Participants in the 3rd Party Financing discussion at the Social Franchising Conference last week were treated to a rendition of “Going to the chapel” as they took their seats. The session was rebranded “Marriage Counseling”, alluding to an earlier post by Gina Lagomarsino in which she presented social franchising and national insurance as a potential marital match. True to TV dating game shows, three “date” options were discussed at the session: government contracting, integration with national insurance, and access to provider credit. Which do franchise managers choose? Is it ok to have more than one partner?
First up is contracting. Government contracting of private clinics offers a number of benefits. Governments are often bad managers – contracting out service provision allows government agencies to delegate managerial responsibilities to the private sector and, instead, focus on higher-level tasks such as planning and oversight. For clinics, government contracts bring in a steady funding stream that can be used to update infrastructure and diversify service offerings. But governments can also be challenging to work with and individual providers may find it difficult to manage government contracts. Is there strength in numbers? In India, franchise networks have banded together to form a national federation. As a group, they have garnered the interest of India’s government and have now submitted a proposal to implement franchise networks in five of the country’s northern states. While the federation’s experience with contracting is yet to be defined, it does demonstrate that disparate networks joining forces can command government attention. Lesson 1: Franchise networks should consider identifying opportunities to band together to leverage collective bargaining power.
Now, on to national insurance. While there is general agreement that, where exist, national schemes are key to long-term sustainability, there is still a lot of skepticism toward the practicality of accepting public insurance. Much like contracting, engaging governments may be difficult, particularly for smaller networks, and many providers may not be ready to meet the standards of insurance accreditation. Furthermore, as long as donor funds persist, vouchers may appear to be the more attractive tool to increase demand and improve service quality. But pursuing one option does not preclude the other. Vouchers may indeed be the better short-term option to increase the uptake of key services and build internal capacity for claims administration. Insurance, however, presents a viable long-term funding stream – think exciting fling versus long-term companionship. More importantly, vouchers can target services not covered by national schemes and leverage government agencies to help with administration and monitoring (see Tinh Chi Em’s voucher program), laying important groundwork for future integration. Lesson 2: Voucher programs can complement public insurance schemes where available and engage governments from the get-go to build the foundation for future integration.
Last, although certainly not least, is provider credit. Access to credit is perhaps one of the largest barriers to scale-up and traditional lenders are weary of investing in the health sector. Where credit is available, access qualifications and costs may simply be too high. In addition to dispelling myriad misconceptions about lending to health among traditional investors, a greater number of loans should be tailored to small private providers. The Medical Credit Fund, implemented by the PharmAccess Foundation, has stepped in to fill this gap. The Fund provides doctors and clinics in sub-Saharan Africa access to affordable loans to expand their practices and invest in quality; funds are supplemented with technical assistance on business administration and quality improvement. Lesson 3: Provider credit can be used to improve the infrastructure and capacity within franchise networks, giving them the necessary leverage to achieve national insurance accreditation.
Having reviewed the three eligible options – which do franchise managers chose? The trick answer may be all. Supply side financing such as contracting and provider credit may be necessary to build provider capacity to delivery much needed interventions, while demand-side approaches such as insurance – perhaps preceded or supplemented by vouchers – increase patients’ ability to access them. It appears that in health systems strengthening, multiple partners may not only be allowed, but even preferred.