26 September 2014 1
In remembrance of Prof. Dr. Joep Lange On 17 July 2014 Joep Lange passed away, together with his partner Jacqueline van Tongeren, on board Malaysian Airlines flight MH17, en route to the International AIDS Conference in Melbourne. Joep Lange was founder and chairman of PharmAccess Foundation and one of the principal architects and advisors of the Health Insurance Fund. After launching the Health Insurance Fund he continued following his course to scale up AIDS care, treatment and research and over the years expanded it with new ways of financing health, improving quality of care and setting up a new research institute, the Institute for Global Health and Development. He was a world class scientist and a true visionary leader. He and Jacqueline have been a driving force in leading all of us on the road towards an AIDS free generation and affordable access to quality care, especially in developing countries in Africa and Asia. He emphasized the need for rigorous scientific evaluations of health programs in Africa and initiated the operational research within the Health Insurance Fund programs. It is impossible to overestimate the contribution Joep Lange has made. 2
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INDEX Management Board s report... 5 1. Introduction... 6 2. Partnerships... 8 3. Leverage... 20 4. Financial... 21 5. Outlook 2014 and beyond... 23 6. Institutional development... 25 Financial statements... 26 Balance sheet as at 31 December 2013... 28 Statement of income and expenditure 2013... 29 Cash flow statement for the year 2013... 30 Notes to the financial statements... 31 Signing of the financial statements... 41 Other information... 42 Independent auditor s report... 43 Subsequent events... 43 Result appropriation for the year... 43 4
Management Board s report 5
Management Board s report 1. Introduction In October 2006, the Health Insurance Fund (HIF) signed a contract with the Dutch Ministry of Foreign Affairs to provide access to affordable and quality healthcare for currently uninsured populations in sub-saharan Africa through the introduction of innovative financing mechanisms (including health insurance) and the improvement of healthcare quality over the period 2006 2012. The philosophy of the Health Insurance Fund is to focus simultaneously on both financing and delivery in order to ensure a sustained increase in access to affordable quality health care. The Health Insurance Fund program facilitates the introduction of standards in order to create trust and reduce risk in the healthcare system, thereby contributing to increasing investment and reducing transaction costs. The overarching objective of the Health Insurance Fund program is to shift the paradigm in healthcare delivery and financing by stimulating more resources, increased efficiency and improved effectiveness in the healthcare system. The Health Insurance Fund contracts PharmAccess Foundation (hereinafter: PharmAccess ) for the implementation of the programs and the Institute of Global Health and Development (AIGHD) and the Institute for International Development (AIID) for impact evaluation into medical and economic outcomes. The work of PharmAccess also includes consultancy on healthcare infrastructure, HIV/AIDS corporate programs as well as mobile health (mhealth) applications. The Health Insurance Fund has developed several complementary initiatives over the years, namely standards for quality improvement of health providers (SafeCare), loans for healthcare providers (the Medical Credit Fund), health plans and in-depth impact research. The HIF has been an important starting point for the establishment of the Investment Fund for Health in Africa (IFHA). This private equity fund invests in medical infrastructure in Africa such as insurance companies and medical supply chains. The first IFHA fund was closed at 50.2 million through the mobilization of initial investment capital from Heineken, Shell, Unilever, Aegon, SNS Reaal and Achmea. 6
The key objectives of the HIF are the following: To increase access to quality basic health care for currently uninsured groups, mainly through private health facilities. To evaluate different private healthcare delivery models based on a demand-driven and results-oriented approach. To lower the threshold for investment in private healthcare infrastructure (for which inter alia the Investment Fund for Health in Africa was set up). To directly support Millennium Development Goals (MDG) 1 and 6: reducing poverty and halting the spread of HIV/AIDS, tuberculosis, malaria, and other major diseases. 7
2. Partnerships The Dutch Ministry of Foreign Affairs (MoFA) was the first donor to support the HIF with a grant of 100 million for the development and implementation of health financing and delivery programs in Africa over the period 2006 to 2012. In 2012, MoFA extended the contract with the HIF to the end of December 2015. The following other contracts have also been signed: In October 2008, the HIF signed a five year grant agreement with the Global Partnership for Output Based Aid (GPOBA), a Trust Fund of The World Bank for USD 6 million to support an additional target population in Nigeria (CAPDAN). The Funds are provided by the International Finance Corporation (IFC) and the grant is managed by The World Bank. In 2013, the World Bank approved the extension of the CAPDAN project till April 30th 2014. An evaluation by both PharmAccess and the World Bank will take place prior to the end of the project to assess the results, lessons learned and strategies for providing affordable and quality basic health care to the urban poor. In April 2009, the HIF signed an agreement with the Kwara State Government in Nigeria to cofinance the expansion of the program in Kwara to include an additional group of farmers in the state. In February 2013, a Memorandum of Understanding (MoU) was signed between Kwara State Government, Hygeia Community Health Care and the Health Insurance Fund to support a further expansion of the program to cover 60% of the one million rural poor population i.e. 600,000 people - by the end of 2018. The agreement to expand the Kwara program represents a major milestone in achieving universal health coverage in Nigeria. In September 2009, the HIF signed a Leader with Associate Award Agreement with the United States Agency for International Development (USAID) valued at USD 20 million. This umbrella agreement consists of two parts. Under the Leader part it supports the implementation of regional studies on the HIF s private health insurance activities in sub-saharan Africa and the HIF s involvement in advocacy and evidence based policymaking. Under the Associate part, this agreement enables the HIF to sign contracts with USAID offices in the countries where the HIF operates up to a maximum of USD 20 million. In 2013, studies into the burden of chronic diseases of households in Tanzania and Kenya and the potential of HIF program to improve maternal and child health were done. By the end of September 2014, the Leader with Associate Agreement with USAID East Africa will end. There are on-going discussions between the HIF and USAID about the use of the Associate Agreement. In July 2010, the HIF signed a contract with STOP AIDS NOW! (SAN!) for the Community Health Insurance Participation Project (CHIP) in Tanzania. This project focuses on the mobilization of the farmers and their families of the Kilimanjaro Native Co-operative Union (KNCU) for health insurance. In co-operation with MicroEnsure and KNCU, a tablet application has been developed for the standardization of messages for the education and marketing of health insurance. 8
In June 2012, HIF signed a MoU with Achmea. Achmea, the largest health insurance company in the Netherlands, uses their knowledge and experience in organizing financial security to contribute to solving social and economic issues, in the Netherlands and abroad. This ambition, in line with that of Health Insurance Fund, prompted these two organizations to initiate the Global Health Membership in 2013. The following paragraphs describe the key activities of the various initiatives of the Health Insurance Fund in 2013. PharmAccess has contributed enormously towards the realization of the objectives of the Health Insurance Fund. HEALTH PLANS Access to affordable and quality basic health care for uninsured people through financial inclusion in a health plan is still rare in sub-saharan Africa. The Health Plan activities are directed at i) developing partnerships with insurers, governments, insurance distributors and mobile network and money operators in order to strengthen healthcare systems; and, ii) providing risk sharing mechanisms to reduce financial risks for local partners in order to kickstart sustainable market development and growth. Different models are designed and implemented to suit the local context. Thanks to excellent co-operation with local partners communities, national and state governments, local companies, clinics, and hospitals the Health Insurance Fund program has delivered a record enrollment of around 120,000 insured people. In 2012, the Kwara State Government enacted and signed into law the Kwara State Community Insurance Bill in order to institutionalize and ensure the continuity of the Kwara program. In order to execute the Health Insurance Bill, the Kwara State Government, Hygeia Community 9
Health Care (local partner of PharmAccess) and the Health Insurance Fund in February 2013, signed a memorandum of understanding to expand the program to cover 600,000 people in rural areas within the next five years. This agreement represents the first time that a state government in Nigeria is partnering with an insurer to provide state-wide health insurance for its citizens. In Tanzania, the Health Insurance Fund has funded the development of a health insurance scheme with Kilimanjaro Native Co-operative Union (KNCU) the biggest and oldest cooperative in Tanzania. At close of year (December 2013) the KNCU Health Plan had over 13,000 active members. Lessons learned from the programs in Nigeria have enabled us to offer a healthcare package tailored to the needs of the community, namely outpatient care (consultations, laboratory tests, and drugs), chronic disease management, and maternity coverage. At the end of 2013, an MOU was signed with the Siha district in the Kilimanjaro region to merge the existing KNCU Health Plan in the Siha district with the local Community Health Fund (CHF). The CHF is a subsidiary of the Tanzanian National Health Insurance Fund (NHIF) and is intended to provide access to health care to people in the informal sector. Due to limited institutional, implementation and management capacity, the CHF has not been successful in pursuing its mandate. From this collaboration and over time, CHF will pay about 50 percent of the health insurance premium. Also, at the request of the NHIF, PharmAccess has started discussions with the Tanzanian NHIF and the CHF to provide technical assistance for the rollout of the CHF in three of the four regions of the Northern Zone in Tanzania: Arusha, Kilimanjaro, and Manyara. It is expected that co-operation with the CHF and NHIF will lead to increased access to quality based health care and will lower the threshold for investment in private health infrastructure. In Kenya, the Community Health Plan (TCHP), a collaborative program of AAR, Tanykina Dairy Ltd, and PharmAccess, has been extended to the general population beyond the Tanykina Dairy membership and expanded into new neighboring areas (Kabiyet Dairy for example). The TCHP insurance package has been redesigned to better meet the varying needs of the population and to better reflect the actual cost of care for the program, which will contribute to its financial viability. Within 4 months after program re-design, number of enrollees and clinics doubled. Namibia and Mozambique are countries in which the HIF provides support for technical assistance. The Mister Sister program in Namibia is a public private partnership that aims to improve access to primary health care (PHC).The core target groups for this program are employees and their dependents in remote and underserved areas. Their employers contribute towards the cost of the health care. The Namibian Ministry of Health & Social Services (MoHSS) and a number of public and private organisations are among the partners of this program. After a positive evaluation of the services provided in the semi-urban areas of Windhoek by the Ministry of Health and Social Services (MoHSS), an agreement was signed allowing PharmAccess Namibia to continue to operate in the semi-urban sites. This agreement also allowed PharmAccess to develop new packages for corporate clients in the urban areas. In Mozambique, support is given to the development of a healthcare program for the students of the Universidade Eduardo Mondlane (UEM) in Maputo. In 2013 most efforts were 10
concentrated on the identification of a management organization to run the Campus Health Center and the provision of technical assistance for the UEM to set up the structure to administer the health plan. The variety of program models and geographical locations has allowed the Health Insurance Fund to collect valuable data and learn important lessons. The former include biomedical, financial, and market data that have never previously been available in Africa. All health insurance models are aimed at attracting sufficient and sustained local funding to cover the full premiums of enrollees for programs at scale. Each model has its own underlying rationale regarding subsidy and sustainability. PharmAccess, on behalf of the Health Insurance Fund, is working with partners to develop efficient cross-subsidy targeting mechanisms f.i. based on mobile phone usage. DELIVERY INFRASTRUCTURE, QUALITY AND DEVELOPMENT At the time of the establishment of the Health Insurance Fund, the OnTrack methodology was designed to measure and improve quality of healthcare provision of the insurance program. Although this methodology was sufficient to monitor and improve the quality among the healthcare providers of the Health Insurance Fund, it could not be used across programs and countries, and could not be institutionalized at a national, African, governance level. Therefore, in 2010, SafeCare was launched. SafeCare is a formal collaboration of PharmAccess, Joint Commission International (USA), and COHSASA (South Africa). The quality standards are specifically developed for basic healthcare 11
facilities in resource-restricted settings. SafeCare standards and benchmarking strengthen the trust in the healthcare system and reduce investment risk and transaction costs. SafeCare standards focus on bottom of the pyramid public and private healthcare facilities such as dispensaries and health centers, which constitute the main healthcare delivery channel for low-income settings and which struggle with patient safety and quality requirements. The methodology dissects the improvement process of healthcare providers in survey-able, measurable steps. Thus, an improvement trajectory is created that provides positive incentives for healthcare providers to move upwards in quality, which will boost client, investor, and regulator confidence in the motivation and capacity of healthcare providers to steadily enhance their performance. All quality improvement efforts are supported by innovative data collection and reporting tools, allowing for real-time facility assessment and online monitoring. In addition, the data collected on clinical performance allow for prioritization of financial resource allocation that enables a more efficient use of available resources. SafeCare has seen a rapid growth of the number of clinics in the program. Although the program is at the core of the health plans and Medical Credit Fund programs, SafeCare has attracted interest well beyond. Across Nigeria, Kenya, Tanzania, Namibia, and Ghana, SafeCare had performed 825 quality assessments by the end of 2013, and has awarded 100 certificates since the start of the program. It has trained 260 local facilitators, 49 of whom are certified SafeCare surveyors. These surveyors are qualified to independently certify clinics. SafeCare currently (end 2013) has 613 clinics in the program and has signed agreements with the National Hospital Insurance Fund (NHIF) in Kenya, the Ministry of Health and Social Welfare in Tanzania, and the National Primary Healthcare Development Agency in Nigeria, to introduce SafeCare methodology and standards as the national standard used for legislation and enforcement and/or contracting. For the private sector, SafeCare methodology is applied within a subset of the social franchise networks of the African Health Markets for Equity program (AHME) in Ghana, Kenya, and Nigeria. In Namibia, SafeCare conducted a first assessment of the Mister Sister Mobile Clinics, which are part of the health plan activities. Special standards for mobile clinics have been designed that could be used to create similar programs, in Nigeria and Kenya for example. In September, SafeCare organized a conference in Mombasa, Kenya, with the theme Quality in Practice; Towards Sustainable Quality of Care in Africa. A group of more than 70 international participants gathered in Mombasa to share ideas, successes, and lessons learned on sustainable quality improvement. FINANCING QUALITY IMPROVEMENT OF PRIVATE PROVIDERS One of the key objectives of the Health Insurance Fund is to reduce the investment risk in Africa, in order to address the shortage of capital of healthcare businesses. Healthcare providers need investment capital to grow their businesses and improve the quality of their services. Most African medical professionals in the private sector, especially those who serve low-income groups, have limited or no access to credit facilities because the cost is too high and they cannot provide the necessary (financial) information and collateral. As a result, they 12
remain unable to develop their business or improve the quality of services, while at the same time as a group they serve more than 50% of the African population. To date, investors are generally reluctant to provide financing to the lower-tier segments as the prevailing risks are unknown and considered too high. These risks relate to both financial and medical uncertainties. The Medical Credit Fund was established by PharmAccess in 2009 as an offshoot of the Health Insurance Fund to address these financial and medical constraints of the healthcare market in an innovative, customized and integrated manner. The Medical Credit Fund s mission is to contribute to building a quality healthcare system by enabling private healthcare providers to fully explore and develop their potential as key players in the healthcare sector. It does that by strengthening the business cases of healthcare providers and improving the quality of their clinical and medical services. By reducing the investment risk for lower-tier healthcare providers, the Medical Credit Fund enhances the provision of affordable quality healthcare services. As such, healthcare providers become financeable and can invest in quality enhancement and expansion of their facility. To achieve its objective of improving the provision of quality healthcare services for low-income Africans, the Medical Credit Fund provides performance-based financing in combination with technical support to eligible private primary healthcare providers in two programs that are interlinked: the Technical Assistance (TA) program and the Lending program. The TA program consists of a clinical and business quality improvement program that strengthens the healthcare provider s business case and debt servicing capacity, and reduces credit and medical risk. The quality improvement part of the TA program is designed along the lines of the SafeCare program. So far, the Medical Credit Fund has set up operations in Kenya, Tanzania, Nigeria, and Ghana. 13
What makes the Fund especially innovative is its layered capital structure. The Medical Credit Fund is financed by blending grants, equity and debt financing from both public and private parties, which are used for technical assistance (grants), first loss (equity-grants) and debt financing (loans). By using public funds to catalyze much larger amounts of funding from private sources, the MCF is able to increase its developmental impact significantly. Through this fund structure, USD 13 million in public funding leverages private investments that will result in USD 70 million in loans to more than 2500 African healthcare providers by 2019. Medical Credit Fund s investors and contributors include OPIC, USAID, Calvert Foundation, the Bill & Melinda Gates Foundation, the Soros Economic Development Fund, IFC/G-20, the Dutch Ministry of Foreign Affairs/FMO and the AHME (African Health Markets Equity) program, which is jointly funded by DFID and the Gates Foundation. In November 2010, U.S. President Obama presented the Medical Credit Fund with the G-20 SME Finance Challenge Award for its innovative approach. In 2013, broader recognition of private health care as a necessary complement to public sector service delivery was observed at government level in all four Medical Credit Fund countries. There is growing interest among governments at various levels (national, federal, state) to engage in public-private partnerships, and the Medical Credit Fund is frequently invited to participate in a consortium setting with program partners. A growing goodwill for the private sector in health is also demonstrated by the fact that local capital markets are displaying an increased interest in the private health sector, a segment long under-serviced due to the high risk profiles associated with it. Whereas it was quite a challenge for the Medical Credit Fund to contract suitable partner banks in the early years of its existence, as of early 2013, banks are approaching the Medical Credit Fund in search of partnership options. Since the Medical Credit Fund program s inception, 443 loans have been disbursed, of which 194 were still outstanding by year-end 2013. The disbursed volume more than doubled between 2012 ( 1.2 million) and year-end 2013 ( 3.0 million). The overall repayment rate at the end of 2013 was at 97.5%. Kenya represents just under half of all enrolled clinics and more than half of disbursed and outstanding loan volumes. Tanzania ranks second, before Ghana and Nigeria. The number of clinics in the program and the amount of technical assistance provided has doubled over the course of 2013. By the end of 2013, 516 facilities had enrolled in the Medical Credit Fund program, completing 315 business trainings and 301 quality trainings, thereby covering 1276 health professionals in total. Under the SafeCare methodology, 372 first assessments and 28 second assessments were conducted. Of the 28 Medical Credit Fund facilities that received a follow-up assessment, 24 have shown an increase in their quality improvement score. The average score of the 28 follow-up assessments showed a 12% increase in quality. 14
PROGRAM DEVELOPMENT, ADVOCACY AND RESOURCE MOBILIZATION In sub-saharan Africa, government policy has hindered private sector development in health care and the mobilization of resources into inclusive quality health care. An important aspect of the HIF program is to promote strategic private sector partnerships and advocacy for policy change, resource mobilization, program development and communication on innovative health financing and delivery. Since 2008, strategic partnership has been developed with the Health in Africa initiative (HIA) setup by the International Finance Corporation. Further, PharmAccess started discussions with Shell and Philips for collaboration in health care in Africa. Also, discussions are ongoing with the Global Fund s Country Coordinating Mechanisms (CCM) in Nigeria to collaborate on using health insurance to provide HIV/AIDS, malaria, TB and other health care based on the Kwara program model. The Global Fund invited the PharmAccess Group to its replenishment conference in Washington DC in December 2013. In order to build partnership for policy change, fundraising and program development as well as build capacity in relevant areas of its work, the partners of the HIF program participated in and presented its activities and results at diverse conferences and expert meetings, both internationally and in the countries of operations, including the 10 th anniversary of Ghana s National Health Insurance Scheme, the East African Healthcare Federation Conference in Dar es Salaam, the World Bank s conference on Scaling up Health Insurance and Financial Protection in Health in Washington DC; and SafeCare conference on Quality in Practice; Towards Sustainable Quality of Care in Africa in Mombasa. The Minister for International 15
Trade and Development Cooperation, Lilianne Ploumen, visited PharmAccess to familiarize herself with our activities and results. Also, the Dutch Parliamentary Commission for International Trade and Development visited PharmAccess in Tanzania. PharmAccess and its partners continue to influence global policy and demonstrate how development co-operation within public-private partnerships can be effective. It was announced this year that the Global Marketplace for Private Health Insurance (2009) was the most widely read book of the World Bank in 2012. The book was co-edited by Onno Schellekens (PharmAccess), Alex Preker, and Peter Zwefel, and it includes a selection of papers on the role of health insurance in improving the healthcare sector and financial protection of people worldwide. As a follow-up to this book, Scaling Up Affordable Health Insurance (2013), co-edited by, among others, Alex Preker and Onno Schellekens, was launched during the Conference on Scaling up of Health Insurance and Financial Protection in Health in Washington DC. LEARNING AND ANALYSIS One of the key lessons learned from the Health Insurance Fund programs is the importance of data collection, data analysis, and feedback into current and new programs to further improve and strive for self-financing of the activities from local sources. For example, data on the target population and actuarial data on healthcare utilization and costs are vital to accurately determine utilization, size and cost of healthcare packages, and to calculate premiums. Gathering data regarding the number of patients, revenue, costs and the management capacity of healthcare providers, as well as the quality of services, is important to determine the financial performance of healthcare providers and to spur catalytic effects in stimulating the scale-up of affordable access to quality health care on a viable and long-term basis. Based on this insight, PharmAccess set up the Learning and Analysis Unit in 2013. The Learning & Analysis unit aims to combine and strengthen all sources of knowledge (internal and external) in learning programs and will be an integral component of the PharmAccess programs. The generated data provides a valuable source for continuous feedback on the programs. Additionally, the Learning & Analysis unit (L&A) aims to translate this knowledge into external communications, in a range of different formats. IMPACT EVALUATION All projects funded by the Health Insurance Fund are rigorously evaluated in terms of their impact on the health, and other dimensions of well-being, of the intended target groups. The rationale for this is that evidence based evaluation must be conducted to determine the effectiveness of interventions, especially for projects and programs with an innovative character. The result of the impact evaluations are not just used to improve project interventions when necessary, but, more importantly, to stimulate expert and scientific discussions to promote and direct future strategic development co-operation. In 2013, the Institute for Global Health and Development and the Institute of International Development and the Ilorin Teaching Hospital (Kwara) published the results of their impact evaluation of the community health plan in Kwara Central. This report concludes that health insurance has contributed to improved financial protection for the low- 16
income population, a significant increase in the utilization of modern healthcare providers and improved health outcomes (e.g. management of chronic diseases). In 2013, seven papers on other studies (e.g. Mother and Child Health Study (MACHS), Quality Improvement for Cardiovascular Care Kwara (QUICK), Costing, Maternal Care and other studies were submitted to peer reviewed journals). By the end of 2013, over 50 publications were produced based on the Health Insurance Fund initiative. NEW INITIATIVES New initiatives have been established to develop innovative activities in support of the main objectives. These innovative activities are the core element of our strategy to continually target missing links on both the demand and supply side of the health value chain. The following paragraphs provide some examples of new innovative activities the organization has been working on in 2013. Mobile Health In 2012-2013, PharmAccess started exploring the idea of using mobile telephones to increase access to quality health care in Africa. This phenomenon is commonly referred to as mhealth, or mobile health. Initial research indicated that this would be a significant complement to existing PharmAccess initiatives, namely the health plans, the Medical Credit Fund, and SafeCare, working on both the supply and demand side of health care. PharmAccess has worked together closely with Safaricom/M-PESA Foundation, and with the local insurance partner AAR, on a number of mhealth products and services in Kenya. For this purpose, a MoU was signed between Safaricom, the M-PESA Foundation and PharmAccess in March 2013. The first and foremost mhealth concept that was tested in a Mobile Health Research in Kenya is that of a Mobile Health Wallet. This is a separate wallet on the mobile phone that can only be used to pay for health care at quality-controlled, SafeCare-certified clinics. The Mobile Health Wallet forms the basis of a Health-PIN (Health Payment Infrastructure), which is a complete mobile health payment infrastructure based on M-PESA ( M-PESA 2.0 ). The Mobile Health Wallet provides a way of sharing risk by transferring entitlements and remit money to those who need it, which is the most basic form of insurance. Besides the developments on the ground in Kenya, important steps were also being taken to form a partnership with the Global Fund around the development of the Mobile Health Wallet and Health-PIN concepts. After an initial meeting in October 2013 in, between teams of the Global Fund and PharmAccess, it was agreed to further pursue collaboration in this field. In December 2013, this resulted in a first contract between both parties, with a support of the Global Fund for the work done in the Mobile Health Research in Nairobi. Furthermore, both sides agreed to pursue collaboration between the Global Fund, Vodafone and PharmAccess in this field. 17
Global Health Membership In 2013, Global Health Membership (GHM) was established as a new international proposition of the Health Insurance Fund. This global movement aims to raise funds for the activities of the Health Insurance Fund. CEO of Achmea and board member of the Health Insurance Fund, Willem van Duin, strongly endorses Global Health Membership and acts as ambassador for the concept. In October 2013, Zilveren Kruis Achmea introduced Global Health Membership to its staff and policyholders. Through a number of client propositions and distribution channels, test campaigns were set up to invite policyholders to contribute to the Global Health Membership. Based on the results of these test campaigns, the teams of Zilveren Kruis Achmea and the Health Insurance Fund evaluated the results as a preparation for follow-up campaigns and the final roll-out in 2014. In close collaboration with the International Federation of Health Plans (IFHP), the association of the globally 100 leading health insurers, and under the leadership of ACHMEA, the Health Insurance Fund has invited their members to join the initiative. In 2014 Helsana from Switzerland confirmed their commitment to join the Global Health Membership. The Health Insurance Fund will aim to increase the number of participating IFHP members in the coming period. 18
Africa Health Infrastructure Fund Over the last years, the Medical Credit Fund has demonstrated that there is a demand for financing of small sized healthcare providers. However, through the Medical Credit Fund PharmAccess has also identified a need for larger and more flexible loans, which the Medical Credit Fund cannot cater to. In order to satisfy this demand, PharmAccess decided to prepare a spin-off fund, the Africa Health Infrastructure Fund (AHIF). The Africa Health Infrastructure Fund will be a USD 60 million impact-oriented investment fund providing debt with flexible terms, including mezzanine financing, to companies active in the health sector. It will build on the existing infrastructure and partnerships of PharmAccess and the Medical Credit Fund in particular. The Africa Health Infrastructure Fund will have a broader scope than the Medical Credit Fund and will invest across the value chain. The key results of 2013 included a tentative commitment by the CDC/DFID Impact Fund to invest USD 15 million, subject to due diligence and attracting additional investments. In addition, the DFID Impact Fund will contribute 10% of its investment to the Technical Assistance Facility accompanying the fund. 19
3. Leverage As a result of the financial commitment of the Dutch Ministry of Foreign Affairs, the Health Insurance Fund and its partners have been able to develop and implement programs in healthcare financing and delivery in Africa. Besides material leverage, the funding from the Ministry of Foreign Affairs has led to considerable and immaterial leverage for the Health Insurance Fund, including collaboration with international and national institutions, African governments, and professional associations. Relationships have been built with ministries of health in Nigeria and Tanzania and national insurance agencies in Ghana and Kenya. A key objective of the Health Insurance Fund is to lower risk so that investments will increase, by using public and private funds to attract more capital for Africa s severely underfunded health systems. These resources help modernize Africa s health systems by introducing risk pooling, improving management, enhancing quality standards and deploying technology more effectively. As a result of the 100 million grant from the Dutch Ministry of Foreign Affairs, HIF, PharmAccess, the Medical Credit Fund and the Investment Fund for Health in Africa have been able to mobilize more than 300 million since 2006 in additional committed resources from third-party donors, local governments, investors, local banks, private clients, and member contributions for the premium to support healthcare delivery. The continuous growth in commitments demonstrates recognition for the approach of the Health Insurance Fund and its partners to development. These funds, however, are all pledged to a specific investment fund or program and do not contribute to the core funding. Nonetheless this funding does support the Health Insurance Fund and PharmAccess unique position for developing innovative health finance products for patients and doctors in sub- Saharan countries. A stable amount of core funding is also important to maintain the organization s ability to secure additional funding in the future. It is clear that there is a significant gap between expensed and contracted grants and in investments in the case of Medical Credit Fund, reflecting the reality of introducing entirely new concepts in less developed countries and of the slow process of building local public support to scale up insurance programs. As soon as programs can be scaled up, costs will drop significantly while Health Insurance Fund s leverage will increase exponentially. 20
4. Financial At the end of 2013, the HIF has received 69,391,714 from the Dutch Ministry of Foreign Affairs (MoFA). During 2013, the HIF received 11,098,000, based on the annual activity plan, budget and liquidity prognosis. Total realized expenses for the program up to 31 December 2013 were 67,698,087. In 2013, total realized program expenses (including expenses of the HIF and operational research) were 15,721,003. In 2013, total realized expenses for PharmAccess and local insurance partners were 14,702,307. In 2013, total realized expenses for the AIGHD were 545,263 and for AIID 348,932. For the Global Partnership for Output-based Aid (GPOBA) program the HIF has received until end of 2013 2,366,000 from The World Bank, of which 131,000 in 2013. Total realized expenses for the program up to 31 December 2013 were 2,999,639. This amount includes the excess medical payout. In 2013, total realized program expenses amount to 640,882 excluding an amount of 170,891 for excess medical payout for the years 2011 and 2012. Kwara State has transferred a total amount of 550,709, of which 222,705 in 2013. The total realized expenses by HCHC in Nigeria were 1,081,688. USAID has transferred a total amount of 172,793, of which 36,706 in 2013. The total realized expenses were 178,537. 21
SOLVENCY SUPPORT Due to new regulations our partner in Kenya AAR was challenged by new regulations for HMO s which needed to register as licensed insurers in 2012 and demanded increased solvency capital. The HIF provided a 5 year solvency loan of 8 million to AAR to accommodate this transition and be able to continue its activities as partner to the HIF. These - sometimes sudden - developments to our private sector partners may also occur in other countries where the HIF is building capacity for health insurance programs eligible for low income and currently insured groups. Monitoring of regulatory developments and potential solutions for local partners will continue to be a priority. TRANSPARENCY AND ACCOUNTABILITY The program has been designed to ensure transparency and accountability to all stakeholders. The Health Insurance Fund Board holds quarterly meetings to discuss the status and progress of the program. In addition, the Board keeps regular formal an informal track of the program standing and development which includes visits to local operations. Financial program audits covering all main stakeholders including the local implementing partners are carried out by Deloitte every year. A program audit includes the verification of the procedures regarding the enrollment administration as well as the verification of the financials of the project. The results based contracts with the local implementing partners specify two monthly progress reports, two monthly cash requests to be submitted to PharmAccess. The local implementing partners are required to use dedicated program bank accounts. Medical, financial and administrative monitoring and evaluation visits of all the contracted hospitals and clinics are carried out twice a year. 22
5. Outlook 2014 and beyond Supported by and together with the Dutch government, the Health Insurance Fund has had the opportunity to make a major contribution to a shift in the development paradigm for health care in Africa by: Initiating private sector investments, risk was reduced and investments stimulated thus realizing 6-8 times leverage with private and public funds; Starting innovative approaches for inclusive and affordable access to quality health care and delivering proof of principle to enable scale-up to structural change; Implementing and institutionalizing quality standards improving access to quality health care and reducing risk to increase access capital; Demonstrating and promoting effectiveness through rigorous scientific impact evaluation, advocacy and policy change. Discussions with the Dutch Ministry of Foreign Affairs are ongoing to define the future strategy and resource mobilization for the scaling up of the HIF programs. For the coming years, the Health Insurance Fund and partners will continue to: Scale up economically viable, affordable, and quality health care by reducing risks & transaction costs through clinical, medical & business quality standards, scalable local and international PPP coalitions and applying (mobile) technology; Develop and test innovative models on healthcare financing & delivery models in an evidence based learning environment; Accelerate 6-8 times leverage through new investments by reducing risk and employing targeted risk capital; 23
Enforce market transparency through accessible standards to improve health outcomes and economic productivity. 24
6. Institutional development By December 2013, the HIF was represented by five Board Members. Board Members of the HIF are Kees Storm, Chairman (former CEO of AEGON), Willem van Duin (CEO of Eureko/Achmea), Marcel Levi (Chairman of the Executive Board of the Academic Medical Center, University of ), Peter van Rooijen (Executive Director International Civil Society Support) and Pauline Meurs (Professor of Governance in Health Care of the Erasmus University of Rotterdam). Sjoerd van Keulen left as at 11 June 2013. Special advisors to the HIF are Jacques van der Gaag (Director of the Institute for International Development and Distinguished Visiting Fellow, Brookings Institution) and Joep Lange (Professor of Medicine, University of, Founder and Chairman of PharmAccess and former Chairman of the International AIDS Society 2002-2004). We are deeply saddened to have lost Joep Lange in the Malaysian Airlines tragedy on 17 July 2014. The Health Insurance Fund collaborates closely with PharmAccess, IFHA, MCF and SafeCare. IFHA attracts private equity capital in order to build and support local infrastructure related activities. Current investors in IFHA are Achmea, AEGON, African Development Bank, APG, FMO, Goldman Sachs, Heineken, IFC, Pfizer, Shell, SNS REAAL and Unilever., 26 September 2014 K.J. Storm Chairman 25
Financial statements 26
Financial statements Balance sheet Statement of income and expenditure Cash flow statement Notes to the financial statements 27
Balance sheet as at 31 December 2013 (After appropriation of result) Assets Note 31.12.2013 31.12.2012 Note 31.12.2013 31.12.2012 Equity and liabilities Financial fixed assets: Balance of income and expenditure 6 4,470 1,105 Loans 1 6,452,897 6,326,370 Long-term liabilities Current assets Deferred income concerning solvency support 7 8,202,897 8,076,370 Other receivables 2 8,341 0 Advance payments 3 170,310 740,997 Accounts receivable 4 2,946 12,922 Current liabilities Cash 5 2,769,977 7,750,966 Creditors 135,115 126,229 Deferred income 8 1,040,767 6,607,477 Other liabilities and accrued expenses 21,222 20,074 9,404,471 14,831,255 9,404,471 14,831,255 28
Statement of income and expenditure 2013 Note 2013 2012 Income Ministry of Foreign Affairs 8 15,721,003 15,983,359 Program expenses Ministry of Foreign Affairs 9 15,596,503 124,500 15,341,283 642,076 Income The World Bank 8 837,519 651,831 Program expenses The World Bank 10 811,773 25,746 605,181 46,650 Income Kwara State 8 520,905 430,351 Expenses Kwara State 520,905 0 430,351 0 Income Aids Fund 8 0 15,171 Expenses Aids Fund 0 0 15,171 0 Income STOP AIDS NOW! 8 44,017 186,313 Expenses STOP AIDS NOW! 44,017 0 186,313 0 Income USAID 8 40,203 51,504 Expenses USAID 21,020 19,183 26,585 24,919 Subtotal 169,429 713,645 Operating expenses: Personnel expenses 11 82,658 388,255 Expenses conference/strategy committee/extra study 3,682 15,651 General and administrative expenses 12 79,724 166,064 308,425 712,331 Result 3,365 1,314 29
Cash flow statement for the year 2013 2013 2012 Operating result 3,365 1,314 Adjustments for: Changes in working capital: - movements operating accounts receivable 572,322 (1,505,997) - movement deferred income (5,566,710) 6,273,375 - movements operating accounts payable 10,034 (4,984,354) 3,133 4,770,511 Cash flow from business activities (4,980,989) 4,771,825 Interest received/paid 0 0 Cash flow from operating activities (4,980,989) 4,771,825 Received from MoFA concerning solvency support Investments in other financial fixed assets concerning solvency support 0 8,000,000 (6,250,000) Cash flow concerning solvency support 0 1,750,000 Net cash flow (4,980,989) 6,521,825 Cash as per 1 January 7,750,966 1,229,141 Cash as per 31 December 2,769,977 7,750,966 Movements in cash (4,980,989) 6,521,825 30
Notes to the financial statements GENERAL Foundation Stichting Health Insurance Fund is a not-for-profit organization based in, the Netherlands. The foundation was set up on 6 October 2005. Objective The objective of the foundation is to increase access to quality basic health care including HIV/AIDS treatment through the provision of private health insurance to previously uninsured groups with a low and middle income in Africa. ACCOUNTING POLICIES General The financial statements have been prepared in accordance with the Guideline for annual reporting 640 Not-for-profit organizations of the Dutch Accounting Standards Board. The financial statements have been prepared using the historical cost convention and are based on going concern. If not indicated otherwise, the amounts of the accounts are stated at face value. Financial fixed assets Loans are recorded at face value, after deduction of any provisions and equal the principal amount plus the 2% interest per annum. Current assets Receivables are recorded at face value, less provisions for doubtful accounts. These provisions are determined by individual review of the receivables. Deferred income Deferred income consists of subsidy prepayments related to projects to be carried out less the realized costs of these projects, taking into account foreseeable losses on projects. 31
Statement of income and expenditure Income and expenditure are recognized as they are earned or incurred and are recorded in the financial statements of the period to which they relate. Overhead expenses are excluded from program expenses and recorded in the operating expenses. Recognition of transactions in foreign currency Transactions in foreign currencies are recorded at the exchange rate prevailing at the transaction date. At year-end, the assets and liabilities reading in foreign currencies are translated into euros at the rates of exchange as per that date. Financial instruments Financial instruments include both primary financial instruments, such as receivables and liabilities, and financial derivatives. Reference is made to the treatment per balance sheet item for the principles of primary financial instruments. The foundation does not use derivatives. Notes to the specific items of the balance sheet 1. Loans 2013 2012 Balance as at 1 January 6,326,370 0 Disbursed to AAR 0 6,250,000 Interest to be received 126,527 76,370 Balance as at 31 December 6,452,897 6,326,370 Total disbursed as at 31 December 6,250,000 6,250,000 Total accumulated interest to be received 202,897 76,370 Balance as at 31 December 6,452,897 6,326,370 The HIF signed a loan agreement for a total amount of 8 million with AAR for solvency support. From this amount 6.25 million has been disbursed to AAR in Kenya. The remainder of 1.75 million is available for AAR in Uganda. The interest rate on this solvency loan is 2% per annum on the disbursed amount and is added to the deferred income concerning solvency support. The final repayment date is 31 December 2017. 32
2. Other receivables 31.12.2013 31.12.2012 Interest to be received 8,341 0 3. Advance payments 31.12.2013 31.12.2012 Prepaid to PharmAccess regarding MoFA 1,133,483 840,794 Prepaid to PharmAccess regarding The World Bank (597,193) 83,581 Prepaid to PharmAccess regarding Community Health Insurance Participation Project/To-Gather (15,000) 16,401 Prepaid to PharmAccess regarding Kwara State (530,980) (232,780) Prepaid in total to PharmAccess on projects (9,690) 707,996 Prepaid to HIVOS regarding Community Health Insurance Participation Project/To-Gather (143,649) (170,275) Prepaid to AIID regarding MoFA 24,297 158,750 Prepaid to AIGHD regarding MoFA 106,873 (119,718) Interest revenue PharmAccess regarding MoFA 192,479 164,244 170,310 740,997 4. Accounts receivable 31.12.2013 31.12.2012 Accounts receivable 2,946 11,167 Prepayments 0 1,755 2,946 12,922 33
5. Cash 31.12.2013 31.12.2012 ABN-AMRO 49.39.14.234 0 4,847,257 ABN-AMRO 50.92.58.646 2,580,563 2,380,020 ABN GPOBA account 5,932 322,016 ABN USAID account 172,466 135,849 SNS 92.29.51.063 359 55,428 SNS Savings account 10,657 10,396 2,769,977 7,750,966 6. Balance of income and expenditure 2013 2012 Balance as at 1 January 1,105 (209) Result 3,365 1,314 Balance as at 31 December 4,470 1,105 In accordance with the subsidy agreements, the operating expenses are funded by the different donors. 34
7. Deferred income concerning solvency support Cumulative payments from Dutch 31.12.2013 31.12.2012 Realized in 2013 Ministry of Foreign Affairs 8,000,000 8,000,000 0 Deferred income before interest 8,000,000 8,000,000 Cumulative interest to be received: - AAR (202,897) (76,370) (126,597) Total interest to be received (202,897) (76,370) (126,597) Deferred income after interest (8,202,897) 8,076,370 This long-term deferred income position with MoFA relates to solvency support which has been made available to AAR Insurance Holding Limited (AAR). Based on the communication with MoFA, this position is part of the grant of 100 million. Repayment will be reallocated according to the objectives of the HIF program and, therefore, no repayment to MoFA is obliged. The interest that is added to this deferred income position is calculated on the disbursed amount. 8. Deferred income 31.12.2013 31.12.2012 Dutch Ministry of Foreign Affairs 2,254,775 6,815,497 The World Bank (633,639) 72,880 Kwara State (530,979) (232,779) STOP AIDS NOW! (43,646) (45,874) USAID (5,744) (2,247) 1,040,767 6,607,477 35