of the strength of international organizations is that they evoke trust in member country governments, enabling collaboration between public and private sectors. The role of the international organizations in this situation can include acting as initial convener, providing funding (i.e., a subsidy that allows the business partners in the partnership to cross their investment hurdle, an incentive that is usually needed especially where the issue at stake is propoor research and development), third-party facilitation and mediation, and making sure that the PPP actually delivers the desired public good (i.e., a product that is in the public domain or is affordable for the intended beneficiaries). Facilitators of actions and knowledge among PPPs that have a complementary role to nationallevel development initiatives. For example, pharmaceutical and medical knowledge is what economists call a nonrival good: one person s consumption of the good does not diminish the availability of the good for other persons. So it is efficient and makes good sense for developing countries and their aid partners to join forces, across country borders, to promote pharmaceutical and medical R&D jointly sharing the costs and enjoying the desired good for a fraction of the price they would have had to pay had they tried to go it alone. Examples of such joint global PPPs are the Medicines for Malaria Venture (MMV) or the International AIDS Vaccine Initiative (IAVI). Funders, hosts and suppliers everything from funding activities or studies on local partnerships to housing global partnerships and procuring drugs for partnerships on the ground. In summary, the role of public sector agencies is to ensure that global PPPs meet a double bottom line: an adequate reward for sponsors and affordable health products for the poor. Finally, some barriers to effective intergovernmental organization participation are as follows: Seen from the country office, national PPP perspective: inflexible procedures and difficulty in accommodating the objectives of others; skewed incentive structures for PPPs, e.g., transaction advisers funded for the public sector but not the private sector; poor communication between country offices and headquarters, leading to the priorities of headquarters overriding country priorities; poor appreciation of the need for private companies to have a strong commercial business case for engaging in anything other than philanthropic PPPs, and their period of participation in a PPP determined in part by annual budget cycles and politics; and an absence of forums or funded formal grievance mechanisms where partners can meet each other, develop common strategies or resolve issues. Seen from the perspective of the headquarters: lack of uniformity of procedures, making crosscountry comparisons and oversight difficult (often requested by funders); lack of coordination and unity on country-level efforts, without which the control of communicable disease may remain an elusive goal; duplication of learning and gathering experience. 9

11 5. Linking single issue health PPPs to improvements in the wider healthcare system In considering ways that PPPs influence health systems, it is important to distinguish between two different approaches: linkage of complementary PPPs, to promote systematic change including those operating at global and national levels. Not addressing coinfectious diseases is like clapping with one hand. Typically, there is a greater need for coordination between what is done internationally and what happens on the ground; top-down interventions aimed at single diseases of critical global importance. Many participants and experts in the field report that this approach misses opportunities to address the interface between multiple diseases. This could be reduced or avoided by the bottom-up programming approach used by the Global Fund to Fight AIDS, Tuberculosis and Malaria, and others. Assistance requests are formulated nationally, approved by the Fund internationally, and implemented nationally. In PPPs in health we need to move away from who should be responsible, to who has the comparative advantage to deliver. Clearly, diseases such as HIV/AIDS, TB and malaria need a coordinated and cooperative response at the global scale. In such cases the international community opts for top-down interventions. Nevertheless, there is also justified concern that the Millennium Development Goals for health are leading to excessive concentration of resources on single diseases and issues, namely: infant mortality, maternal mortality, HIV/AIDS, TB and malaria. The concern is that this may be occurring at the expense of more systemic approaches, such as addressing interactions between diseases or addressing system-wide issues (e.g., policy, skills availability, infrastructure or institutional capacity). However, the two basic approaches the single disease approach versus systemic change both address important needs, and can and should be made compatible. One interesting example is a PPP arrangement formed by the Bill & Melinda Gates Foundation, health workers in the government of the state of Andhra Pradesh, and PATH, an international NGO. The partnership offers the Hepatitis B vaccine to the general public. The programme focuses on overcoming the weak links in the public health system of Hepatitis B vaccine delivery, for example in vaccine refrigeration, supervision at rural clinics, disposal of syringes, side-effect investigation and local vaccine production. In the project area, the effect has been to strengthen the whole approach of the state Health Department to vaccine and drug distribution and delivery, as well as bring benefits for other single issue health programmes such as those for HIV/AIDS prevention, diagnosis and care. The state Health Department has been persuaded by the evidence to sustain and expand the immunization programme with US$ 60 million. Ultimately the public health sector assumed responsibility for continuing delivery, and having fulfilled a successful catalytic role the PPP was dissolved. What more can be done globally to exploit the presence of single disease PPP projects to foster reform in the wider healthcare system? Should other private philanthropic foundations the Wellcome Trust, the Rockefeller Foundation, etc. also adopt the strategy outlined above? Should some of the global health initiatives such as the Global Alliance for Vaccines and Immunization (GAVI), the Global TB Drug Facility, and the Rollback Malaria Programme do likewise? Linking single issue programmes to health system reform relies on public health authorities taking on the recurrent expenditure burden of any system change. Yet this may require resources beyond those immediately available from government. Finally, the strategy needs to be developed further to ensure that other single issue health projects are able to 10

12 exploit the system changes brought about by the original initiative. Obvious candidates here are other vaccination programmes, for example those addressing mumps, measles, influenza, tetanus, diphtheria, typhoid and meningitis. Continuing the Discussion The first Roundtable raised many issues and questions about how to effectively develop, fund, manage and govern PPPs in health, but also confirmed that they can improve progress towards public health goals in the developing world. PPPs demonstrate that where markets fail, state intervention is not the only available policy alternative and vice versa. In both cases, the answer can also If it happens in Africa, there is no good reason why it cannot happen in India. Let s be guided by other people s experience. involve a partnership between public and private actors. At a minimum, the World Economic Forum/UN Roundtables suggest a need for improved dialogue among parties on policy options and regulatory reforms. There is also significant interest in greater multistakeholder collaboration in detailed project design, infrastructure development, service delivery, institutional strengthening and performance oversight. Encouraging activities are happening at the workplace level, with the private sector taking the lead, but efforts need to be enhanced to strengthen and scale up these efforts and to include the public sector in a structured way. Specific activities at this level should include: more advocacy, better measurement systems, greater shared responsibility at the global level, appropriate long-term funding and dedicated human resources in ministries of health from the private and public sectors. Many questions still remain: The next Roundtable in health PPPs on 25 and 26 May 2005 in Geneva will attempt to address some of these, including: What new PPP models can be created? What kind of financing model is most likely to unlock the necessary private sector participation? How could those convening global health PPPs better structure their funding? How can donor funds be channelled effectively? What checks and balances and accountability system are needed? Can there be an economic justification for industrialized countries ministries of health reallocating resources to global public goods in health? What changes to legislation and policy will be needed to realize this reallocation of public expenditures? How will coordination be achieved between these new sources of funding and existing aid, domestic or philanthropic healthcare resources? 11

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14 For further information, please visit our website at or for questions on health partnerships and the India Business Alliance please contact: World Economic Forum Stefanie Held Financing for Development Initiative Global Institute for Partnership and Governance Route de la Capite CH 1223 Cologny/Geneva Telephone: +41 (0) Francesca Boldrini Global Health Initiative Global Institute for Partnership and Governance Route de la Capite CH 1223 Cologny/Geneva Telephone: +41 (0) For questions on the partnering process please contact: Overseas Development Institute Dr Michael Warner Business and Development Performance Telephone: This overview has been complied from information gathered during the Roundtable in New Delhi. Prepared by the event facilitators, its purpose is to provide both a summary of the main topics covered in the Roundtables and insight into new directions and outstanding issues. This overview will be used to inform a second set of Roundtables in spring The final report will follow. Cover Photo credits: P. Bennett and S. Colvey 13

15 The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas. Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests. (